What is stringent or light credit policy?

A stringent credit policy refers to strict lending criteria that limit the availability of credit, often requiring borrowers to have high credit scores, substantial income, and low debt-to-income ratiOS. This approach minimizes risk for lenders but may restrict access to credit for many potential borrowers. Conversely, a light credit policy is more lenient, allowing a broader range of borrowers to qualify, including those with lower credit scores or less income. While this can stimulate borrowing and spending, it may also increase the risk of defaults for lenders.