What is credit and why is it important?

Credit refers to an arrangement in which a lender provides funds to a borrower with the expectation that the borrower will repay the funds over time, usually with interest. Credit is important because it enables individuals and businesses to make purchases and investments that they might not be able to afford with their own cash on hand. It allows for the transfer of funds from savers to borrowers, enabling economic growth and development. Credit can take many forms, including credit cards, personal loans, mortgages, and business loans, among others. However, it is important to use credit responsibly and make timely payments to maintain good creditworthiness.