Credit Flashcards
The amount that remains due on a loan
Balance Due
Last date of the billing cycle any purchases can be made
Billing Date
Person Using Credit
Borrower
Property you possess worth more than your debt
Capital
Personal property pledged to secure a loan
Collateral
Business or person that you’re borrowing the credit from
Creditor
the date on which the payment is due
Due date
Pay for the use of credit
Finance charge
to divide over a period of time
Pro-rate
a loan where the borrower pledges property to assure repayment
Secured-Loan
A fee charged for servicing an account
Service Charge
Advantages of Consumer Credit
Line of credit
Deferred billing
A pre established amount that can be borrowed on demand
Line of Credit
Purchases are not billed to the customer until a later date
Deferred Billing
Disadvantages of Credit
Reduces comparative shopping
Future income is tied up
Can lead to overspending
Unlicensed lenders who charge very high illegal interest rates
Loan Sharks
3 Major Credit Bureaus
Equifax, Experian, TransUnion
Credit Worthiness (5 Cs)
Character, Capacity, Capital, Conditions, Collateral
Tips on getting started with credit
Begin with savings account, Open a checking account, Maintain checking account digitally, Get a small loan, apply for credit card
Major Causes of Bankruptcy
Business failure, emotional spending, Failure to budget and plan, catastrophic injury or illness
Two types of Filing Bankruptcy
Chapter 7 and Chapter 13
Straight bankruptcy in which many, but not all debts are forgiven. (Stays on credit report for 10 years)
Chapter 7
Debtors keep property and have a court enforced plan to repay debt over time up to 5 years. ( Stays on credit report for 7 years)
Chapter 13
