LET US UNDERSTAND THE TERM CREDIT !!

In financial sphere

Credit is a contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some date in the future, generally with interest. The term also refers to the borrowing capacity of an individual or company.For example, when you make a purchase at your local mall with your credit card it is considered a form of credit because you are buying goods with the understanding that you'll need to pay for them later.The credit concept can be applied in barter economies as well, based on the direct exchange of goods and services. Credit is in turn dependent on the reputation or creditworthiness of an entity which takes responsibility for the funds. 

The cost of credit  is the additional amount, over and above the amount borrowed, that the borrower has to pay. It includes interest, arrangement fees and any other charges. Some costs are mandatory, required by the lender as an integral part of the credit agreement. Other costs, such as those for credit insurance, may be optional. The borrower chooses whether or not they are included as part of the agreement.

Credit comes in many different shapes and sizes including mortgages, loans, overdrafts and credit cards.In most cases you'll have to pay an agreed amount back every month with interest i.e. EMI.

Choose your credit wisely and keep up with EMI's for a healthy credit life.