Who is referred to as a Borrower?

The term "Borrower" specifically refers to an individual or entity that requests a loan from a lender. This definition captures the essence of the borrower’s role in a financial transaction, as they are the party seeking to obtain funds that they will need to repay over time, typically with interest.

In the context of lending, the borrower engages in an agreement with a lender – often a financial institution – to receive the necessary funds for purposes such as purchasing a home, starting a business, or financing educational needs. The borrower is responsible for adhering to the terms of the loan agreement, including repayment schedules and interest rates.

This distinction is important because it clarifies the borrower’s position in the lending process compared to other roles, such as a lender, which is the institution providing the funds, or a guarantor, who may back the loan to provide additional security for the lender. Additionally, a credit reporting agency plays a different role entirely, as it provides credit histories and scores that inform lending decisions but does not directly participate as a borrower or lender in loan agreements.