Loan
A loan is a sum of money that is lent to another party in exchange for repayment in the future. The party borrowing the money (known as the “borrower”) incurs a debt, which they have to pay back before a certain date. This includes the principal, which is the original borrowed amount, and any added interest.
Loans are usually given by banks and other financial institutions to individuals, small businesses, corporations, governments and other entities. The party advancing the sum of money, is usually known as a “lender”. In certain cases, the lender may also ask for collateral to help secure the loan.
Find out now how loans function in our quick explainer guide below.
What Is a Credit Score?
A credit score is a number between 300-850 that represents a consumer’s creditworthiness. This number is used by lenders as part of their decision-making process when approving or denying loans.
Credit scores are based on credit history, which includes factors such as repayment history, total debt, and number of open accounts. Although every creditor can set their own ranges for credit scores, the average FICO score range is most often utilized.
- 800 to 850: Excellent
- 740 to 799: Very good
- 670 to 739: Good
- 580 to 669: Fair
- 300 to 579: Poor
Read more: How to get a loan with bad credit
Types of Loans
Loans can be either secured or unsecured; a secured loan is a loan backed by collateral. On the other hand, an unsecured loan does not require collateral. This usually means that they have higher rates than secured loans due to being riskier for lenders.
There can also be further differences in the type of interest rates that a loan offers. For example, fixed rate loans have interest rates that don’t change during the loan term, while variable rate loans offer interest rates that change based on underlying benchmarks or indexes.
Loans can also be used for a variety of different purposes. Some of the most common types of loans include:
- Mortgages
- Personal loans
- Auto loans
- Student loans
- Title loans
- Installment loans
- Credit card cash advances
- Home equity loans
- Payday and payday alternative loans
A loan is a sum of money that is lent to another party in exchange for repayment in the future. The party borrowing the money (known as the “borrower”) incurs a debt, which they have to pay back before a certain date. This includes the principal, which is the original borrowed amount, and any added interest.
Loans are usually given by banks and other financial institutions to individuals, small businesses, corporations, governments and other entities. The party advancing the sum of money, is usually known as a “lender”. In certain cases, the lender may also ask for collateral to help secure the loan.
Find out now how loans function in our quick explainer guide below.
What Is a Credit Score?
A credit score is a number between 300-850 that represents a consumer’s creditworthiness. This number is used by lenders as part of their decision-making process when approving or denying loans.
Credit scores are based on credit history, which includes factors such as repayment history, total debt, and number of open accounts. Although every creditor can set their own ranges for credit scores, the average FICO score range is most often utilized.
- 800 to 850: Excellent
- 740 to 799: Very good
- 670 to 739: Good
- 580 to 669: Fair
- 300 to 579: Poor
Read more: How to get a loan with bad credit
Types of Loans
Loans can be either secured or unsecured; a secured loan is a loan backed by collateral. On the other hand, an unsecured loan does not require collateral. This usually means that they have higher rates than secured loans due to being riskier for lenders.
There can also be further differences in the type of interest rates that a loan offers. For example, fixed rate loans have interest rates that don’t change during the loan term, while variable rate loans offer interest rates that change based on underlying benchmarks or indexes.
Loans can also be used for a variety of different purposes. Some of the most common types of loans include:
- Mortgages
- Personal loans
- Auto loans
- Student loans
- Title loans
- Installment loans
- Credit card cash advances
- Home equity loans
- Payday and payday alternative loans