Credit Policy for businesses and how to extend credit and manage credit risk

Credit is when someone borrows money with the understanding that it will be repaid, that person has been given credit. 

Obtaining credit from a creditor has costs associated with it.  The cost is based on the interest rate and fees you will be required to pay over time as a result of being extended credit. This is in addition to the principal or amount you borrowed.

There are many forms of loans and credit and each works slightly differently.