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Question 1

What is a Capped Rate?

Answer 1

A capped rate is an interest rate or price that can vary, butit will have a fixed amount that it won’t go above. This often applies to products such as mortgages and energy bills.

Question 2

What is a Collections Process?

Answer 2

Collective term for the various stages a debt goes through when contractual payments are not made.

Question 3

What is a Compound Interest?

Answer 3

Interest calculated on the principal sum of a debt, plus any interest that has accrued in previous periods. Each time interest is added, the total becomes the new sum on which subsequent interest is calculated.

Question 4

What is a Complaint?

Answer 4

A formal legal document that details the facts and legal reasons why you are being sued, i.e. that the terms of the agreement between the debtor and the lender have been breached.

Question 5

What is a Conditional SaleAgreement?

Answer 5

Conditional sale is a type of credit agreement where you don’t own the goods until you’ve made all of the payments set out in the credit agreement. If you miss
paymentsthe goods may be repossessed.

Question 6

What is a Consolidation Loan?

Answer 6

The replacement of two or more loans with a new single loan, often with a lower monthly payment and a longer repayment period. Also known as debt consolidation.

Question 7

What is the Consumer Credit Act 1974 (CCA)?

Answer 7

This is the law that governs personal loans and other credit agreements, such as hire purchase and credit cards. It sets the standards by which companies
should comply when arranging credit and when recovering debts.

Question 8

What is a Contractual Payment?

Answer 8

The amount you agreed to pay back towards a debt each month when you first signed the credit agreement. If you don’t pay the contractual payment you’ll fall into arrears, and it may affect your credit rating.

Question 9

What is the County Court?

Answer 9

A civil court generally used to settle disputes between partieswho cannot otherwise reach an agreement.

Question 10

What is a County Court Claim?

Answer 10

A county court claim is a legal process creditors can use to collect an outstanding debt.

Question 11

What is a County Court Judgment (CCJ)?

Answer 11

A CCJ is a court order that tells you what to pay towards a debt.

Question 12

What is a Court Action?

Answer 12

If you can’t come to an agreement withcreditors to repay a debt, they can take court action.

Question 13

What is a Credit Agreement?

Answer 13

A legally-binding contract between a borrower and a lender detailing terms and conditions under which money was lent.

Question 14

What is a Credit Bureau?

Answer 14

An agency that records consumer credit history and provides credit reports and scores. The three main agencies are Experian, Equifax, and TransUnion.

Question 15

What is a Credit Card Debt?

Answer 15

This type of debt is covered by the Consumer Credit Act. Debt accumulates and increases via interest and penalties.

Question 16

What is a Credit File?

Answer 16

Your credit file contains details of the money you’ve borrowed and the payments you’ve made or missed. Your credit file will also have information about any types of credit you have applied for. Also known as a ‘credit report’.

Question 17

What is a Credit Limit?

Answer 17

The maximum amount of money that you may charge on a credit card, or take out in a loan.

Question 18

What is a Credit Line?

Answer 18

The total amount of revolving credit that you may borrow partially or in full. After the debt is repaid, you can use the line of credit up to the limit as many times as you need.

Question 19

What is a Credit Rating?

Answer 19

Your credit rating is the method a creditor uses to assess whether they want to lend you money. All creditors will use different information to assess you and will score you differently.

Question 20

What are Credit Bureau Agencies?

Answer 20

These companies keep financial information on almost every adult in the United States. 3 Major Ones are EXPERIAN.COM, EQUIFAX.COM, TRANSUNION.COM. They sell their datato potential lenders to search through when making adecision on whether they should lend to someone or not.

Question 21

What are Credit Inquiries?

Answer 21

A potential lender will search the applicant’s credit file before making a decision about lending to them. These searches are recorded on the credit file.

Question 22

What are Credit Unions?

Answer 22

Not-for-profit organisations, owned by their members, providing saving and loan facilities.

Question 23

What is a Credit Report?

Answer 23

A record of an individual’s or company’s past borrowing and repaying. Consumers have a report at each of the three main consumer credit agencies Experian, Equifax, and TransUnion. Creditors may examine it in order to determine “credit worthiness” before approving a loan.

Question 24

What is a Credit Score?

Answer 24

A credit score is the numerical representation based on the statistical analysis of a person’s credit files in order to analyze the creditworthiness of that person. A credit score is determined on the basis of information acquired from credit bureaus. Depending on the credit
score, creditors decide whether or not to extend credit.

Question 25

What is a Creditor?

Answer 25

A creditor is a person or a company (usually a bank) who lends you money.

Question 26

What is a Crisis Loan?

Answer 26

A temporary loan, issued by the Job Centre, for those infinancial difficulties. It can bemade to people who areworking or claiming benefits.