GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Revolving Credit


Synonyms:revolver, revolving line of credit
Filed Under: financial-banking, mortgages
Tags: banking, credit, mortgage
 

Definition of revolving credit

revolving credit
1. A type of credit line that does not have a specified repayment schedule, but may require a minimum payment to cover interest and contribute to paying off the principal. This is typical for credit card loans, chequing account cash reserves, or overdraft accounts that have pre-approved lines of credit.

Related Terms and Acronyms:

  • credit   Money that a lender gives to a borrower on condition of repayment over a certain period.
  • credit card (CC)   A plastic card with a coded magnetic stripe that, when signed, entitles its bearer to a revolving line of credit, with a credit limit and interest rate determined by the borrower's income and credit report.
      ➥  A payment card that gives customers access to a revolving line of credit.
  • credit history   A record of an individual's or company's past borrowing patterns and whether or not debts were repaid on time.
  • credit insurance   Insurance that covers borrowers and/or lenders if one is unable to repay debts.
  • credit rating (CR)   A judgement of a person's ability to repay debts. The rating is often based on a person's current and projected income and past debt payment history. Also called a credit score.
      ➥  A metric to measure the credit worthiness of a debtor.
  • credit report (CR)   A report on a loan applicant's willingness and ability to make payments in a timely manner in the past. This report is provided to the bank by an outside agency.
      ➥  A report that outlines the credit worthiness of an individual or entity.
  • interest only payments   A payment plan where only the interest is paid off.
  • line of credit (LOC)   A commitment by a financial institution to lend up to a specified maximum amount to a customer during a specified period of time.
  • revolver   A term credit card issuers use for card holders who roll over part of the bill to the next month, instead of paying off the balance in full each month. About seven out of 10 cardholders revolve the debt.
  • revolving line of credit (RLOC)   An agreement to lend a specific amount to a borrower, and to allow that amount to be borrowed again once it has been repaid. Most credit cards offer revolving credit.

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