Advertisement Upgrade to remove ads

3 C's of credit

capacity, character and collateral

auto finance companies

financial organization that specializes in automobile loans to consumers

balance owed

the amount left over after subtracting, as, for example, the amount owed on a loan (also called principal balance) or the amount in an account

bank

a financial institution that accepts deposits and channels the money into lending activities

bankruptcy Chapter 7

dealing with liquidation, provides for a court-appointed interim trustee to make management changes, arrange unsecured financing, and generally operate the debtor business to prevent loss.

bankruptcy Chapter 11

deals with reorganization of businesses, provides that, unless the court rules otherwise, the debtor remains in possession of the business and in control of its operation

bankruptcy Chapter 13

deals with debt adjustment or reorganization for individuals, allows people to put forward a plan to repay creditors over time, usually from future income

cash advances

money lent: a loan given in cash, especially by an employer or credit card company, in anticipation of the borrower's being able to repay it

charge cards

a card used for making payments; balance must be paid in full when the statement is received

consolidation loans

one large loan made to consumers to pay several debts at once

Consumer Credit Counseling Services (CCCS)

a nonprofit agency that gives free advice to people in financial difficulties

consumer debt

debt that has been incurred primarily for the purchase of consumer goods

credit card companies

bank or business that allows somebody to purchase goods and services and pay for them later, often with interest

credit cards

provides individuals with revolving open-end credit, which they can draw from repeatedly up to some preset limit

credit reporting agency

a company that collects information from various sources and provides consumer credit information on individual consumers for a variety of uses. It is an organization providing information on individuals' borrowing and bill paying habits.

debtors anonymous

is a fellowship of men and women who share their experience, strength, and hope with each other that they may solve their common problem and help others to recover from compulsive debting. The only requirement for membership is a desire to stop incurring unsecured debt.

due date

the date on which a financial obligation must be repaid

fixed interest rate

an interest rate that does not change

fixed rate of interest

interest rates are effective annual yields

garnishment

a court action in which a portion of an employee's wage is set aside to pay a debt owed a creditor

grace period

a period in which a debt may be paid without accruing further interest or penalty

home equity loans

home owners can borrow against the appraised value of their already purchased homes

identity theft

the crime of obtaining someone else's personal data and using it for financial gain or to defraud or deceive

installment loans/credit

a loan that is repaid with a fixed number of periodic equal-sized payments

late fee

a penalty for making a payment after the due date

credit limit

the maximum amount of credit a lender will extend to a customer

line of credit

an arrangement in which a bank or vendor extends a specified amount of unsecured credit to a specified borrower for a specified time period

liquidation

the process of taking a business' real assets and turning them into cash, either to pay off debt or to reap a personal profit

low credit rating

a credit rating around 500 or lower is high enough risk that many lenders will refuse a line of credit, and those that do grant one will penalize the borrower with high interest rates and difficult terms.

minimum amount due

If the consumer makes the minimum payment, interest charges continue to accrue on all outstanding balances.

minimum payment

minimum amount due on credit balance

mortgage

a long-term loan extended to someone who buys property

mortgage brokers

one who places mortgage loans with lenders for a fee, but does not orginate or service loans.

overspending

puchasing more than your budget allows

ownership

the right to hold, possess, control and dispose of property

pawn shops

charge very high interest for loans based on the value of tangible assets (such as jewelry or other valuable items)

payday loans

provided a temporary loan at a high interest rate until your next paycheck

penalty

a payment required for not fulfilling a contract

PIN

(personal identification number) a number you choose and use to identify themselves to gain access to various accounts

predatory lending

Any of a number of fraudulent, deceptive, discriminatory, or unfavorable lending practices. Many of these practices are illegal, while others are legal but not in the best interest of the borrowers.

prepayment

The unscheduled partial or complete payment of the principal amount outstanding on a loan, such as a mortgage, before it is due.

revolving credit

a credit agreement that allows consumers to pay all or part of the outstanding balance on a loan or credit card. As credit is paid off, it becomes available again to use for another purchase or cash advance

secured credit card

one that requires you to keep a savings account as security

secured loans

loans for which the borrower is required to pledge specific assets as collateral or security

tax preparers

use their knowledge of federal, state, and local tax codes and publications to prepare tax returns and make sure that their clients do not pay unnecessary taxes.

title for goods

a legal document that provides a history of ownership and entitlement by the current owner

Truth in Lending Act of 1968

provides a uniform manner of calculating and presenting the terms of consumer loans to enable you to compare costs so you can make informed choices about credit

unsecured loans

is a loan that does not require collateral from the borrower

usury

the act of lending money at an interest rate higher than that permitted by law

variable interest

an interest rate that moves up and down based on the changes of an underlying interest rate index

variable rate

means that the APR can go up or down depending on economic factors

APR (Annual Percentage Rate)

yearly percmet amount it will cost a person to use credit

bankruptcy

legal process that allows someone deeply in debt to create a plan to repay their debts

collateral

as related to credit, an evaluatin of a person's net worth

co-signed loans

when someone with strong established credit signs a contract along with the borrower

credit history

a record of whether or not a person has paid his or her bills on time in the past

credit rating

an evaluation of a person's credit history

credit report

a report showing all accumulated credit data on an individual; this is used for granting or denying credit

credit score

a numerical rating based on person's credit history that represents their credit worthiness

default

failure to repay a debt

finance charge

the total amount that a person is charged for borrowing money; includes interest plus any service charges or insurance premiums

foreclosure

a legal proceeding in which the creditor either sells or repossesses property for failure to repay a debt

interest (APR)

the price a borrow pays a creditor for the use of money over a period of time

lien

a claim upon property to satisy a debt

repossession

taking away property due to failure to repay the debt

Please allow access to your computer’s microphone to use Voice Recording.

Having trouble? Click here for help.

We can’t access your microphone!

Click the icon above to update your browser permissions above and try again

Example:

Reload the page to try again!

Reload

Press Cmd-0 to reset your zoom

Press Ctrl-0 to reset your zoom

It looks like your browser might be zoomed in or out. Your browser needs to be zoomed to a normal size to record audio.

Please upgrade Flash or install Chrome
to use Voice Recording.

For more help, see our troubleshooting page.

Your microphone is muted

For help fixing this issue, see this FAQ.

Star this term

You can study starred terms together

NEW! Voice Recording

Create Set