credit

credit granting of goods, services, or money in return for a promise of future payment. Most credit is accompanied by an interest charge, which usually makes the future payment greater than an immediate payment would have been. The credit system is founded upon the lender's confidence in the borrower or in his collateral and general possessions. Credit may be classified according to the industry using it, its quality or liquidity, or the length of time for which it is extended. Basically there are two kinds, business and consumer. The chief function of business credit is the transference of capital from those who own it to those who can use it, in the expectation that the profit from its use will exceed the interest payable on the loan. Thus business credit increases the productive power of capital. Consumer credit permits the purchase of retail commodities without the use of cash or with the use of relatively little cash. It is estimated that some 90% of all wholesalers' and manufacturers' sales, and more than 30% of all retail sales are made on a credit basis. In the larger banks, credit-analysis departments determine the amount of credit that may safely be given to loan applicants. Data as to credit risk are supplied by agencies organized for that purpose. The chief agency in the United States is Dun and Bradstreet, formed by a merger (1933) of R. G. Dun & Company (1841) and the Bradstreet Company (1849). If more credit is granted than the community can liquidate, there is inflation; if too little is granted, there is deflation. A lack of business confidence may cause credit to dissolve, thereby contributing to economic crises, panics, and depressions. In bookkeeping , the credit side is the side of the account on which payments are entered; hence, the term credit is sometimes applied to the payments themselves. See credit card ; debt ; debt, public ; installment buying and selling .

Bibliography: See F. T. Juster, Household Capital Formation and Financing, 1897-1962 (1966); W. E. Dunkman, Money, Credit, and Banking (1970); F. Ando, An Analysis of Access to Bank Credit (1988).

cred·it / ˈkredit/ • n. 1. the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future. ∎  the money lent or made available under such an arrangement: the bank refused to extend their credit | [as adj.] exceeding his credit limit. 2. an entry recording a sum received, listed on the right-hand side or column of an account.The opposite of debit. ∎  a payment received. 3. public acknowledgment or praise, typically that given or received when a person's responsibility for an action or idea becomes or is made apparent: the president claims credit for each accomplishment. ∎  [in sing.] a source of pride, typically someone or something that reflects well on another person or organization: he's a credit to his mother. ∎  (usu. credits) an acknowledgment of a contributor's services to a movie or a television program, typically one of a list that is scrolled down the screen at the beginning or end of a movie or program. 4. the acknowledgment of a student's completion of a course that counts toward a degree or diploma as maintained in a school's records: a student can earn one unit of academic credit. ∎  a unit of study counting toward a degree or diploma: in his first semester he earned 17 credits. ∎  acknowledgment of merit in an examination which is reflected in the grades awarded: students will receive credit for accuracy. 5. archaic the quality of being believed or credited: the philosophy of Cicero has lost its credit. ∎  favorable estimation; good reputation. • v. (cred·it·ed , cred·it·ing ) [tr.] (often be credited) 1. publicly acknowledge someone as a participant in the production of (something published or broadcast). ∎  (credit someone with) ascribe (an achievement or good quality) to someone. 2. add (an amount of money) to an account. 3. believe (something surprising or unlikely). PHRASES: do someone credit (or do credit to someone) make someone worthy of praise or respect: your concern does you credit. give someone credit for commend someone for (a quality or achievement), esp. with reluctance or surprise: please give me credit for some sense. have something to one's credit have achieved something notable: he has 65 tournament wins to his credit. on credit with an arrangement to pay later. to one's credit used to indicate that something praiseworthy has been achieved, esp. despite difficulties: to her credit, she had never betrayed a confidence. ORIGIN: mid 16th cent. (originally in the senses ‘belief,’ ‘credibility’): from French crédit, probably via Italian credito from Latin creditum, neuter past participle of credere ‘believe, trust.’