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What is Bank Credit?

What is Bank Credit?

Bank Credit is the amount of loaned capital that an individual or business is capable of getting from a bank at a given time.

This amount will be based on a series of evaluative metrics such as the total amount of assets an individual has, home equity, income, liquid net worth, work history, credit rating, and so forth. An individual can only borrow so much at a time, and, using these variables, a banker can essentially estimate how much credit could be extended that a given individual at that time.

Bank credit could be a line-item on a balance sheet, documenting the amount of outstanding and available credit to a person or business, or it can be treated as a concept for economic analysis, to estimate the amount of liquidity and debt that can originate from banking institutions. FICO credit scores use all available credit history information to give borrowers a rating of creditworthiness.

Some of the information about outstanding bank credit extended to an individual will be searchable by other lending institutions, so that an individual can only be extended so much credit at a given time.

Keywords: economics, loans, credit score, banking institutions, FICO score,