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65 terms

WISE - Credit

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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