Dela Cruz, Juan A.

BSStat 1-A
GEC MMW December 2021

LOAN AND CREDIT

Activity 22

I. Introduction
A loan is an amount of money that is borrowed with the promise of repayment plus
interest. Banks, credit unions, and other financial entities all offer loans. Personal loans,
mortgages, auto loans, and student loans are just a few of the different kinds of loans
available. On the other hand, the ability to borrow money or a person's history of taking
out loans and repaying them are both terms used to describe credit. Financial
institutions, such banks and credit card companies, frequently offer credit based on a
person's credit history and credit score. An individual's creditworthiness is expressed
numerically by their credit score, which is based on elements including payment history,
balances owed, and credit usage.

II. Contents
When someone borrows money, they are responsible for paying it back in accordance
with the terms set forth, which may include interest and fees. Negative repercussions,
such as a worse credit score and trouble obtaining future loans, may occur if the loan is
not repaid. On the other hand, responsible borrowing and repayment can increase
credit availability and contribute to an increase in credit score.
III. Economic Value
Loans and credit play a crucial role in the economy by providing individuals and
businesses with access to capital that they may not have otherwise. This allows them to
make investments, grow their businesses, and improve their standard of living.
Additionally, loans and credit can help to stimulate economic growth by providing
consumers with the means to purchase goods and services.
Loans and credit also play an important role in the financial system by allowing banks
and other financial institutions to lend money and earn a return on their assets. This
helps to stabilize the economy by providing a source of funding during economic
downturns. The availability of credit and loans is necessary for the smooth functioning of
the economy, as it enables businesses to invest in new projects, expand their
operations, and hire new employees. This can lead to increased productivity, economic
growth, and job creation.