A person, institution or business that has the right to demand the payment of a financial obligation from another (debtor) based on a previous agreement. The creditor has this right until the debt is paid.
There are typically three types of creditors:
- Unsecured creditors (those without guarantee of repayment),
- Secured creditors (those that hold financial or debt instruments like a mortgage or lien against someone’s debt as a type of guarantee against default) and
- Preferred creditors (those who have preferential status to collect payment of debts before others)