Annual Percentage Rate (APR)
The yearly cost of borrowing money, expressed as a percentage. APR includes interest plus certain fees, giving you a more complete picture of a loan's cost than the interest rate alone. For credit cards, the APR is the interest rate charged on balances carried month-to-month.
Related guides
- Full credit & FICO® glossary
Browse all defined terms by category.
- Interest Rate
The percentage charged by a lender for borrowing money, expressed annually. The interest rate is the base cost of borrowing. APR (Annual Percentage Rate) is a broader measure that includes fees in addition to the interest rate.
- Mortgage
A loan used to purchase or refinance real estate, where the property serves as collateral. Mortgages are installment loans with terms typically ranging from 10 to 30 years. Missing mortgage payments can lead to foreclosure. Minimum credit scores vary by loan type (FHA: 500, conventional: 620).
Frequently Asked Questions About Annual Percentage Rate (APR)
What does Annual Percentage Rate (APR) mean?
The yearly cost of borrowing money, expressed as a percentage. APR includes interest plus certain fees, giving you a more complete picture of a loan's cost than the interest rate alone. For credit cards, the APR is the interest rate charged on balances carried month-to-month.
Is Annual Percentage Rate (APR) important for my FICO® score?
Understanding Annual Percentage Rate (APR) helps you manage your credit profile more effectively, which in turn supports a stronger FICO® score.