Extension of Credit meaning

Question

I'm reading some finance literature and often when it refers to loan it instead uses these term:

• extending credit
• extension of credit
• credit extension

When I google define "credit extension", I get the following answer:

Extension of Credit means the right to defer payment of debt or to incur debt and defer its payment offered or granted primarily for personal, family, or household purposes.

Alright, it's a loan. It's someone borrowing some money and someone else lending that money. Everybody understands what loan, lend and borrow means.

What is the exact meaning of credit extension? What is it's etymology? Both credit and extension have to signify some deep concept that makes using this term preferable to just loan.

Answer 1

I think the phrase is indeed a bit misleading. In a general financial context, "extension" can mean additional time granted beyond the time originally agreed on. Here, however, the idea is that even the original offer of credit (without any subsequent change in terms) is imagined as reaching out, extending a hand as it were, to provide the loan. A definition in US banking law is:

An extension of credit is a making or renewal of any loan, a granting of a line of credit, or an extending of credit in any manner whatsoever...

An analogous phrase is "extend a job offer", which means simply "make a job offer", not necessarily anything more specific like "postpone the deadline for responding to a job offer".

Answer 2

For real etymology, see our sister site, https://english.stackexchange.com/

'Extending' is similar to 'opening' as in opening a tab. Extending credit is opening a relationship with the borrower.