AVAILABLE CREDIT Meaning and
Definition
-
Available credit refers to the amount of money or credit that a person or business can borrow or utilize from a financial institution or lender. It represents the maximum limit of funds that can be accessed in a given period of time.
This term is commonly associated with credit cards, lines of credit, or loans. When a person obtains a credit card or opens a line of credit, the financial institution assigns them a predetermined credit limit. Available credit is the portion of this limit that remains untapped or unused.
The available credit is typically computed by deducting the amount already utilized or borrowed from the total credit limit. It shows the remaining balance or capacity for further borrowing or spending.
For example, if an individual has a credit card with a limit of $5,000 and has only used $1,000, their available credit would be $4,000. This means they can still charge up to $4,000 to the card before reaching their credit limit or requiring an increase in their available credit.
Monitoring available credit is crucial as it helps individuals or businesses manage their finances effectively and avoid overspending or exceeding their credit limit. Lenders also consider the available credit when assessing creditworthiness, as it reflects the borrower's ability to manage their credit responsibly.
Etymology of AVAILABLE CREDIT
The etymology of the phrase "available credit" can be analyzed as follows:
1. Available: The word "available" comes from the Latin word "availabilis", which means "that which can be used" or "capable of being of use". It is derived from the Latin verb "avalere", which means "to be of value or use". This verb consists of the prefix "ad-" meaning "to" and the root "valere" meaning "to be strong" or "to be worth".
2. Credit: The word "credit" originates from the Latin word "credere", which means "to believe" or "to trust". It is also related to the Latin word "credo", meaning "I believe". The concept of "credit" initially referred to the belief or trust placed in someone's ability to pay back borrowed money or goods.
