Lending and credit explained: BNPL, scores and APR

Start here: read these first

An old-style carbon-copy credit card receipt — Photo: “Credit card receipt - old style” by Bubba73, CC BY-SA 4.0 (edited)

Lending

How do credit scores actually work?

A credit score is a lender's shortcut: one number that predicts whether you will repay. Here is where it comes from and what moves it.

8 min read

A large percent sign drawn in chalk on a grey board — Photo: “Percentage chalkboard” by Feen, CC BY-SA 3.0 (edited)

Lending

What is the difference between APR and APY?

Two three-letter rates look almost identical but answer different questions. One tells you what borrowing costs, the other what saving earns.

7 min read

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Lending

How does buy now, pay later actually work?

Buy now, pay later looks like a payment button, but it is a loan. Here is who lends the money, who pays the fees and what happens when a payment is missed.

8 min read

More in Lending & Credit

7 explainers & comparisons

Key terms ↓

LendingExplainer

What is alternative credit data and how do lenders use it?

Millions of adults have little or no credit history. Lenders are testing other records, from rent payments to bank-account cash flow, to judge whether they can repay.

Photo: “20120925-utility-bill invoice” by Rakoon, CC0 1.0 (edited)

LendingComparison

BNPL vs credit card: what is the real difference?

Both let you take the goods now and pay later. One is a fixed short loan per purchase, the other a reusable credit line. The differences show up when something goes wrong.

Photo: “Child hands credit card to adult while sitting at table with laptop” by Shixart1985, CC BY 2.0 (edited)

LendingExplainer

What is embedded finance and how does it work?

The loan offer in your shopping app or the financing button in a seller dashboard is rarely made by the app itself. Here is who sits behind it.

Photo: “Retail checkout area at the Vermont Teddy Bear Company store” by Tessa Bury, CC BY 4.0 (edited)

LendingExplainer

How does peer-to-peer lending work?

Peer-to-peer platforms promised to cut out the bank. In practice the lender, not the platform, carries the risk, and the rules reflect that.

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Key terms in Lending & Credit

Glossary

What does APR mean?

The single number designed to let you compare the cost of different loans.

Photo: “Vintage Texas Instruments TI Money Manager Pocket LED Calculator, Made in USA, Circa 1977 (9273154764)” by Joe Haupt from USA, CC BY-SA 2.0 (edited)

Glossary

What does BNPL mean?

A checkout button that is really a short-term loan.

Photo: “Beauties of the Installment Plan” by Friedrich Graetz, Public Domain Mark 1.0 (edited)

Glossary

What is a credit score?

One number that lenders use as a shortcut to judge borrowing risk.

Photo: “Credit card sized objects” by Tijmen Stam / IIVQ, CC BY 2.5 (edited)

About this channel

#What this channel covers

Borrowing used to mean a meeting with a bank manager. Today credit is offered in a second at checkout, decided by models that read your credit report or even your bank transactions, and sometimes funded by other people rather than a bank. The guides here explain each piece in plain English. Start with how credit scores work, because the score shapes almost every lending decision. Then learn to read the price of a loan in APR vs APY explained, and see how the most talked-about new product really works in how buy now, pay later works.

#Why lending rules keep changing

Fast-growing products attract new rules. In the UK, the Financial Conduct Authority started regulating interest-free buy now, pay later on 15 July 2026, adding affordability checks and access to the Financial Ombudsman Service⁠^[1]. In the US, the Federal Reserve's household survey found that 16% of adults had used buy now, pay later in the previous year⁠^[2]. Every rule we mention is dated and linked to a regulator or statute, so you can see how current it is.

#How to use these guides

Each page defines its jargon the first time it appears, and every worked example is calculated with code. Nothing here is a recommendation to borrow, or to use or avoid any lender or app. If a word is unfamiliar, use the glossary entries for APR, credit score and BNPL. Lending connects to the rest of fintech: card payments are explained in how card payments work, bank partnerships in banking as a service, and data sharing in what is open banking. You can also check the numbers yourself with the loan payment calculator.

Sources for this introduction (3)

Sources

Buy Now Pay Later — Financial Conduct Authority, 2026 Primary
Economic Well-Being of U.S. Households in 2025: Credit — Board of Governors of the Federal Reserve System, 2026 Primary
What is a credit score? — Consumer Financial Protection Bureau, 2026 Primary

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