A credit system is a method used by financial institutions to evaluate the creditworthiness of individuals or businesses. It typically involves assigning a credit score based on factors like payment history, outstanding debts, and length of credit history. This score helps lenders decide whether to approve loans or credit applications. In many countries, credit systems are managed by agencies such as Equifax, Experian, and TransUnion. These agencies collect and maintain credit information, providing reports that lenders use to assess risk. A good credit score can lead to better loan terms, while a poor score may result in higher interest rates or loan denials.