20 terms

Lesson 7: The Credit Conundrum

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Terms in this set (...)

annual percentage rate
"APR"; the total of what a loan costs the borrower each year, expressed as a percentage of the loan amount.
capital
money that can be used to produce or acquire things of value.
credit
the ability to obtain goods or services immediately by promising to pay for them later.
creditor
the person or business who provides money for a loan.
collections
activities by a debt collection agency to recover amounts owed.
consumer debt
debt incurred for the purchase of goods or services primarily for personal or household purposes which goods or services lose value over time.
consumerism
theory that the consumption of goods and services in large quantities is beneficial to a country's economy.
credit bureau
an independent company that records and shares information about the creditworthiness of consumers who want to borrow money.
credit report
information on a person's bill paying history, total debts and bankruptcy history used by a potential creditor to evaluate a loan applicant's creditworthiness.
crowdlending
loans made via online platforms that connect people who need money with investors who have money to lend; also called peer-to-peer lending.
debt
a sum of borrowed money which must be paid back.
debt to income (DTI) ratio
the amount of debt a person has compared to their overall income.
FICO® credit score
a measure of creditworthiness based on a data analysis method invented by the Fair Isaac Corporation (FICO).
financing
to obtain a loan for a business purchase or personal purchase.
government guaranteed debt
a loan that will be repaid by the government if the debtor fails to repay it.
interest
a fee paid for the use of someone else's money, expressed as a percentage rate.
non-consumer debt
debt incurred as an investment in things that build wealth or increase in value over time.
purchasing power
the financial ability to buy products and services.
principal balance
the amount of loan remaining unpaid, not including interest and other charges.
wage garnishment
an order from a court or a government agency requiring an employer to deduct money from an employee's paycheck to satisfy a debt.