<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, 1998
                                      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, 1998
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 14 PAGES




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To the extent that this Form 10-Q Report contains forward-looking statements 
and information relating to the Registrant, such statements are based on the 
beliefs of management as well as assumptions made by and information currently 
available to management.  The words "anticipate," "believe," "estimate," 
"expect," "intends", "will" and similar expressions, as they relate to the 
Registrant or the Registrant's management, are intended to identify forward-
looking statements.  Such statements reflect the current views of the 
Registrant with respect to future events and are subject to certain risks, 
uncertainties and assumptions.  Should one or more of these risks or 
uncertainties materialize, or should underlying assumptions prove incorrect, 
actual results may vary materially from those described herein as anticipated, 
believed, estimated or expected.  The Registrant does not intend to update 
these forward-looking statements.














































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                       XEROX CREDIT CORPORATION
                               Form 10-Q
                          September 30, 1998

Table of Contents
                                                             Page
Part I -  Financial Information

   Item 1. Financial Statements

      Consolidated Statements of Income                         4

      Consolidated Balance Sheets                               5

      Consolidated Statements of Cash Flows                     6

      Notes to Consolidated Financial Statements                7

   Item 2. Management's Discussion and Analysis of Results of
     Operations and Financial Condition

      Continuing Operations                                     8

      Discontinued Operations                                   9

      Capital Resources and Liquidity                           9


Part II - Other Information

   Item 1. Legal Proceedings                                   11

   Item 6. Exhibits and Reports on Form 8-K                    11

Signature                                                      12

Exhibits

   Computation of Ratio of Earnings to Fixed Charges (Xerox
   Credit Corporation)                                         13

   Computation of Ratio of Earnings to Fixed Charges (Xerox
   Corporation)                                                14

Financial Data Schedule           (filed in electronic form only)



                                     










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PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements


                           XEROX CREDIT CORPORATION
                       CONSOLIDATED STATEMENTS OF INCOME
                                 (Unaudited)
                                (In Millions)


                                       Three Months Ended    Nine Months Ended
                                          September 30,        September 30,
                                          1998     1997        1998     1997
Earned income:
  Contracts and notes receivable         $  97    $  85       $ 287    $ 263

Expenses:
  Interest                                  61       54         178      162
  Operating and administrative               3        2           8        8
    Total expenses                          64       56         186      170

Income before income taxes                  33       29         101       93

Provision for income taxes                  13       12          41       38

Net income                               $  20    $  17       $  60    $  55


See accompanying notes.

























 




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                           XEROX CREDIT CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                                (In Millions)


                                                  September 30,  December 31,
                                                          1998          1997
                                                      (Unaudited)
                                    ASSETS
Cash and cash equivalents                              $     -       $     -

Investments:
  Contracts receivable                                   5,366         4,796
  Notes receivable - Xerox and affiliates                   56            56
  Unearned income                                         (665)         (623)
  Allowance for losses                                    (122)         (131)
    Total investments                                    4,635         4,098

Net assets of discontinued operations                       41            58
Other assets                                                 1             2

      Total assets                                     $ 4,677       $ 4,158


                      LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
  Notes payable within one year:
    Commercial paper                                   $ 1,525       $ 1,428
    Current portion of notes payable after one year        700           795
    Notes payable - Xerox and affiliates                   550           161
  Notes payable after one year                           1,251         1,191
  Due to Xerox Corporation, net                             26            21
  Accounts payable and accrued liabilities                  34            34
  Deferred income taxes                                     23            20
      Total liabilities                                  4,109         3,650

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                                        326           266
    Total shareholder's equity                             568           508

      Total liabilities and shareholder's equity       $ 4,677       $ 4,158


See accompanying notes.









 


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


                                                             Nine Months Ended
                                                               September 30,
                                                              1998      1997
Cash Flows from Operating Activities
  Net income                                                $   60    $   55
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Net change in operating assets and liabilities               9        32
      Net cash provided by operating activities                 69        87

Cash Flows from Investing Activities
  Purchases of investments                                  (1,902)   (1,462)
  Proceeds from investments                                  1,365     1,274
  Net collections from discontinued operations                  17        61
      Net cash used in investing activities                   (520)     (127)

Cash Flows from Financing Activities
  Change in commercial paper, net                               97       320
  Change in notes with Xerox and affiliates, net               389       (21)
  Proceeds from long-term debt                                 635       648
  Principal payments on long-term debt                        (670)     (866)
  Dividends                                                      -       (41)
      Net cash provided by financing activities                451        40

Increase in cash and cash equivalents                            -         -

Cash and cash equivalents, beginning of period                   -         -

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


See accompanying notes.





















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                           XEROX CREDIT CORPORATION
                  Notes to Consolidated Financial Statements


(1)  The unaudited consolidated interim 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, 1997 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.  Certain 
prior year balances have been reclassified to conform to the current year 
presentation.

(2)  During the first nine months of 1998, the Company redeemed the following 
term debt (in millions):

  7.125% notes                         $100
  15.00% notes                           50
  Variable rate notes                   320
    Total debt redeemed at maturity     470
  Redeemed prior to maturity            200
      Total debt redeemed              $670

(3)  During the first nine months of 1998, the Company sold at various dates a 
total of $110 million of fixed and adjustable-rate notes which mature at 
various dates in 2008, 2013, and 2018, and are first callable in 2000.  The 
company also sold $225 million of fixed rate notes which mature in 2000.  The 
interest rates on all of these notes have been swapped into LIBOR-based rates.

In addition, the Company sold $300 million of Libor-based notes which mature 
in 1999.

(4)  The terms of a Support Agreement with Xerox provide that the Company will 
receive income maintenance payments from Xerox, 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)   Effective January 1, 1998, the Company adopted Statement of Financial 
Accounting Standards No. 130, "Reporting Comprehensive Income."  This 
Statement requires that companies disclose comprehensive income, which 
includes net income, foreign currency translation adjustments, minimum pension 
liability adjustments, and unrealized gains and losses on marketable 
securities classified as available-for-sale.  For the Company, comprehensive 
income is the same as net income.









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                           XEROX CREDIT CORPORATION

Item 2.  Management's Discussion and Analysis of Results of Operations and 
Financial Condition  

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.  These receivables arise primarily from 
Xerox equipment sold under installment sales and sales-type leases.

Earned income from contracts and notes receivable was $97 million and $85 
million for the third quarter of 1998 and 1997, respectively, and $287 million 
and $263 million for the first nine months of 1998 and 1997, respectively.  
The increase was due to a higher average portfolio of contracts receivable in 
1998 than in 1997, which was partially offset by a lower average interest 
rate.

Interest expense was $61 million and $54 million for the third quarter of 1998 
and 1997, respectively, and $178 million and $162 million for the first nine 
months of 1998 and 1997, respectively.  The increase was primarily due to the 
increase in debt related to the larger average portfolio of contracts 
receivable in 1998, which was partially offset by a decrease in the cost of 
funds.

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 interest rates for specified 
maturities.  This practice 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 
to ensure an adequate spread between interest income and interest expense.

Operating and administrative expenses were $8 million for the first nine 
months of both 1998 and 1997.  These expenses include billing, collection and 
other administrative costs related to the administration of the contracts 
receivable purchased from Xerox. 

The effective income tax rate was 40.5 percent and 40.9 percent for the first 
nine months of 1998 and 1997, respectively.

The Year 2000  problem is the result of computer programs written in two 
digits, rather than four, to define the applicable year.  As a result, many 
information systems are unable to properly recognize and process date-
sensitive information beyond December 31, 1999. The Company has no Information 
Technology or Non-Information Technology systems of its own which might 
require remediation.  The  Company contracts with Xerox to provide billing and 
collection services for all of the receivables that it purchases from Xerox.  
In addition, the Company's business is significantly dependent on the 
continuing ability of Xerox to sell and lease products to customers.   As with
all major companies, certain of the information systems and products of Xerox 
require remediation over the next year in order to render these systems Year 
2000 compliant.  For detailed information regarding Xerox' Year 2000 
readiness, reference is made to the Form 10-Q of Xerox for the fiscal quarter

                                      (8)
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ended September 30, 1998 as filed with the Securities and Exchange Commission. 
The Company has no independent readiness or contingency plans and does not 
intend to create any. If Xerox' remediation plans or replacements are not 
completed in a timely manner, the Year 2000 problem could potentially have a 
material adverse impact on the Company's operations.  Possible worst case 
consequences could include: an interruption in our ability to bill and apply 
collections on the accounts receivable owned by the Company; an interruption 
in our ability to meet our cash requirement needs; and a significant reduction 
in the amount of accounts receivable purchased from Xerox causing a reduction 
in the Company's income.

In June 1998, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities."  SFAS No. 133 requires companies to 
recognize all derivatives as assets or liabilities measured at their fair 
value. Gains or losses resulting from changes in the values of those 
derivatives would be accounted for depending on the use of the derivative and 
whether it qualifies for hedge accounting.   The Company's interest rate swap 
contracts hedge cash flow exposures.  The accounting for such cash flow hedges
under SFAS No. 133 will require the Company to record adjustments to other 
comprehensive income, including an adjustment at transition. The Company does 
not expect the implementation of this Statement to have a material effect on 
its results of operations or financial condition, although shareholders' equity 
volitility will increase. This Statement is effective for fiscal years
beginning after June 15, 1999.  The Company will adopt this accounting standard 
beginning January 1, 2000.

                           Discontinued Operations

Since their discontinuance in 1990, the Company has made substantial progress 
in disengaging from the third party financing and real estate businesses.  
Through September 30, 1998, the Company has received net cash proceeds of 
$2,588 million from the sale of discontinued business units, asset 
securitizations, asset sales, and run-off collection activities.  The amounts 
received have been consistent with the Company's estimates in its disposal 
plan and were primarily used to reduce the Company's indebtedness.

During the first nine months of 1998 and 1997, the Company reduced net assets 
of discontinued operations by $17 million and $61 million, respectively, 
primarily through contractual maturities and cash sales.

The remaining $41 million portfolio represents passive lease receivables with 
long-duration contractual maturities and unique tax attributes as well as 
other third party financing investments.  Accordingly, 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.

Net cash provided by operating activities was $69 million and $87 million in 
the first nine months of 1998 and 1997, respectively.  The decline in 1998 
resulted from an increase in intercompany settlements partially offset by 
higher net income. 

Net cash used in investing activities was $520 million and $127 million during 
the first nine months of 1998 and 1997, respectively.  The increase was the

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result of more contracts receivable purchased in 1998 than in 1997. The net 
proceeds from contracts grew at a slower rate than the growth in purchases of 
contracts primarily due to an increase in the length of the average contract 
originated in 1998 versus the prior year. Cash collections related to 
discontinued assets were lower as the asset base continued to decline due to 
sales and contractual maturities. 

Net cash provided by financing activities was $451 million and $40 million in 
the first nine months of 1998 and 1997, respectively.  The increase was 
largely a result of lower principal repayments.  Higher amounts of notes 
payable to Xerox and affiliates more then offset lower cash provided by 
commercial paper borrowings.  Also contributing to the increase was the 
absence of dividend payments to Xerox during the first nine months of 1998 
given the Company's need for equity capital to support its accelerated growth.

At September 30, 1998, the Company had registered domestic shelf capacity of 
$1,240 million.  In addition, a $2 billion Euro-debt facility is available to 
the Company, Xerox and Xerox Capital (Europe) plc ("Xerox Capital"), of which 
$993 million was unused at September 30, 1998.

The Company and Xerox have joint access to a $7 billion revolving credit 
agreement with various banks, which expires in 2002.  Up to $4 billion of this 
revolver is also accessible by Xerox Capital. Any amounts borrowed under this 
facility would be at rates based, at the borrower's option, on spreads above 
certain LIBOR reference rates.

The Company believes that cash provided by continuing operations, funding 
available through its commercial paper program supported by its committed 
credit facility, and its readily available access to the capital markets are 
more than sufficient to enable the Company to meet its liquidity needs.  New 
borrowing associated with the financing of customer purchases of Xerox 
equipment is expected to continue during the remainder of 1998 and decisions 
regarding the size and timing of any new term debt financing will be made 
based on cash flows, match funding needs, refinancing requirements and capital 
market conditions.

The Company is exposed to market risk from changes in interest rates that 
could affect results of operations and financial condition.  To assist in 
managing its interest rate exposure and match funding its principal assets, 
the Company routinely uses certain financial instruments, primarily 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 manage 
its outstanding commercial paper, the Company opportunistically issues 
variable and fixed-rate medium term notes, which are swapped to attractive 
LIBOR-based rates.  The Company does not enter into derivative instrument 
transactions for trading purposes and employs long-standing policies 
prescribing that derivative instruments are only to be used to achieve a set 
of very limited match funding and liquidity objectives.

During the first nine months of 1998, the Company entered into interest rate 
swap agreements that effectively convert $1,276 million of variable-rate debt 
into fixed-rate debt.  These agreements mature at various dates through 2003 
and result in a weighted average interest rate of 5.72 percent.  The Company 
also entered into interest rate swap agreements during the first nine months 
of 1998 that effectively convert $335 million of fixed and adjustable-rate 
debt into variable-rate debt indexed to LIBOR rates.  Of these, $225 million 
mature in 2000 and $110 million mature on various dates beginning in 2008 and 
ending in 2018. Each of the swaps that are scheduled to mature beyond 2000 is 
cancelable by the counterparty on interest payment dates beginning in 2000. 
Cancellation dates within the swap agreements conform to exercise dates of 
call options embedded in the Company's fixed and adjustable-rate debt.

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The Company's interest rate hedging is typically unaffected by changes in 
market conditions as variable- to fixed- rate swaps are normally held to 
maturity consistent with the Company's objective to lock in interest rate 
spreads on the underlying transactions.

As of September 30, 1998, the debt-to-equity ratio approximated 7.0 to 1.  
Under the terms of the Amended and Restated Operating Agreement, Xerox has the 
option, but no obligation, to transfer additional funds to the Company in 
order to maintain such ratio at a specific level.  No such transfers were made 
during the periods covered by this report.


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
                               September 1, 1992.

                               Incorporated by reference to Exhibit 3(b)
                               to Registrant's Quarterly Report
                               for the Quarter ended March 31, 1997.

                
                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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                                  SIGNATURE


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



November 10, 1998                      BY: /s/  George R. Roth

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









































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