Credit & Debt

A hard inquiry refers to a lender pulling a full credit report on an individual from a credit reporting company in order to determine their creditworthiness for a loan or revolving line of credit. A hard inquiry can temporarily lower the credit applicant’s credit score as where a soft inquiry, which entails a more cursory view of a borrower’s credit, does not.

Credit rating generally refers to an individual’s creditworthiness as measured by a credit score. It can also apply to corporate entities as it relates to the ability of a company to borrow money in the capital markets or issue debt instruments such as corporate bonds.

Credit history is the accumulated credit account behavior of an individual that is tracked by credit reporting agencies. Lenders such as banks and credit card issuers report their customers’ accounts, credit usage and payment behavior to credit reporting agencies such as Experian, Equifax and TransUnion each month, forming credit profiles.

Credit quality is another term for creditworthiness, meaning the level at which lenders assign credit amounts and terms based on risk level. Banks and other types of lenders measure credit quality objectively using credit scores based on factors such as types of credit owned, on-time payment history, credit utilization and age of credit.

Buy Now, Pay Later, also known as BNPL, is a relatively recent take on the old layaway plans of the past. However, unlike layaway plans, Buy Now, Pay Later allows the buyer to take possession of the goods immediately and break up payments into four equal installments over a short period of time.