Points are extra out of pocket fees paid by the person taking the loan at closing to get a lower rate. 1 point is equal to 1% of your total loan amount. Most people are trying to keep their out of pocket closing costs as low as possible, so they seldom pay for points.

Credits are fees paid by the lender for you at closing, which have the effect of reducing your closing costs and raising your rate a little. Lenders typically offer a credit to people who are comfortable with a slightly higher rate to have lower or no closing costs.
Was this article helpful?
Thank you!