credit

Definitions (3)

1. A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some later date. When a consumer purchases something using a credit card, they are buying on credit (receiving the item at that time, and paying back the credit card company month by month). Any time when an individual finances something with a loan (such as an automobile or a house), they are using credit in that situation as well.
2. The borrowing capacity of an individual or company.
3. A journal entry recording an increase in assets. With cash basis accounting, credits are recorded when income is received. With accrual basis accounting, credits are recorded and recognized when income is earned. Compare to Debit.

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National Foundation for Credit (NFCC) consumer credit counseling