Credit is borrowing money, usually to buy goods. Interest usually has to be paid on a loan. There may also be administration costs to pay, and interest may be charged on these too. A creditor is an individual or a company making a loan and may also be known as the lender.
There are some different types of credit. The most common type of credit agreement is a credit sale. Under credit sale, you buy the goods at the cash price. You usually have to pay interest but some suppliers offer interest-free credit. Repayment is made in installments. You are the legal owner of the goods as soon as the contract is made and the goods cannot be returned if you change your mind.

The supplier cannot repossess the goods if you fall behind in repayments but can take court action to recover the money owed if you are in arrears. Under a hire purchase (HP) agreement, you are technically hiring goods until you pay the final instalment. You will not own the goods until then. This means that you can end the agreement and return the goods at any time. Under a conditional sale the goods do not belong to you until you have paid the final instalment. The lender may be able to repossess the goods if you fall behind with payments.
Credit cards are supplied by banks, finance companies or shops.

They can be used to buy goods or obtain money from a bank. You will get a monthly statement saying how much you owe (including interest) and will be told the minimum amount you must pay that month. You may also have to pay an annual fee. There are also charge cards. The difference between a charge card and a credit card is that the amount borrowed on a charge card must be repaid in full at the end of a given period, usually a month. Interest is not charged on the amount but you may have to pay an annual fee for the card.

Lenders use a number of methods to decide whether or not to give credit. If you are told you cannot have credit you can apply again, either to the same company or another one. You have no right to be granted credit or to be given a reason why credit has not been granted, although some creditors may give this information. A lender can ask for a reference from your bank but the bank cannot provide this without your authorization. The bank may charge you for providing the reference. You are entitled to a copy of the reference given by your bank. If you think you have been refused credit because the information is incorrect you should contact the bank.
It is always sensible to shop around before you decide to borrow. Make sure that you are getting the most suitable type of credit for your purposes and the most favourable terms. Compare the cost of different types of credit by looking at both the annual percentage rate of interest (the APR) and the length of the agreement.

Credit reference agencies collect and store information about everybody's financial situation. Agency records are not a 'blacklist'. Credit reference agencies provide factual information to lenders, for example, banks, building societies, finance houses and major retailers. The lender uses the information provided by the credit reference agency, together with the information given by you on an application for credit, to decide whether or not to grant credit.
If you fall into debt, your credit reference file will show this. You could then find it difficult to get more credit, or for example, get a mortgage. The agencies list details of the electoral roll, your credit agreements, including balances and payment histories, home repossessions and failure to pay your mortgage, money judgments in the county court, bankruptcy orders and voluntary arrangements, previous credit searches, administration orders. You can check your credit file to make sure it is correct.