Pangasinan State University

Lingayen Campus
College of Business and Public Administration

Name: Cyrell Andrea DG. Bustarde

Section: 2-FM B
Task: Assignment no. 1

Nature of Credit

Instruction: Please include specific, concrete details from your Study Guide, Readings, Research, and
Appropriate Theories to support your answers. include references (print and online references)
1. What do you understand or know about credit?

With its definition: Credit is the ability to obtain a thing of value with the understanding
that you'll pay later. I understood that it creates an obligation to pay and a right to collect the
thing of a value which can be in a form of cash or merchandise. Credit ties the creditor to its
debtor and it develops a trust and confidence between two parties.

2. Cite, discuss what credit can do for the country or to an individual/company?

From what I have learned during our face-to-face discussion, credit can help individuals
to lessen their burden while purchasing. With credit, you don’t have to spend all your savings.
You can borrow money and pay it in the future. Credit can also save individuals during their
emergency situations. And as for the company and our country, credit is also good. It is part of
the company’s financial power. Working to improve their credit helps ensure their qualification
for loans whenever they need them. It is referred as credit score in which the higher the score, the
better a borrower looks to potential lenders.

3. What macro-economic factors have effects on the use or enforcement of one’s credit

One of the foundations of credit is the stability of monetary standard in which the stability of
our money is considered when extending credit. For example, there is an inflation where money
supply increases, prices increases and the value of our money decreases. This macro-economic
factor can affect the approval of credit because creditors may be hesitant to approved credit when
there are wide fluctuations of money value.
On the other hand, this can also benefit debtor who already owed money before the
inflation occurred. This is because the borrower still owes the same amount of money, but
now they have more money in their paycheck to pay off the debt. Lastly, this will also help
lenders when extending new financing. Higher prices means that more people want credit to
purchase luxury items, and the higher prices of those items earn the lender more interest.

4. Is there such a thing as no-nonsense credit and collection use of credit?

 From browsing the internet, I think that there is such a thing as no-nonsense credit and
collection use of credit and it is actually a book authored by Numeriano Erdulfo S. Sison in which
it discusses improving profitability through no-nonsense credit and collection operation.

REFERENCES

Francis Philip Duremdes Doromal Follow. (n.d.). Imroving profitability through NNCC
operation. Share and Discover Knowledge on SlideShare. Retrieved March 7, 2023, from
https://www.slideshare.net/PhilipDoromal/imroving-profitability-through-nncc-operation

Segal, T. (2022, November 22). Does inflation favor lenders or borrowers? Investopedia.
Retrieved March 7, 2023, from https://www.investopedia.com/ask/answers/111414/does-
inflation-favor-lenders-or-borrowers.asp

Team, T. I. (2023, January 13). Credit score: Definition, factors, and improving it. Investopedia.
Retrieved March 7, 2023, from https://www.investopedia.com/terms/c/credit_score.asp

What is credit and why is it important? - great lakes. My Great Lakes. (n.d.). Retrieved March 7,
2023, from https://mygreatlakes.org/educate/knowledge-center/credit.html