Credit

Question 1

Creditor

Answer 1

The business or organisation that extends the credit

Question 2

Principal

Answer 2

The original amount borrowed

Question 3

Secured credit

Answer 3

Backed by a pledge of property

Question 4

Collateral

Answer 4

The property that is pledged to guarantee repayment

Question 5

Closed-end credit

Answer 5

A one time extension of credit for a specific amount and time period

Question 6

Open-end credit

Answer 6

Line of credit that can be used repeatedly

Question 7

Instalment

Answer 7

A set portion of the loan amount that the borrower must pay at regularly scheduled intervals

Question 8

Finance charge

Answer 8

The cost of using credit including interest and fees

Question 9

3 C’s of credit

Answer 9

Character: reputation

Capital: items owned or assets

Capacity: a persons earning power

Question 10

Credit history

Answer 10

Pattern of past behaviour in regard to repaying debt

Question 11

Credit bureau

Answer 11

Credit reporting agency, gathers info about the creditworthiness of the customers

Question 12

Credit report

Answer 12

A record of a particular consumers transactions and payment

Question 13

Credit rating

Answer 13

An evaluation of a consumers credit history

Question 14

Credit score

Answer 14

A numerical rating, based on credit report info.

Question 15

Consigner

Answer 15

A person with a strong established credit history who signs the credit application and contract along with borrower

Question 16

APR

Answer 16

Annual percentage rate

Question 17

Grace period

Answer 17

Period of time during which the balance may be payed in full to avoid charges

Question 18

Credit limit

Answer 18

The max. amount of credit that the creditor will extend to the borrower

Question 19

Consumer finance companies

Answer 19

Businesses that specialise in making small to personal loans

Question 20

Loan shark

Answer 20

Unlicensed lenders who operate illegally and charge excessive interest

Question 21

Down payment

Answer 21

A portion of a purchase price paid by cash or check at the time of purchase

Question 22

Balloon payment

Answer 22

A final payment that is much larger than the other instalments

Question 23

Acceleration clause

Answer 23

Gives the seller the right to declare the whole balance due if the buyer misses even one instalment payment

Question 24

Add on clause

Answer 24

Allows additional purchases to be added to an instalment contract

Question 25

Right of rescission

Answer 25

Right to cancel a loan. Provided by the Truth in Lending Act. Notice of cancellation must be given in writing

Question 26

Delinquent

Answer 26

Fail to make payments due on time

Question 27

Default

Answer 27

Failure to fulfil the obligations of the loan

Question 28

Repossession

Answer 28

Taking away property due to failure to make loan or credit payment

Question 29

Collection agency

Answer 29

Business that collects unpaid debt for others

Question 30

Lien

Answer 30

A claim upon property to satisfy a debt

Question 31

Garnishment

Answer 31

The legal withholding of a specified sum from a persons wages in order to collect a debt

Question 32

Credit consoling

Answer 32

Guidance provided by trained people who help consumers learn to live within their means, helps them overcome debt problems

Question 33

Debit consolidation loan

Answer 33

Combines all existing debt into a new loan with a more manageable payment schedule

Question 34

Bankruptcy

Answer 34

Legal relief from repaying certain debts

Chapter 7: to totally release you from all debt in your bankruptcy petition

Chapter 13: commonly called debt adjustment because chapter 13 allows you to file a repayment plan for your bills, allows you to keep your personal possessions

Question 35

Credit

Answer 35

The supplying of money, goods or service at present in exchange for the promise of future payment