Credit System

A credit system is a way to measure and track an individual's or entity's borrowing and repayment behavior. It assigns a numerical score based on factors like payment history, debt levels, and credit utilization. A higher score indicates responsible financial management, making it easier to qualify for loans or credit cards with favorable terms. Conversely, a lower score suggests higher risk, which may lead to higher interest rates or denial of credit. Credit systems help lenders assess risk and make informed lending decisions, while individuals can improve their credit health through consistent, responsible financial habits.