Borrower

Borrower summary: 

  • In finance, a borrower is someone who gets a loan or line of credit from a lender that they agree to pay back. 

  • Borrowers are legally obligated to repay what they owe. If they don't, they can face debt collection actions.

  • When there's more than one borrower on a loan, they're listed as co-borrowers and share equal responsibility for the debt. 

Borrower definition and meaning

In a loan agreement, the party that makes the loan is the lender. The person who receives the loan funds is the borrower. When you borrow, you create a debt. The lender gives you money on the assumption that you'll pay it back. 

You're expected to make on-time payments to your debt: Timely payments can help your credit scores. Missed payments, on the other hand, can trigger collection actions and your credit score can suffer. 

Key concept: A borrower is someone who gets a loan or line of credit.

More on borrower

Loans can help you meet different financial needs. For example, you might get an unsecured personal loan to consolidate debt or use a home equity line of credit (HELOC) to fund home repairs. A HELOC is a credit line that's secured by your home. 

When you apply for and accept a loan or line of credit, you become a borrower. You agree to pay back what you've borrowed, usually with interest. 

Borrower: a comprehensive breakdown

Borrower isn't strictly a finance term—it can apply to any situation where you have the temporary use of something. For example, you're a borrower when you check out books from the library or ask a friend to lend you a pen. You know that you'll eventually have to give back whatever you've borrowed.

The same concept applies to loans and lines of credit. Lenders offer loans because they expect the funds they lend to come back to them over time. In exchange for using a lender's money, the borrower pays interest on the loan. 

Why would someone agree to be a borrower if it costs you money? Borrowing has its benefits. 

  • You can build a positive credit history when you borrow if you repay your loans or lines of credit on time. 

  • A loan can help you pay for unexpected expenses if you don't have a fully funded emergency fund yet. 

  • Loans offer flexibility since you can use them to cover just about any expense. 

  • You might be able to qualify for low interest rates if you have good or excellent credit. 

Here's another benefit: Some loan interest is tax-deductible. If you get a home equity line of credit (HELOC) or home equity loan, for example, and use the loan to fund home improvements or repairs, your loan interest might be tax deductible. Talk to a tax professional about it.

Types of borrowers

Borrowers are usually divided into two main categories: individuals and businesses. As an individual, you might be a borrower of:

Each type of loan is different, but they all create a debt that you have to repay. Your ability to borrow is typically based on your credit scores, income, and other financial factors. 

Lenders might have a minimum credit score requirement they expect borrowers to meet. For example, you might need a FICO® Score of 620 or better to qualify for a HELOC or personal loan. Your credit score tells lenders how risky you are as a borrower and how likely you are to repay what you owe.

If you have a lower credit score, you may need help from a co-borrower to get a loan. A co-borrower is someone who applies for a loan with another person and agrees to share legal responsibility for the debt. For example, a parent who signs off on a student loan with their child is a co-borrower. 

Borrower FAQs

Some personal loan providers focus on borrowers with lower credit scores or income. You can search for those providers online if that's an issue for you.

Another option is to look for secured personal loans, which require collateral. Collateral is something valuable that you offer as a guarantee that you'll repay the loan. It's common to use a savings account as collateral for a secured personal loan. Some lenders will also consider letting you borrow against collectibles, fine art, a vehicle, or other items of value.

Lenders consider secured loans less risky because they can take the collateral if you don't repay your loan.

You could also add a co-borrower with better credit or additional income to strengthen your application. That can help you get approved or get you a better loan. At Achieve, we offer interest-rate discounts if you have a co-applicant—check your eligibility.

If you're comfortable with the internet and with filling out forms, applying for a loan online is faster and easier than calling or driving to a traditional branch. And many online lenders will help you with chat, email, or phone support if you get stuck.

It won't affect your loan decision if you choose an online or in-person process.

You can get a preliminary loan decision in minutes. It takes a few hours to a few days to finalize a loan approval and transfer your money. The exact time depends on the lender's policies, how quickly you respond to requests, and how simple or complicated your situation is. 

Personal loans are available through our affiliate Achieve Personal Loans (NMLS ID #227977), originated by Cross River Bank, a New Jersey State Chartered Commercial Bank, Equal Housing Lender. Loan applications are subject to credit review, underwriting criteria, and approval. Loans are not available in all states and available loan terms/fees may vary by state. Loan amounts range from $5,000 to $50,000. For loans $35,000+ must have a minimum 660 credit score. APRs range from 8.99% to 29.99% and include applicable origination fees that vary from 1.99% to 8.99%. Repayment periods range from 24 to 60 months. Example loan: four-year $20,000 loan with an origination fee of 8.99%, a rate of 15.49%, and corresponding APR of 20.77%, would have an estimated monthly payment of $561.60 and a total cost of $26,966.26. To qualify for a 8.99% APR loan, a borrower will need excellent credit, a loan amount less than $12,000.00, and a term of 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to pay off qualifying existing debt directly; or showing proof of sufficient retirement savings, could help you also qualify for lower rates. Loan Consultants for Achieve Personal Loans are available Monday-Friday 6 AM to 8 PM AZ time, and Saturday-Sunday 7 AM to 5 PM AZ time.

Home Equity loans are available through our affiliate Achieve Loans (NMLS ID #1810501). Equal Housing Opportunity. Offers may vary and all loan requests are subject to eligibility requirements, application review, loan amount, loan term, income verification, and lender approval. Product terms are subject to change at any time. Offers are a line of credit. Loans are not available to residents of all states and available loan terms/fees may vary by state where offered. Line amounts are between $15,000 and $300,000 and are assigned based on product type, debt-to-income ratio and combined loan-to-value ratio. 10, 15, 20, and 30-year terms available. Minimum 600 credit score applies for debt consolidation requests (20 and 30 year terms require a minimum credit score of 640), minimum 700 applies for cash out requests. Other terms, conditions and restrictions apply. Fixed rate APRs range from 6.74% - 14.75% and are assigned based on underwriting requirements and offer APRs assume automatic payment enrollment which may provide a discount (autopay enrollment is not a condition of loan approval). All terms have a 5-year draw period with the remaining term being a no draw period. Payments are fully amortized during each period and determined on the outstanding principal balance each month. Closing fees range from $750 to $6,685, depending on line amount and state law requirements and typically include origination (3.5% of line amount) and underwriting ($725) fees if allowed by law. Property must be owner-occupied. Combined loan-to-value ratio may not exceed 80% (20 and 30 year debt consolidation requests may not exceed 75%), including the new loan request. Property insurance is required and flood insurance may be required if the subject property is located in a flood zone. You must pledge your home as collateral. Loan funding time is dependent on full application and documentation submission, average funding time is 11 business days for 2025, including rescission. Monthly/yearly savings claim is based on average monthly debt savings from originated loans for Q4 2024. Monthly/yearly savings varies based on each loan situation and can be more or less than $800/$10,000. Requirements to obtain 6.74% APR include: debt to income ratio <=15%; cumulative loan to value <= 50%, including new request; loan amount between $15,000 and $150,000; term of 10 years; FICO of 800+; and automatic payment enrollment. Contact Achieve Loans for further details

Affiliated Business Arrangement Disclosure: Achieve.com (NMLS #138464) and Achieve Loans are both wholly owned subsidiaries of Achieve Company. Because of this relationship, your referral to Achieve Loans may provide Achieve.com a financial or other benefit. Where permitted by applicable state law, Achieve Loans charges: 1) an origination fee of 3.50%, and 2) an underwriting fee of $725. You are NOT required to use Achieve Loans for a home equity line of credit. Please click here for the full Affiliated Business Arrangement disclosure form. Please click here for the full Affiliated Business Arrangement disclosure form.

Resolution is available through our affiliate Achieve Resolution (NMLS ID # 1248929). All estimates for Achieve Resolution’s services are based on prior results, which will vary depending on your specific enrolled creditors and your individual program terms. Not all Achieve Resolution clients are able to complete their program for various reasons, including their ability to save sufficient funds. Achieve Resolution does not guarantee that your debts will be resolved for a specific amount or percentage or within a specific period of time. Achieve Resolution does not assume your debts, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice or credit repair services. Achieve Resolution’s services are not available in all states, including New Jersey, and their fees may vary from state to state. Please contact a tax professional to discuss potential tax consequences of less than full balance debt resolution. Read and understand all program materials prior to enrollment. The use of Achieve Resolution services will likely adversely affect your creditworthiness, may result in you being subject to collections or being sued by creditors or collectors and may increase the outstanding balances of your enrolled accounts due to the accrual of fees and interest. However, negotiated settlements Achieve Resolution obtained on your behalf resolve the entire account, including all accrued fees and interest. C.P.D. Reg. No. T.S.12-03825.

© 2025 Achieve.com. All rights reserved. NMLS #138464