What Is a Personal Loan and How Does It Work?
A personal loan can look simple: you borrow money, receive it as a lump sum, and repay it over time. But the real decision is not just whether you can get approved. The more important question is whether the loan solves a problem without creating a bigger one.
People often consider personal loans when they need money for debt consolidation, emergency expenses, medical bills, home repairs, moving costs, major purchases, or other personal needs. A personal loan may be useful when it has a clear purpose, affordable monthly payments, and a total cost that makes sense. It can become risky when it is used to cover ongoing overspending, taken without comparing APRs, or accepted without understanding fees.
This guide explains personal loans in plain English so beginners can understand how they work, what they cost, what lenders look for, and how to decide whether borrowing is the right move.
A personal loan is usually a fixed-term installment loan. You receive a set amount of money upfront and repay it through scheduled payments over a set period. Most personal loans are unsecured, meaning they do not require collateral, but approval and pricing often depend on your credit, income, debts, and overall financial profile.
1. What Is a Personal Loan?
A personal loan is money borrowed from a bank, credit union, online lender, or other financial institution for personal use. The borrower usually receives the full loan amount upfront and repays it in monthly installments until the balance, interest, and any required fees are paid.
Personal loans are commonly considered closed-end credit because the loan has a defined borrowing amount, repayment term, and payment schedule. Unlike a credit card, you generally cannot keep reusing the same loan balance after paying it down. If you need to borrow again, you typically apply for a new loan.
1.1 Simple Personal Loan Definition
A personal loan is a lump-sum loan that you repay over time through fixed payments, usually with interest and sometimes fees.
2. How Does a Personal Loan Work?
A personal loan follows a predictable process. The lender reviews your application, decides whether to approve you, offers loan terms, sends the funds if you accept, and collects repayment according to the agreement.
- You choose how much you want to borrow and why you need the money.
- You apply with a lender and provide information such as income, employment, housing costs, debts, and identity details.
- The lender may check your credit report and evaluate your ability to repay.
- If approved, the lender offers an amount, APR, term, monthly payment, and fees.
- You review the loan agreement and accept only if the payment and total cost are affordable.
- The lender sends the funds to your bank account or, for some debt consolidation loans, directly to creditors.
- You repay the loan in scheduled installments until it is fully paid off.
| Loan Feature | What It Means | Why It Matters |
|---|---|---|
| Principal | The amount you borrow before interest and fees. | A larger principal usually means a larger payment and more total interest. |
| Interest rate | The cost of borrowing the money, expressed as a percentage. | A lower rate generally reduces borrowing cost. |
| APR | The annual cost of credit including the interest rate and certain fees. | APR is often the best number for comparing loan offers. |
| Loan term | The length of time you have to repay the loan. | A longer term may lower monthly payments but increase total interest. |
| Monthly payment | The scheduled amount due each month. | This must fit comfortably into your budget. |
| Origination fee | A lender fee that may be deducted from the loan proceeds or added to cost. | It can reduce the cash you receive and increase the true cost. |
| Collateral | Property pledged to secure a loan, if required. | Most personal loans are unsecured, but secured options may put assets at risk. |
2.1 Simple Personal Loan Flow Diagram
The following flow shows the full borrowing process from identifying a need to completing repayment.
| Step | What Happens | Why It Matters |
|---|---|---|
| 1. Identify the need | Define the exact purpose and the smallest amount required. | A clear purpose helps prevent unnecessary borrowing. |
| 2. Compare offers | Review APR, fees, repayment term, monthly payment, total repayment, and lender reputation. | The lowest monthly payment is not always the lowest-cost loan. |
| 3. Apply | Provide identity, income, employment, housing, and debt information. | Your credit profile and ability to repay affect approval and pricing. |
| 4. Review and accept | Read the final disclosure and confirm the net proceeds, payment, due date, and total cost. | Accepting without reviewing the details can lead to unexpected fees or budget pressure. |
| 5. Receive funds | Funds are sent to your bank account or, in some consolidation loans, directly to creditors. | Confirm how much you will actually receive after any deducted origination fee. |
| 6. Repay | Make scheduled payments until the balance is paid in full. | On-time repayment protects your credit and helps avoid fees and collection activity. |
3. Types of Personal Loans
| Type | How It Works | Best For | Main Risk |
|---|---|---|---|
| Unsecured personal loan | No collateral is required. Approval depends heavily on creditworthiness and income. | Borrowers who qualify for fair terms without pledging assets. | Higher APRs may apply if credit is weak. |
| Secured personal loan | You pledge an asset such as savings, a vehicle, or another acceptable form of collateral. | Borrowers who need better approval odds or lower rates. | You may lose the collateral if you default. |
| Fixed-rate personal loan | The interest rate and payment usually stay the same. | Budgeting and predictable repayment. | You may pay more if market rates fall later. |
| Variable-rate personal loan | The rate can change according to the loan agreement. | Borrowers comfortable with payment uncertainty. | Payments and total cost may rise. |
| Debt consolidation loan | A personal loan used to combine multiple debts into one payment. | Simplifying payments or lowering expensive debt costs. | It can backfire if you continue using credit cards. |
| Co-signed or joint personal loan | Another person applies with you or guarantees repayment. | Borrowers who need stronger approval support. | Missed payments can hurt both people and damage relationships. |
4. Common Uses for Personal Loans
Personal loans can be used for many legal personal expenses, depending on lender rules. Common uses include:
- Debt consolidation, especially combining high-interest credit card balances into one installment payment.
- Emergency expenses, such as urgent home repairs, car repairs, or necessary travel.
- Medical or dental bills that are not fully covered by insurance.
- Home improvement projects that do not require a home equity loan.
- Moving costs, relocation expenses, or large one-time household needs.
- Major planned purchases when saving first is not possible or practical.
A personal loan is usually not ideal for nonessential spending, speculative investments, gambling, routine living expenses, or purchases that lose value quickly unless there is a strong reason and a clear repayment plan.
5. How Much Can You Borrow With a Personal Loan?
Personal loan amounts vary widely by lender. Some lenders offer relatively small loans, while others offer much larger amounts to well-qualified borrowers. The amount available to you may depend on your income, credit history, existing debts, employment or income stability, requested term, lender limits, and intended loan purpose.
The more useful question is not simply, “How much can I get?” It is, “How much can I safely repay?” Borrowing the smallest amount that solves the problem usually reduces the monthly payment, total interest, and risk of financial strain.
A practical borrowing limit should be based on a realistic budget that still leaves room for essential expenses, savings, irregular costs, and emergencies. Do not rely on perfect conditions or assume your income and expenses will remain unchanged throughout the loan term.
6. Why Personal Loans Matter
Personal loans matter because they can either improve your financial situation or make it harder. Used well, a personal loan can simplify debt, create predictable payments, or cover a necessary expense without relying on revolving credit. Used poorly, it can add fixed monthly obligations, increase total debt, and create long-term budget pressure.
The key is to treat a personal loan as a financial tool, not free money. The loan should have a clear purpose, a realistic repayment plan, and a measurable benefit.
7. Personal Loan Benefits
- Predictable payments: Many personal loans have fixed monthly payments, making them easier to budget for.
- Potentially lower cost than credit cards: Qualified borrowers may receive lower APRs than they pay on high-interest credit card balances.
- Fast funding: Some lenders can fund approved loans quickly, though timing varies.
- Flexible uses: Personal loans may cover many personal expenses.
- No collateral in many cases: Unsecured personal loans do not require you to pledge an asset.
- Debt consolidation potential: One loan can replace multiple payments if used carefully.
8. Personal Loan Drawbacks
- Interest and fees increase the total cost of borrowing.
- Approval is not guaranteed, and weaker credit may lead to higher APRs or denial.
- Missed payments can damage credit and lead to collection activity.
- Origination fees may reduce the amount of money you actually receive.
- A longer repayment term can make the monthly payment look affordable while increasing total interest.
- Borrowing can hide a spending problem if the root cause is not fixed.
| Pros | Cons |
|---|---|
| Can provide a lump sum for a specific need. | Creates a fixed monthly obligation. |
| May offer lower APR than credit cards for qualified borrowers. | May include origination, late, or other fees. |
| Fixed terms can support disciplined repayment. | Can damage credit if payments are missed. |
| May simplify debt consolidation. | Does not solve overspending by itself. |
| Often unsecured, so no collateral is required. | Unsecured loans may be expensive for high-risk borrowers. |
9. Personal Loan Eligibility Requirements
Each lender sets its own approval standards, but most lenders review similar factors. A strong application usually shows that you are likely to repay the loan on time.
| Eligibility Factor | What Lenders Commonly Review | How to Improve Your Position |
|---|---|---|
| Credit history | Payment history, open accounts, credit utilization, delinquencies, and recent applications. | Pay bills on time, reduce revolving balances, and avoid unnecessary new credit before applying. |
| Income | Employment income, self-employment income, benefits, or other eligible income sources. | Document income clearly and apply for an amount your income can support. |
| Debt-to-income ratio | How much of your monthly income already goes toward debt payments. | Pay down existing debt or borrow less. |
| Employment or income stability | How reliable your income appears. | Provide consistent records such as pay stubs, tax documents, or bank statements if requested. |
| Identity and residency | Basic identity verification, address, age, and required documentation. | Make sure your application information is accurate and consistent. |
| Loan purpose | Some lenders restrict certain uses. | Choose a lender that allows your intended purpose. |
10. Personal Loan Costs and Fees
The true cost of a personal loan is not just the interest rate. Borrowers should compare APR, monthly payment, total repayment amount, and fees before accepting an offer. The CFPB explains that APR includes the interest rate plus certain lender fees, which makes it useful for comparing loan offers.
10.1 Common Personal Loan Fees
| Fee or Cost | What It Means | What to Watch For |
|---|---|---|
| Interest | The cost of borrowing the principal. | Compare both rate and total interest over the full term. |
| APR | The annual cost of credit including interest and certain fees. | Use APR, not just interest rate, to compare offers. |
| Origination fee | A setup or processing fee charged by some lenders. | It may be deducted from loan proceeds, so you receive less cash than expected. |
| Late payment fee | A fee charged when payment is not made on time. | Set autopay or reminders to avoid it. |
| Returned payment fee | A fee if your bank rejects a payment. | Keep enough funds available before the due date. |
| Prepayment penalty | A fee for paying off the loan early, if included. | Avoid loans with prepayment penalties when possible. |
| Optional add-ons | Credit insurance or other optional products. | Understand whether the add-on is necessary and how much it costs. |
11. How Monthly Payments Are Calculated
Most installment personal loans use amortization. This means each payment includes interest plus part of the principal. Early payments often include more interest, while later payments reduce more principal.
A lower APR, shorter term, and smaller loan amount usually reduce total cost. A longer term may lower the monthly payment, but it often increases total interest paid.
| Example Loan | APR | Term | Approximate Monthly Payment | Approximate Total Repaid | What It Shows |
|---|---|---|---|---|---|
| $10,000 personal loan | 12% | 3 years | $332 | $11,957 | Shorter term: higher monthly payment, lower total interest. |
| $10,000 personal loan | 12% | 5 years | $222 | $13,347 | Longer term: lower monthly payment, higher total interest. |
| $10,000 personal loan | 20% | 5 years | $265 | $15,896 | Higher APR significantly raises total cost. |
These examples are simplified estimates for education only. Actual payments depend on the lender, exact APR, fees, payment timing, and loan terms.
12. How to Get a Personal Loan: Step-by-Step Process
1. Define the purpose of the loan. Know exactly why you need the money and how the loan improves your situation.
2. Calculate the amount you truly need. Avoid borrowing extra just because you qualify for more.
3. Check your budget. Confirm the monthly payment fits after essentials, savings, and existing debts.
4. Review your credit report if possible. Correct errors and avoid applying blindly.
5. Prequalify with multiple lenders when available. Prequalification can help you compare estimated offers before a formal application.
6. Compare APR, fees, term, monthly payment, total repayment, and lender reputation.
7. Read the loan agreement carefully. Look for origination fees, late fees, prepayment penalties, and automatic payment terms.
8. Accept the loan only if the purpose, payment, and total cost make sense.
9. Use the funds for the intended purpose. If consolidating debt, pay off the target balances promptly.
10. Make every payment on time. Set reminders or autopay and track your payoff progress.
13. What Happens After You Get the Loan?
After the loan is funded, repayment becomes the priority. Confirm the exact first-payment date, payment amount, payment method, and account information. Keep enough money available before each due date and review the first statement to make sure the lender applied the payment correctly.
Set up autopay or calendar reminders, but continue checking your account rather than assuming every automatic payment succeeded. Keep copies of the agreement, disclosures, payment confirmations, and lender communications until the loan is fully paid and the account shows a zero balance.
If the loan was used for debt consolidation, pay the targeted balances promptly and avoid rebuilding them. If extra principal payments are allowed without penalty, paying more than the required amount may reduce total interest and shorten the payoff period. Confirm that extra payments are applied to principal rather than merely advancing the next due date.
If you expect difficulty making a payment, contact the lender before the due date. Some lenders may offer hardship assistance or temporary arrangements, but options vary and are generally easier to discuss before the account becomes seriously past due.
14. Personal Loan vs Other Borrowing Options
| Option | Best Used For | Advantages | Risks or Limits |
|---|---|---|---|
| Personal loan | One-time expenses or debt consolidation. | Fixed payments, lump sum, predictable payoff date. | Fees, interest, and fixed monthly obligation. |
| Credit card | Short-term purchases that can be repaid quickly. | Convenient and reusable. | High interest if balance is carried. |
| Balance transfer card | Moving credit card debt to a promotional APR offer. | Can reduce interest temporarily. | Promo period ends; transfer fees may apply. |
| Home equity loan or HELOC | Large home-related expenses for homeowners. | May offer lower rates than unsecured loans. | Your home may be at risk if you default. |
| Payday loan or cash advance | Very short-term cash needs. | Fast access. | Often very expensive and risky. |
| Borrowing from savings | Avoiding debt when emergency funds are available. | No lender interest. | Reduces financial cushion. |
| Payment plan with provider | Medical bills, repairs, or service bills. | May be cheaper or interest-free. | Terms vary and may still involve fees. |
| Personal line of credit | Ongoing or uncertain borrowing needs where the exact amount or timing is not known. | Borrow only what you need and reuse available credit, subject to the agreement. | Rates may be variable, payments are less predictable, and easy reuse can encourage continued borrowing. |
15. When Is a Personal Loan a Good Idea?
A personal loan may be a good idea when it has a clear financial purpose and improves your position compared with other options.
- You can afford the monthly payment without missing essentials.
- The APR is lower than the debt you are replacing.
- You are consolidating debt and have stopped the habits that created the balances.
- The expense is necessary, urgent, or planned, not impulsive.
- You have compared multiple offers and understand all fees.
- You have a plan to repay the loan on time or early without penalty.
16. When Is a Personal Loan a Bad Idea?
- You are using it to pay for everyday expenses without fixing a budget shortfall.
- You cannot comfortably afford the payment.
- The APR and fees are high compared with safer alternatives.
- You are borrowing for wants, luxury spending, or impulse purchases.
- You are taking a debt consolidation loan but plan to keep using credit cards heavily.
- The lender pressures you, guarantees approval, or asks for an upfront fee before providing a legitimate loan offer.
17. Real-World Personal Loan Examples
17.1 Example 1: Debt Consolidation Done Carefully
Maya has three credit cards with different due dates and high interest rates. She qualifies for a personal loan with a lower APR and a fixed three-year term. She uses the loan to pay off the card balances, stops using the cards for new purchases, and sets up automatic payments. Her finances become easier to manage because she has one payment and a defined payoff date.
Why it can work: the loan lowers complexity and may reduce borrowing cost. The key is that Maya changes her spending behavior and does not rebuild credit card balances.
17.2 Example 2: Emergency Repair with a Repayment Plan
Omar needs a major car repair to keep commuting to work. He does not have enough emergency savings, so he compares personal loan offers and chooses the lowest affordable APR with no prepayment penalty. He keeps the term short enough to reduce interest but long enough for the payment to fit his budget.
Why it can work: the expense is necessary, the loan amount is limited, and the repayment plan is realistic.
17.3 Example 3: A Personal Loan That Creates More Trouble
Sara takes a personal loan for a vacation because she qualifies for more than she expected. The monthly payment seems manageable at first, but later she also carries credit card balances for everyday expenses. Now she has both the loan payment and new revolving debt.
What went wrong: the loan funded a nonessential purchase, and the payment reduced her monthly flexibility. Borrowing did not address her budget habits.
18. Personal Loan Risks and Warning Signs
Personal loans are common financial products, but borrowers should be cautious. A legitimate lender should clearly disclose loan terms, fees, APR, and repayment obligations. Be especially careful with lenders or messages that promise guaranteed approval, pressure you to act immediately, or demand money upfront before providing a loan.
- Advance-fee loan scams: Be suspicious if someone asks you to pay a fee before receiving loan funds.
- Guaranteed approval claims: Legitimate lenders generally review your application before approval.
- No clear APR or fee disclosure: You should be able to understand the cost before signing.
- Pressure tactics: A lender should not force you to decide immediately.
- Unclear company identity: Verify contact details, licensing where applicable, and online reputation.
- Requests for unnecessary sensitive information: Share personal data only with reputable lenders through secure channels.
19. Common Personal Loan Mistakes to Avoid
| Mistake | Why It Hurts | Better Approach |
|---|---|---|
| Only looking at the monthly payment | A low payment can hide a long term and high total interest. | Compare total repayment and APR. |
| Ignoring origination fees | You may receive less money than expected or pay more overall. | Calculate net proceeds and total cost. |
| Borrowing more than needed | Extra borrowing increases interest and monthly pressure. | Borrow the smallest amount that solves the problem. |
| Not comparing lenders | The first offer may not be the best offer. | Compare multiple reputable lenders. |
| Using a loan to delay budgeting | Debt can grow if spending habits do not change. | Fix the budget before or during repayment. |
| Missing payments | Late payments can cause fees, credit damage, and collections. | Use autopay, reminders, and emergency buffers. |
| Consolidating debt and using cards again | You can end up with both the loan and new credit card debt. | Pause card use until the loan plan is working. |
| Signing without reading the agreement | Hidden or overlooked terms can be costly. | Review APR, fees, term, due dates, and prepayment rules. |
20. Expert Tips for Choosing a Personal Loan
- Compare APR first, but do not stop there. Also review fees, monthly payment, term, and total repayment.
- Choose the shortest term you can comfortably afford. This often reduces total interest.
- Prequalify with several lenders if available, but understand that final approval may require a hard credit check.
- Use a loan calculator before applying so you know the payment range that fits your budget.
- Check whether the origination fee is deducted from the loan proceeds. If it is, you may need to borrow more to receive the amount you need, which increases cost.
- Avoid loans with prepayment penalties if you plan to pay early.
- Do not use a personal loan as a substitute for an emergency fund. After borrowing, rebuild savings gradually.
- For debt consolidation, close the loop: pay off the old debts, stop new charges, and track the payoff schedule.
21. Quick Action Checklist Before You Apply
- I know the exact reason I need the loan.
- I have calculated the smallest amount I need to borrow.
- I know the monthly payment I can afford without financial strain.
- I have compared APR, fees, term, total repayment, and lender reputation.
- I understand whether the loan has an origination fee, late fee, or prepayment penalty.
- I have read the loan agreement before accepting.
- I have a repayment plan and payment reminders.
- I have considered alternatives such as saving, payment plans, balance transfers, or negotiating bills.
- I am not borrowing because of pressure, panic, or a guaranteed-approval promise.
- I understand what happens if I miss payments.
22. Personal Loan Myths and Misconceptions
Common misconceptions can cause borrowers to focus on approval or monthly payment while overlooking the true cost and risk.
| Myth | Reality |
|---|---|
| A personal loan is free money. | It is debt that must be repaid with interest and possibly fees. |
| The lowest monthly payment is always the best choice. | A lower payment may come from a longer term and can produce a higher total repayment cost. |
| Debt consolidation automatically eliminates debt problems. | It helps only when the new loan improves the terms and the borrower avoids creating new balances. |
| A low advertised interest rate guarantees a cheap loan. | Origination fees and other charges can make a loan with a low rate more expensive; compare APR and total repayment. |
| Bad credit always makes approval impossible. | Some lenders consider weaker credit, but the APR and fees may be substantially higher. |
| All personal loans work the same way. | Rates, fees, terms, collateral requirements, funding methods, hardship policies, and early-payoff rules vary by lender. |
| Paying early always causes a penalty. | Many personal loans allow early repayment without a penalty, but the agreement must be checked. |
| Prequalification guarantees final approval. | Prequalification is normally an estimate based on preliminary information; final approval can change after verification and underwriting. |
23. Frequently Asked Questions About Personal Loans
23.1 What is a personal loan in simple terms?
A personal loan is money you borrow upfront and repay over time in scheduled payments. Most personal loans have a fixed term, a set monthly payment, and interest charges.
23.2 How does a personal loan work?
You apply with a lender, receive an offer if approved, accept the terms, get the funds, and repay the loan in installments. The payment usually includes interest and principal.
23.3 Is a personal loan the same as a credit card?
No. A personal loan usually gives you a one-time lump sum with fixed payments. A credit card is revolving credit, meaning you can borrow, repay, and borrow again up to your credit limit.
23.4 What can I use a personal loan for?
Common uses include debt consolidation, emergencies, medical bills, home repairs, moving costs, and major planned expenses. Lender rules may restrict certain uses.
23.5 Do personal loans require collateral?
Many personal loans are unsecured and do not require collateral. Some secured personal loans require collateral, which may reduce lender risk but can put your asset at risk.
23.6 What credit score do I need for a personal loan?
There is no single required score for all lenders. Stronger credit usually improves approval odds and pricing, but some lenders consider borrowers with fair or limited credit at higher costs.
23.7 What is APR on a personal loan?
APR is the annual cost of credit. It includes the interest rate and certain fees, so it is usually more useful than the interest rate alone when comparing loans.
23.8 What is an origination fee?
An origination fee is a lender charge for processing or creating the loan. It may be deducted from your loan funds or included in the cost of borrowing.
23.9 Can a personal loan help my credit?
It can help if you make on-time payments and manage debt responsibly. It can hurt your credit if you miss payments, borrow too much, or apply for many loans in a short time.
23.10 Is a personal loan good for debt consolidation?
It can be useful if the new loan has a lower cost, a manageable payment, and a clear payoff plan. It is risky if you keep adding new credit card debt after consolidation.
23.11 How long does it take to get a personal loan?
Timing varies by lender. Some lenders fund quickly after approval, while others take longer for verification, underwriting, and bank processing.
23.12 Can I pay off a personal loan early?
Often yes, but check the agreement. Some loans may include prepayment penalties, although many personal loans do not.
23.13 What happens if I miss a personal loan payment?
You may face late fees, credit score damage, collection activity, and possibly default. Contact the lender quickly if you expect trouble making a payment.
23.14 Are personal loans safe?
Personal loans from reputable lenders can be safe when you understand the terms and can afford repayment. Avoid lenders that demand upfront fees, guarantee approval, or hide costs.
23.15 Should I get a personal loan or save money first?
If the expense can wait, saving first is usually cheaper because you avoid interest and fees. A loan may make sense for urgent needs or when it reduces the cost of existing debt.
24. Conclusion: The Smart Way to Think About Personal Loans
A personal loan is a useful borrowing tool when it is chosen carefully and repaid responsibly. It can help with debt consolidation, urgent expenses, or planned financial needs. But it is still debt, and debt always deserves careful thought.
Before applying, focus on the full picture: why you are borrowing, how much you need, whether the payment fits your budget, what the APR and fees are, and how the loan compares with alternatives. The best personal loan is not simply the one that approves you. It is the one that helps solve a real financial need at a cost you can manage.
A practical next step is to calculate your ideal monthly payment, compare multiple reputable lenders, and read every term before signing. Borrow only when the loan supports a clear and realistic financial plan.
25. Reader Advice
This article is for general educational purposes and is not individualized financial, legal, tax, or credit advice. Personal-loan availability, pricing, fees, eligibility standards, consumer protections, and lender practices vary by lender, borrower profile, and location. Review the lender’s current disclosures and complete loan agreement before borrowing, and consider consulting a qualified professional when a decision could materially affect your finances.
26. Sources Consulted
- CFPB Ask CFPB: What is the difference between a loan interest rate and the APR? https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-loan-interest-rate-and-the-apr-en-733/
- CFPB Ask CFPB: Do personal installment loans have fees? https://www.consumerfinance.gov/ask-cfpb/do-personal-installment-loans-have-fees-en-2120/
- FTC Consumer Advice: What To Know About Advance-Fee Loans. https://consumer.ftc.gov/articles/what-know-about-advance-fee-loans
- Federal Reserve Board: Consumer Credit - G.19 About. https://www.federalreserve.gov/releases/g19/about.htm
- New York Fed: Household Debt and Credit background. https://www.newyorkfed.org/microeconomics/hhdc/background.html