Credit

The ability of a person to borrow money, or buy good by paying over time. Credit is extended based on a lender's good opinion of the person's financial situation and reliability.

An agreement that a person will borrow money and repay it to the lender over time.

Credit generally refers to the ability of a person or organization to borrow money, as well as the arrangements that are made for repaying the loan and the terms of the repayment schedule.

If you are well qualified to obtain a loan, you are said to be credit-worthy.

Credit is also used to mean positive cash entries in an account. For example, your bank account may be credited with interest. In this sense, a credit is the opposite of a debit, which means money is taken from your account.

The dollar limit or range a party is willing to extend to a counterparty for doing business or transactions without demanding cash upfront (e.g. party A may agree to grant party B a credit limit of $1 million, allowing B to owe A up to $1 million for any number of transactions. As existing obligations are paid off, B can build up its debt with A with more transactions up to the credit limit. The credit limit is usually mutual between parties. For centralized exchanges, standard credit procedures and criteria are followed, along credit collateral or margining requirements as thresholds are crossed. Increasingly, bilateral transactions also have collateral thresholds and collateral calls).