Credit systems are financial frameworks that allow individuals or businesses to borrow money or access goods and services with a promise to pay back later, often with interest. These systems are used by banks, lending institutions, and retailers to facilitate transactions. In a credit system, the borrower is given a credit limit based on their financial history, and they agree to repay the amount over time, typically in installments. The amount borrowed is called the principal, and any additional cost is called interest. Credit can be secured (backed by collateral) or unsecured (not backed by collateral). Credit systems are vital for economic growth because they allow for immediate consumption or investment, even when one doesn’t have all the funds upfront.