<PAGE>
                                  FORM 10-Q
                      SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C.  20549

(Mark One)
( X )     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the quarterly period ended:  September 30, 1996
                                      OR
(   )     Transition Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934
          For the transition period from :                 to

Commission file number:  1-8133

                           XEROX CREDIT CORPORATION
            (Exact name of Registrant as specified in its charter)
Delaware                                                           06-1024525
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                            Identification No.)

100 First Stamford Place, Stamford, Connecticut                         06904
(Address of principal executive offices)                           (Zip Code)

                                (203) 325-6600
             (Registrant's telephone number, including area code)

      Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class                 Name of Each Exchange on Which Registered

10% Notes due 1999                  New York Stock Exchange


      Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the Registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
Registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.     Yes:     X         No:

Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as of the close of the latest practicable date.

   Class                                Outstanding as of October 31, 1996
Common Stock                                            2,000

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1)(a) 
AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED 
DISCLOSURE FORMAT.



                                      THIS DOCUMENT CONSISTS OF 12 PAGES








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PART 1.   FINANCIAL INFORMATION
Item 1.   Financial Statements


                           XEROX CREDIT CORPORATION
                      CONSOLIDATED STATEMENTS OF INCOME

                                (In Millions)


                                       Three Months Ended   Nine Months Ended
                                          September 30,        September 30,
                                          1996     1995        1996     1995
Earned income:

   Contracts and notes receivable       $   83   $   87    $    256   $  267

Expenses:

   Interest                                 49       57         152      165
   Operating and administrative              3        3          10       10

      Total expenses                        52       60         162      175

Income before income taxes                  31       27          94       92

Provision for income taxes                  13       11          38       37


Net income                             $    18  $    16    $     56   $   55


See accompanying notes.































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                           XEROX CREDIT CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                                 (In Millions)

                                     ASSETS
                                                  September 30,  December 31,
                                                          1996          1995

Cash and cash equivalents                              $     -       $     -

Investments:
    Contracts receivable                                 4,104         4,084
    Notes receivable - Xerox and affiliates                134           189
    Unearned income                                       (509)         (495)
    Allowance for losses                                  (107)         (127)
        Total investments                                3,622         3,651

Net assets of discontinued operations                      161           183
Deferred income taxes and other assets                       1             3

        Total assets                                   $ 3,784       $ 3,837


                      LIABILITIES AND SHAREHOLDER'S EQUITY

Liabilities:
    Notes payable within one year:
      Commercial paper                                 $ 1,030       $   875
      Current portion of notes payable after one year      909           868
    Notes payable after one year                         1,184         1,411
    Notes payable after one year-Xerox and affiliates       75            75
    Due to Xerox Corporation, net                           47            52
    Other liabilities                                       44            56

        Total liabilities                                3,289         3,337

Shareholder's Equity:
    Common stock, no par value, 2,000 shares
        authorized, issued, and outstanding                 23            23
    Additional paid-in capital                             219           219
    Retained earnings                                      253           258

        Total shareholder's equity                         495           500

        Total liabilities and shareholder's equity     $ 3,784       $ 3,837
           



See accompanying notes.














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                              XEROX CREDIT CORPORATION
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                     
                                   (In Millions)

                                                           Nine Months Ended
                                                              September 30,
                                                             1996      1995
Cash Flows from Operating Activities
  Net income                                               $   56    $   55
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:

    Net change in operating assets and liabilities             40       (80)
 
Net cash provided by (used in) operating activities            96       (25)

Cash Flows from Investing Activities
  Purchases of investments                                 (1,364)   (1,166)
  Proceeds from investments                                 1,338     1,297
  Net collections from discontinued operations                 22        19
 
Net cash (used in) provided by investing activities            (4)      150

Cash Flows from Financing Activities
  Change in short-term debt, net                              155      (703)
  Proceeds from long-term debt                                600     1,033
  Principal payments of long-term debt                       (786)     (400)
  Dividends                                                   (61)      (55)

Net cash used in financing activities                         (92)     (125)


  Increase in cash and cash equivalents                         -         -

  Cash and cash equivalents, beginning of period                -         -

  Cash and cash equivalents, end of period                 $    -    $    -



Supplemental disclosure of non-cash activities:
  In 1995, the Company dividended its $74 million investment in Xerox 
  Financial Services Life Insurance Company to its parent company. The parent 
  company then made a capital contribution of $74 million by issuing a $74 
  million interest bearing note to the Company.


See accompanying notes.














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                           XEROX CREDIT CORPORATION
                  Notes to Consolidated Financial Statements


(1)  The consolidated financial statements presented herein have been
     prepared by Xerox Credit Corporation (the "Company") in accordance with
     the accounting policies described in its Annual Report on Form 10-K for
     the fiscal year ended December 31, 1995 and should be read in
     conjunction with the Notes to Consolidated Financial Statements which
     appear in that report.

     In the opinion of management, all adjustments (consisting only of normal
     recurring adjustments) which are necessary for a fair statement of the
     operating results for the interim periods presented have been made.

     Interim financial data presented herein are unaudited.

     Certain prior year balances have been reclassified to conform to the
     current year presentation.

(2)  During the first nine months of 1996, the Company redeemed the following
     notes (in millions):

     At Maturity
     6.25% Notes                      $ 200
     5.27% Notes                         25
     5.28% Notes                         25
     5.20% Notes                         50
     Variable Rate Notes                285

     Prior to Maturity, at par
     10.125% Notes                      150
     Variable Rate Notes                 50

     Total debt redeemed               $785

(3)  During the first nine months of 1996, the Company sold an aggregate of
     $600 million in principal amount of medium-term notes.  Of this amount,
     $200 million are floating rate notes which mature in 1998 and bear an
     interest rate based on a spread to the U.S. Federal Funds Rate.  Of the
     remaining $400 million, $250 million are fixed-rate notes which mature
     in 1997, 2001, and 2011, and $150 million are fixed-rate Euronotes which 
     mature in 1999.  The interest rates on all of this debt have been 
     swapped into commercial paper or Libor-based rates.

(4)  The terms of a Support Agreement with Xerox provide that the Company
     will receive from Xerox income maintenance payments, to the extent
     necessary, so that the Company's earnings shall not be less than 1.25 
     times its fixed charges. For purposes of this calculation, both 
     earnings and fixed charges are as defined in Section 1404 (formerly 
     Section 81(2)) of the New York Insurance Law.  In addition, the 
     agreement requires that Xerox retain 100 percent ownership of the 
     Company's voting capital stock.










(5)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
            Results of Operations

RESULTS OF OPERATIONS
                           Continuing Operations

      Contracts receivable income represents income earned under an agreement 
with Xerox pursuant to which the Company purchases long-term accounts 
receivable associated with Xerox' sold equipment.  The Company purchases from 
Xerox all contract receivables due from the Federal Government and commercial 
customers.  These receivables arise primarily from Xerox equipment sold under 
installment sales and sales-type leases.  New receivables are purchased 
monthly.  The purchase price of the receivables is calculated as the present 
value of the future cash flows.  The interest rate utilized to discount the 
cash flows is determined by certain referenced interest rates plus a 
prescribed spread.  The interest rate utilized for the cost calculation is 
adjusted monthly as each new portfolio of receivables is purchased.  

      Earned income from contracts receivable for the third quarter of 1996 
was $83 million versus $87 million in the corresponding period in 1995, and 
$256 million and $267 million for the nine-month periods ended September 30, 
1996 and 1995, respectively.  The decrease is primarily due to a smaller 
average portfolio of contracts receivable in, 1996 than in 1995 and a 
reduction in the interest rate spread on purchased contracts.  The smaller 
portfolio is primarily due to relatively lower equipment sales by Xerox in 
the second half of 1995 resulting from a realignment of the Xerox United 
States Customer Operations sales force. 

      Third quarter interest expense decreased to $49 million in the third 
quarter of 1996 from $57 million in the same period in 1995.  For the nine-
month period ended September 30, 1996, interest expense decreased to $152 
million from $165 million in 1995.   This decrease is principally 
attributable to a more favorable interest rate environment and debt 
reductions related to smaller Xerox and third-party portfolios.     Since 
substantially all of the Company's contracts receivable earn fixed rates of 
interest, the Company "match funds" the contracts by swapping variable-rate 
commercial paper and medium term notes into fixed rates of interest for 
specified maturities.  This process is employed because it effectively "locks 
in" a spread and eliminates the risk of shrinking interest margins in a 
rising interest rate environment.  Conversely, this practice effectively 
eliminates the opportunity to increase margins when interest rates are 
declining.  The Company intends to continue to match its contracts receivable 
and indebtedness in order to ensure an adequate spread between interest 
income and interest expense.

      Operating and administrative expenses were $3 million for both the 
third quarter of 1996 and the third quarter of 1995. For each of the nine-
month periods ended September 30, 1995 and 1994, operating and administrative 
expenses totaled $10 million.  These expenses are primarily the costs to 
administer the contracts receivable purchased from Xerox.

      The effective income tax rate for continuing operations for the
first nine months of 1996 and 1995, was 40.4 percent and 40.2 percent, 
respectively.











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                           XEROX CREDIT CORPORATION
                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                RESULTS OF OPERATIONS AND FINANCIAL CONDITION
                                 (Continued)


                           Discontinued Operations

      Since their discontinuance in 1990, the Company has made substantial 
progress in disengaging from the real estate and third-party financing 
businesses.  Through September 30, 1996, the Company received net cash 
proceeds of $2,467 million from the sale of discontinued business units, 
asset securitizations, sales, and runoff collection activities.  The amounts 
received have been consistent with the Company's estimates in the disposal 
plan and were primarily used to reduce the Company's short-term indebtedness.

     During the first nine months of 1996, the Company reduced its net assets 
of discontinued operations by approximately $22 million, primarily through 
contractual maturities and the sale of one of its subsidiaries.

     Since approximately $51 million of the remaining assets represent 
passive lease receivables, many with long-duration contractual maturities and 
unique tax attributes, the Company expects that the wind-down of the 
portfolio will continue to be a gradual process.  The Company believes that 
the liquidation of the remaining assets will not result in a net loss.

CAPITAL RESOURCES AND LIQUIDITY

      The Company's principal sources of funds are cash from the collection 
of Xerox contracts receivable and borrowings.

      At September 30, 1996 the Company and Xerox have joint access to a $5 
billion revolving credit agreement with various banks, which expires in 2000 
and is used to support commercial paper issuance.  Any amounts borrowed under 
this facility would be at rates based, at the borrower's option, on spreads 
above certain reference rates such as Libor and Federal funds rates.

     At September 30, 1996, the Company had registered domestic shelf debt 
capacity of $1 billion of which $550 million remained unused.  In addition, a 
$2 billion Euro-debt facility is available to both Xerox and the Company of 
which $1,397 million remained unused at September 30, 1996.

      Cash provided by operating activities was $96 million in the first nine 
months of 1996, compared to $25 million used in operating activities during 
the same period in 1995.  The change is primarily due to increased  
intercompany receipts in 1996.

      Cash used by investing activities was $4 million during the first nine 
months of 1996, compared with $150 million provided during the same period in 
1995.  The change primarily results from increased net purchases of assets 
from Xerox in the first nine months of 1996 over the first nine months of 
1995.  The increase is primarily due to relatively higher equipment sales by 
Xerox in 1996 resulting from the stabilization of Xerox' United States 
Customer Operations sales force after its 1995 realignment. 

      Cash used in financing activities was $92 million in the first nine 
months of 1996 compared to $125 million during the same period in 1995.  This 
change results from the increase in contracts receivable purchased from Xerox 
in 1996 offset by the higher intercompany receipts.





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                          XEROX CREDIT CORPORATION
                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                RESULTS OF OPERATIONS AND FINANCIAL CONDITION
                                 (Continued)



      The Company believes that cash provided by continuing operations, cash 
available under its commercial paper program supported by its credit 
facility, and its readily available access to the capital markets are more 
than sufficient for its funding needs.  New borrowing associated with the 
financing of customer purchases of Xerox equipment will continue and 
decisions regarding the size and timing of any new term debt financing will 
be made based on cash flows, refinancing requirements and capital market 
conditions.

     The Company intends to continue to match fund its contracts receivable.  
To assist in managing its interest rate exposure, the Company has entered 
into a number of interest rate swap agreements.  In general, the Company's 
objective is to hedge its variable-rate debt by paying fixed rates under the 
swap agreements while receiving variable-rate payments in return.  
Additionally, in order to better match the duration of its assets, the 
Company issues variable-rate and fixed-rate medium term notes which are 
swapped to commercial paper or Libor or Libor-based rates.








































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                           XEROX CREDIT CORPORATION


PART II.  OTHER INFORMATION


Item 1.   Legal Proceedings

          None.


Item 6.   Exhibits and Reports on Form 8-K

          (a)   Exhibits


                Exhibit 3 (a)  Articles of Incorporation of Registrant filed
                               with the Secretary of State of Delaware on 
                               June 23, 1980.

                               Incorporated by reference to Exhibit 3(a)
                               to Registration Statement No. 2-71503.

                          (b)  By-Laws of Registrant, as amended through
                               July 18, 1991.

                               Incorporated by reference to Exhibit 3(b) to
                               Registrant's Quarterly Report on Form 10-Q 
                               for the quarter ended June 30, 1991.


                Exhibit 12 (a) Computation of the Company's Ratio of Earnings
                               to Fixed Charges.

                           (b) Computation of Xerox' Ratio of Earnings
                               to Fixed Charges.

                Exhibit 27  Financial Data Schedule (Electronic Form Only)

          (b)   Reports on Form 8-K.

                None























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      Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                             XEROX CREDIT CORPORATION




                             BY:  /s/  George R. Roth

                             George R. Roth, Vice President,
                             Treasurer and Chief Financial Officer

                             November 7, 1996













































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