Glossary
Credit score
A 300–850 number summarizing your credit risk. It is the single biggest lever on the rate a lender offers you.
A credit score compresses your borrowing history — payment record, amounts owed, length of history, new credit, and credit mix — into one number from 300 to 850. Payment history and credit utilization together drive most of it, which is why one missed payment or a maxed-out card hurts more than people expect. Because pricing improves in tiers, moving up one band can cut your rate by several percentage points.
Related terms
- Secured A loan backed by an asset the lender can seize if you default — a house, a car, or a deposit.
- FICO score The most widely used credit-scoring model among lenders, built by Fair Isaac Corporation — often used interchangeably with "credit score," though VantageScore is a common alternative.
- Underwriting The process a lender uses to verify your income, assets, debts, and credit before approving a loan — the "yes or no" behind every offer.
- Prepayment penalty A fee some lenders charge for paying a loan off early. Rare on consumer loans, common in commercial lending — always check the note.
- Fixed rate An interest rate that never changes for the life of the loan — your payment is the same every month.
- Lien A legal claim against property that secures a debt — the lienholder can force a sale to collect if the debt goes unpaid.