A borrower is a person who requests a loan and receives the funds to fulfill a need such as an emergency purchase, money for school tuition, or other obligations. A borrower is also the person who is expected to pay the loan back. The outcome of those payments can have significant effects their credit.
For instance, Jim has a decent credit history that includes paying off his credit cards in a timely manner and making consistent payments on student loans. He seeks a loan to make up the balance on a major purchase he has saved for, therefore, he becomes a borrower on that loan. As a borrower, Jim’s responsibilities include making regular payments on the loan—paying both the principal and the interest—for its term in order to avoid any penalties. If he misses the due date by a day or two, he doesn’t have to worry because he has a grace period available that allows him to pay the amount he owes before the fees kick in.
Because Jim has committed to paying the loan, he knows the term and expected monthly payments following the amortization schedule so he can meet his goals for paying it down and continuing to work towards building a healthy financial credit history.