In bookkeeping and accounting, a credit could refer to the entry on the right side of a T-account. A credit could also be a verb that means the act of recording an amount on the right side of a T-account.

A credit entry in an asset account will reduce the account’s usual debit entry.  A credit entry in a revenue, liability, or owner’s equity account will increase the usual credit balance.

A credit could also mean your bank has increased your bank account balance. Your bank account is a liability for your bank and when your bank account increases, your bank has a larger obligation to you.

Credit can also refer to loans, such as line of credit, letter of credit, credit rating, as so on.

Learn more about Debits and Credits.

About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the creator of the AccountingCoach Pro which has been praised for its ability to simplify accounting in a way that anybody can understand.

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