A lender refers to an individual or financial institution that provides loans to an individual, corporation, or public department in exchange for the principal and interest. A lender could be a bank, an insurance company, or a government agency. Commonly, the borrowers will submit an application to the lender and explain what the loan is for and explain their repaying ability. The lender will access the materials that the borrower submitted and will review the credit history and credit score of the borrower. In the U.S. there are three major credit bureaus that offer a FICO score, the credit score, which is used to evaluate the borrower. The three main credit bureaus are Experian, Equifax, and TransUnion. Typically, the higher the FICO credit score is, the lower the interest rate will be offered by the lender.
[Last updated in May of 2022 by the Wex Definitions Team]