Credit Meaning: From Loans and Bank Entries to Praise

Credit meaning: the main senses

1. Borrowing on trust. An arrangement to receive something now and pay later: a credit card, a loan, a line of credit, buying on credit.
2. Creditworthiness. How trustworthy you look as a borrower, often summed up in a credit score or credit history. "Good credit" makes loans easier and cheaper.
3. Money added to an account. "Your salary will be credited on the first." In bookkeeping a credit is an entry on the right side of an account.
4. Praise or recognition. "Give credit where it's due." "To his credit, he admitted the mistake."
5. A unit of study. "This course is worth four credits." Common in US colleges and now in many Indian universities.
6. Names of contributors. The list at the end of a show or the start of a book, called the credits.
7. Belief. "I give no credit to that rumour." This older sense survives in phrases like lend credit to.

As a verb, credit means to add money to an account, to believe something, or to say someone is responsible: "The invention is credited to a small team of engineers."

Examples of credit in sentences

• The refund was credited to my account two days after I returned the shoes.
• Many small shops in India let regular customers buy groceries on credit until payday.
• The project lead made sure the interns got credit in the final report.
• I need six more credits to graduate this year.
• Missing several card payments can hurt your credit for years.

How credit works: a simple example

Suppose you buy a phone for 30,000 rupees on a credit card. The card company pays the shop straight away. You now owe the card company. If you pay the full bill by the due date, many cards charge no interest. If you pay only part, interest is usually added to the unpaid balance each month, and the phone ends up costing more than its sticker amount.

Lenders look at your credit history (have you repaid on time?) to decide whether to lend and at what rate. In the US this is often a three digit credit score from a credit bureau; India has credit bureaus and scores too, which banks check for loans and cards. Paying on time and not borrowing close to your limit generally help.

Credit is closely tied to collateral (an asset pledged for a loan) and to a mortgage, which is long term credit for buying property.

Credit vs debit

In accounting, credits and debits are not simply good or bad. A credit raises some accounts (income, liabilities) and lowers others (assets), which confuses many beginners. For the full picture see debit.

Phrases with credit

• Give someone credit (for): acknowledge their effort or quality. "Give her credit for trying."
• To someone's credit: used before something that reflects well on them.
• Be a credit to: bring honour to. "You are a credit to your school."
• Take credit for: claim praise, sometimes unfairly.
• Tax credit: an amount taken directly off the tax you owe.
• Store credit: a balance you can spend at one shop, often given instead of a cash refund.
• Extra credit: bonus marks in US schools for additional work.

Belief at the root

English took credit from French in the 1500s, from Italian and ultimately Latin creditum, "a loan, something entrusted", the past participle of credere, "to believe, to trust". The same root gives credible, creed, credentials and incredible. A lender who gives you credit literally believes you will pay. The praise sense grew from the same idea: to credit someone is to believe in what they did. Browse our finance word hub for more terms like this.