Credit is a prevision of resources granted by a lender in which the receiving party does not immediately reimburse the lender and instead agrees to repay the lender at a later date, often times in an amount greater than the initial debt.
Credit by itself simply refers to a situation where something of value such as cash, a home, or a vehicle is given in exchange for a promise of payment. When most people think about the term credit, however, they think of a credit rating and whether they have good credit or bad credit.
In today’s credit driven society, credit is necessary because people rarely have the immediate cash available to make large purchases such as a new home.
The ability receive credit is predicated on your credit rating and the more responsibly you have managed credit in the past, based on a lender’s assessment of your credit history, the more credit your can qualify for and the less you will have to pay in interest rates.