In terms of the dictionary, credit is defined as being reliable in payment of debt and/or goods, money, borrowed or given. Credit in the banking sector is manifested as a combination of these two definitions. According to the banking system, credit is the money you borrow against the interest you can get to repay if you are reliable.
Interest is defined as the profit received against the money lent
Somewhere to operate. In other words, there is money that is operated and you pay a refund by adding a dividend to the lender because you are using it.
Reliability in the banking sector has a different meaning than you might think. It doesn’t make sense for your character, or for the bank how good you are. The bank understands the reliability of individuals by testing. For example, before you can be trusted with a bank, you must first be working with that bank.
When there is a certain amount of money flowing from your account, you are an active customer at the bank and the bank gives you your primary credit score. After that, you are presented with banking instruments. In small limits, credit deposit accounts and credit cards are allocated.
If you use these instruments correctly and pay your debts on time
You will gain regular customer status within the credit registry office, central bank records, and bank records. During a certain period of time (6-12 months), in the case of regular movements and repayments in your accounts, you will gain reliable customer status at the bank. And, depending on the banks’ policies, you can reach the level of reliability that can easily use loans in some types of loans.
However, whatever you do, you may be asked to document your income or even provide surety for amounts over certain limits. These requests are in limits that vary according to the internal regulations of the banks and can be applied differently to everyone. Banks’ risk analysts decide this.
It is the loan that the banks offer interest to the needy by adding a certain amount of profit to the money they receive from depositors. In other words, while the bank gets interested from one side, it pays from the other side. Of course, he will write the difference in interest between the two parties as a profit.
The profitability of a bank does not only depend on the amount of deposit it collects or the loan it gives. Because, if a bank that gives a lot of credit does not have a deposit, it may experience a crisis of losses, and if it does not collect a lot of deposit and give credit, it will lose due to the deposit interest it will pay. The idle money in the bank’s safe is not profit but loss and banks do not want active money in their safe. Of course, the second situation is not very common. Because even if the bank cannot sell loans, it can create a position that it does not hurt at least by depositing the deposits it receives.
The problem is not being able to collect more deposits
because banks can provide financing to sell loans even if they do not receive deposits thanks to their very high profitability.
In our country, the most opposite sector is the banking sector. And even in times of crisis, they continue their activities by increasing their profitability, let alone harm. Because credit is not an instrument to be preferred when it has accumulation for neither businesses nor individuals. People need credit when they get stuck or when they don’t have the savings to meet their needs.
That’s why credit is an indispensable instrument, and banks are profitable as they have this financing method. Of course, in the past, there have been banks sinking due to mismanagement and abuse in our country, but this risk is not in question since the banking system of today is located on very solid ground.
As a result, credit is a valuable financing tool that anyone can apply at any time, and banks, as intermediary institutions, are the organizations that make a profit while intermediating between the owner and the needy.