(From the Latin credere, to believe.) Delivery of goods in confidence of future payment; deferring a payment. This is nothing more nor less than confidence which one has inspired among others as to his honesty and intent to meet his obligations, with every human probability of his doing so. It enables him to borrow money on his simple written promise to pay; to obtain goods to be paid for later; and is the foundation of all business. "Credit," said Daniel Webster, "is the vital air of the whole system of modern business."
Lyman J. Gage declared that, " next to production and the means of transportation, credit (through which the products of industry are exchanged) is the most important operating factor in our business life."
Conant believes one of the simplest definitions of "credit" to be that of Devas; i. e. "Agreed postponement of payments in currency." He considers, however, this definition of Tucker's the best: " The transfer of something valuable to another, whether money, goods, or services, in the confidence that he will be both willing and able, at a future day, to pay its equivalent."
Conant also declares that the fundamental elements of "credit" are confidence and time.
In bookkeeping the credit side of an account is that on which is entered the credit for money received, or its equivalent. For instance, A owes B $15. That fact is entered upon the " debit " side of B's books as a charge against A. But A makes a payment of $10; this fact is entered upon the "credit" (right-hand) side of B's account, showing a credit to A of the amount.