Credit

When it comes to borrowing money, credit is often considered a loan given to someone by another person. In order for a loan to be successful, the borrower will have to repay the lender through payment of interest. The lender will usually make their claim on any assets or property as repayment.

In financial accounting, debit and credit are used to record the effects of transactions when it comes to money. These methods are commonly used for recording transactions between two parties, where each person accepts liability or accepts an asset from the other.

Any difference between the value of these transactions is credited or debited to another party. The main difference between debit and credit is that a credit transaction will result in an increase in assets while a debit transaction increases liabilities or decreases assets.