Credit also may refer to the creditworthiness or credit history of an individual or a company.

To an accountant, credit often refers to a bookkeeping entry that either increases assets or decreases liabilities and equity on a company's balance sheet.

Credit is essentially a social relation that forms between a creditor (debtor) and a borrower (lender).

The debtor promises to repay the lender, often with interest, or risk financial or legal penalties.

Extending debit is a practice that goes back thousands of years, to the dawn of human civilization.

Credit still refers to an agreement to purchase a product or service with the express promise to pay for it later. This is known as buying on credit.

A line of credit is one type of credit that comes with a capped limit and can be used up until you reach the predetermined threshold.

It may include regular minimum payments, but usually, there is not a fixed repayment schedule.

An example would be a credit card as there is a capped limit (the credit card limit), and you can keep using it until you reach such a limit (then over-limit fees apply).

Installment loans are another type of credit that includes a fixed payment schedule for a specified duration.

An example of an installment loan would be a car loan — you are required to pay a set amount of money at a recurring interval (ex. $280 per month) until the loan is paid off in full.

A type of credit that requires full payment for each period, such as per month.

You can borrow up to a maximum amount, similar to a credit card limit, but you are required to pay the funds borrowed in full at the end of each period.

An example of this would be a cellphone bill — you can make phone calls, send text messages, and use data each month, and at the end of the month, you are required to pay for the services you used (including any additional usage fees).

Other examples include mortgages, student loans, and term loans.

Another example would be a utility bill (such as electricity usage in your household).

Each month, you are required to pay P500 until the loan is paid off in full.

You are able to borrow up to P5,000 per month but must pay for all the funds borrowed each month.

You can borrow up to P2,500 per month, but you are only required to make a minimum payment (paying off the loan in full is not required).