A creditor is an individual or institution that lends money or extends credit to another party, known as the debtor. Creditors expect to be repaid, usually with interest, over a specified period. Common types of creditors include banks, credit card companies, and private lenders. When a debtor borrows money, they create a legal obligation to repay the creditor. This relationship is often formalized through contracts, which outline the terms of the loan, including repayment schedules and interest rates. If a debtor fails to repay, the creditor may take legal action to recover the owed amount.