Annual Percentage Rate – APR

Annual Percentage Rate (APR) refers to the cost of borrowing, including the amount of interest charged plus any fees, over the course of a year. The APR can be used to calculate how much will be paid back on top of the original amount borrowed, over the course of a year.



The individual applying for the loan



If a contractual payment is late or missed, the loan account will be classed as ‘being in arrears’. The loan account will continue to be classed as being in arrears until all outstanding payments are brought up to date.


Attachment of Earnings

A court order which permits lenders to receive funds directly from a Borrower or Guarantor’s wages, usually as a result of an unpaid County Court Judgment. The Borrower or Guarantor’s employer is legally obliged to comply with this court order.




Applying for bankruptcy is a legal process which is usually the last resort for those struggling with their debts. When officially declared bankrupt, the value of any possessions such as property or vehicles is shared among any lenders with any remaining debts being written off at the end of the bankruptcy period. Bankruptcy will usually last for 1 year, but stays on a person’s credit file for six years and may have a detrimental effect on them obtaining credit in the future.



The individual with whom the credit agreement is made



A third party company whose aim is to match customers to a lender, often through comparison tables. This means that customers can compare different loans in one place, alleviating the need to search each lender separately.



Charging order

A court order that permits a lender to secure an outstanding debt against property owned by the Borrower and/or Guarantor. When the property is sold or re-mortgaged, the money owed to that lender will usually need to be repaid before or as part of the re-mortgage, or from the proceeds of the sale. A charging order will usually be considered a lesser priority behind any mortgage or secured loans on the property.


Collections team

The department within a lending company responsible for collecting the repayments when due, and for helping customers who have fallen into arrears or who may be struggling with their repayments.
UK Credit’s Collections Team can assist with repayment plans and referring customers to independent debt advice organisations. If you are experiencing problems with paying your loan, then please get in touch on .


Consumer Credit Act 1974

The 1974 Consumer Credit Act and its subsequent amendments set out the regulatory framework under which credit is given and contracted in the United Kingdom.


County Court Judgement – CCJ

A county court judgment (CCJ) can be issued by a court against a person who has failed to repay their debt. The CCJ is a legal request for the person to repay their debt, either in full or via a repayment plan. A CCJ will remain on a person’s credit file for six years and may have a detrimental effect on them obtaining credit in the future. CCJs are only granted by courts in England and Wales; their equivalent in Scotland and Northern Ireland is a Decree.


Credit agreement

A legally binding contract between a Borrower and a lender, the terms of which are governed by the Consumer Credit Act 1974. This details the agreed terms such as the amount borrowed, repayments and any fees.


Credit file/Credit report

A credit file or credit report is a record of a person’s financial history held by one or more credit reference agencies. It contains details of any recorded credit in their name over the past six years, including if there were any late or missed payments. It will also detail if the person has been in an IVA, has been Bankrupt, and may show any legal action taken against them by a lender or another person or organisation they owe money to.


Credit reference agencies (CRA)

In the UK, there are three credit reference agencies: Experian, Equifax and TransUnion. Lenders and credit providers report the conduct of their customers’ accounts to the CRAs who use a person’s financial history to produce a credit report and calculate a score based on this. Each CRA uses a different way of scoring, so someone who scores ‘poor’ with one agency could score ‘fair’ with another. The value of these scores often influences lenders when deciding whether to provide credit to a customer or not.


Credit search/Credit Check

There are two types of credit search: hard and soft. A soft search is generally for initial enquiries, will not usually have any impact on a person’s credit score and other companies won’t be able to see this search. A hard search is done when a company needs to access the person’s full credit report, generally when a credit application has been successful and a loan has paid out. Any hard searches will show up on the person’s credit file and can be seen by other companies.




A sum of money that is owed or due to be paid by one person to another person or company.


Debt consolidation

When a person uses a new loan to repay other items of credit such as credit cards or loans, leaving them with one single repayment.


Debt management plan (DMP)

This is one of several options for those struggling to repay their debts. It is an arrangement set up with a third party to make affordable repayments to each of a person’s lenders on their behalf. It is often difficult to obtain credit when in a DMP and it might affect the ability to get credit in the future.


Debt relief order (DRO)

A debt relief order is another option for those struggling with debt but has some conditions. For example, it is not available to those with total debts of over £30,000 or if the person has any assets such as a house or vehicle valued at over £2,000, or if the debtor has more than £75 disposable income after payment of their normal household expenses. A DRO usually works by freezing payments and interest for a year, after which outstanding debts are written off unless the individual’s financial situation has improved.



If a loan falls three or more payment in arrears, a lender can record the loan as “Defaulted” with the Credit Reference Agencies, provided they have issued the Borrower a Default Notice notifying them of their intention to do so. A default will remain on a person’s credit file for six years and may make obtaining credit in the future more difficult.


Default notice

A letter issued by a lender to a Borrower and/or Guarantor when the loan has fallen into arrears. This gives them a period of time to remedy the arrears, usually either by repaying them in full, or entering an arrangement to pay the arrears over a period of time, and explains what could happen if the debtor does not comply with the notice.


Direct lender

A lender who you borrow money from directly, rather than through a third-party (a broker).



Fixed interest rate

A rate of interest on a loan which will not change for the entire term of the loan. This type of interest rate is favoured by those who are budget conscious as they are safe in the knowledge their monthly repayments won’t change.



Guarantee and indemnity agreement

A legal agreement between the lender and the Guarantor of a loan, binding the Guarantor to the responsibilities of guaranteeing the loan repayments and obligating them to make the loan repayments if the Borrower doesn’t.



A person who agrees to step in and take over the loan repayments, should the Borrower not make their payments.



High-street lender

A term to describe popular credit providers such as banks or building societies. These are often the first choice for people looking for a loan or credit card, but they tend to be inaccessible for those who don’t have a perfect credit history.



A person who owns a property either outright or via a mortgage.
To be considered for a loan from UK Credit both the Borrower and their Guarantor must live in the home they own and be listed on the land registry of that property. This includes those who have a shared ownership or Help to Buy mortgage.



Independent legal advice

Advice from a legal professional such as a solicitor: a Borrower or Guarantor may seek independent legal advice before signing any form of credit agreement. This is to ensure that the Borrower and/or Guarantor are fully aware of what they are agreeing to.


Individual voluntary arrangement (IVA)

An IVA is a legally binding agreement to pay an individual’s lenders. This could be a solution for those struggling to repay their debts. It involves setting up an arrangement to make affordable repayments which are distributed to all lenders, however, unlike a DMP, the terms of an IVA are legally binding. An IVA usually lasts for five years, after which any remaining debts are written off. An IVA will remain on a person’s credit file for six years after it expires and might affect the ability to obtain credit in the future.



When a lender lends money, they will ask to be repaid a certain amount more than was borrowed. This additional sum is called interest and is the way lenders benefit from lending. Interest is calculated as a percentage of the amount borrowed and is based on the level of risk of lending the money.



Loan term

The agreed period of time over which a Borrower will repay their loan. The longer the loan term, the lower the monthly repayments will be, however, this does mean more interest will be paid back, so the total amount repaid will be greater.



Monthly repayments

An amount to be repaid each month, as part of an ongoing series of payments over an agreed period of time that repays the amount borrowed and interest incurred.


My Loan Manager

UK Credit’s web portal which gives the Borrower and Guarantor access to the loan account at any time of day. This can also be used to make payments, view current balance and request a settlement figure.




The term used for someone who doesn’t own a property. This includes anyone who rents a property – either privately or via council or housing association as well as those living with friends or relatives.



Open Banking

A new way of sharing your information with us securely without the need to send us lots of documents. Introduced in 2019, Open Banking works with online/mobile banking to give lenders read-only access to a person’s financial accounts. This gives an insight into their finances and allows a quicker and more thorough affordability assessment. Read more about Open Banking.



Any payment made towards a debt which is greater than the contractual repayment. Making overpayments will reduce the total amount of interest applied to your loan, however, lenders may charge additional fees for making overpayments.



Repayment schedule

A document detailing the specific terms of a loan, such as monthly payment, interest rate, loan term and payment due dates.


Representative annual percentage rate (APR)

This is the APR lenders advertise as an example of their rates. This must be the APR that at least 51% of customers can obtain, a regulation which is set by the Financial Conduct Authority.



Secured loan

A type of loan which is secured against an asset owned by the Borrower, usually a house. If the Borrower is unable to make their repayments, the lender has the legal right to seize the asset to reclaim the money owed.


Settlement figure

If the Borrower wishes to pay off their entire debt in full, they can request a settlement figure to find out how much they need to pay. This amount will be the total of the remaining loan balance plus a settlement fee which may vary from lender to lender. With UK Credit the charge is usually the equivalent of about two month’s interest.




A way to borrow more money, on top of an existing loan. This works by taking out a new loan of a larger amount than the existing loan balance with the difference being paid out in cash. Find out more on our Loan top-up page


Total amount repayable

The total sum of money which must be repaid by the Borrower over the term of the loan – this includes the original sum of money plus interest and any fees.


Trust Deed

Similar to an IVA for those living in Scotland, a Trust Deed is a legally binding agreement to pay an individual’s lenders and could be a solution for those struggling to repay their debts. It involves setting up an arrangement to make affordable repayments which are distributed to all lenders. In some circumstances, a person’s belongings and property may be sold so that the money raised can be paid to lenders. A Trust Deed usually lasts for four years, after which any remaining debts are written off. A Trust Deed will remain on a person’s credit file for six years after it expires and might affect the ability to obtain credit in the future.




The procedure through which a lender will assess a loan application, verify data and documents, and either approve or decline the application.


Unsecured loan

A type of loan which does not require the Borrower to put up any form of collateral to secure the loan against. The decision to lend is based solely on the Borrower’s creditworthiness.



Variable rate

A rate of interest that can fluctuate based on variations in the cost to the lender of funding the loan. This could go up or down periodically meaning a Borrower may pay back more compared to a fixed-rate loan if rates were to increase but may pay less than a fixed-rate loan if rates were to reduce.