Credit Basics
Foundational consumer-credit terms that explain how borrowing works before readers dive into reports, scores, or collections.
Credit basics pages explain the foundation of a credit relationship before a borrower starts comparing scores, disputes, or collections outcomes. This section is where readers should learn the language of borrowing cost, account capacity, and payment expectations.
These pages are especially useful when a person knows a term from a card agreement or loan offer but does not yet understand how it fits into the larger credit system.
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In this section
- Credit
Credit is the ability to borrow now and repay later under agreed terms.
- Credit Limit
A credit limit is the maximum amount a borrower can owe on a revolving account at one time.
- Available Credit
Available credit is the unused portion of a revolving account's credit limit.
- Minimum Payment
The minimum payment is the smallest amount required by the due date to keep an account from becoming late.
- Annual Percentage Rate (APR)
APR is the annualized borrowing-cost measure attached to a credit product.
- Borrower
A borrower is the person who receives credit and is responsible for repaying it under the agreement.
- Creditor
A creditor is the party that is owed repayment on a credit obligation.
- Lender
A lender is the institution or company that extends credit or funds to a borrower.
- Consumer Credit
Consumer credit is credit used for personal, family, or household purposes rather than business borrowing.
- Cosigner
A cosigner is someone who agrees to share legal responsibility for a debt if the primary borrower does not repay.