Credit Basics

Original creditor means the company that first extended the credit or loan to the borrower.

Amount financed means the net amount of credit actually provided to the borrower or on the borrower’s behalf in a closed-end credit transaction.

Annual percentage rate (APR) is the annualized borrowing-cost measure attached to a credit product.

Available credit is the unused portion of a revolving account's limit.

Borrower means the person who receives credit and is responsible for repaying it under the agreement.

Closed-end credit means credit extended for one defined amount that is repaid over time and then ends when the balance reaches zero.

Consumer credit means credit used for personal, family, or household purposes rather than business borrowing.

Consumer debt means debt owed for personal, family, or household purposes rather than business borrowing.

Cosigner means someone who agrees to share legal responsibility for a debt if the primary borrower does not repay.

Credit is the ability to borrow money or purchasing power now and repay it later under agreed terms.

Credit agreement means the contract that sets the borrowing rules, pricing, payment duties, and default terms for a credit account.

Foundational consumer-credit terms that explain how borrowing works before readers dive into reports, scores, or collections.

Credit limit means the maximum amount a borrower can owe on a revolving account at one time.

Creditor means the party that is owed repayment on a credit obligation.

Finance charge means the borrowing cost attached to a credit transaction, including interest and some lender-imposed charges.

Fixed-rate means the stated interest rate stays the same for the defined period covered by the agreement instead of moving with an index.

Joint account means a credit account shared by two account holders who both have rights to use the account and responsibility for the debt.

Joint applicant means a person who applies for credit together with another applicant and is evaluated as part of the shared credit request.

Lender means the institution or company that extends credit or funds to a borrower.

Smallest payment due by the due date to keep a revolving account from being treated as late.

Open-end credit means reusable borrowing that stays open after repayment and lets the balance rise and fall within a credit limit.

Simple interest means interest calculated from principal and a stated rate, without compounding interest on prior interest charges.

Total of payments means the full amount the borrower will pay over the scheduled life of a closed-end loan if payments are made as agreed.

Variable-rate means the interest rate can move up or down under the agreement, often based on an index such as the prime rate.