Credit Flashcards
Credit
When goods, services, or money is received in exchange for a promise to pay a definite sum of money at a future date
Creditor
The business or organization that extends the credit is the creditor
Principal
Which is the original amount borrowed
the original amount of a debt on which interest is calculated
Secured credit
credit for which the consumer must put up some kind of property as protection in the event a debt is not repaid.
Collateral
a security pledged for the repayment of a loan
Closed-end credit
A loan which the borrower must repay the amount in a specified number of equal payments.
A credit arrangement where the amount of money borrowed and the amount to be repaid per month are fixed at the time the installment loan is made
Open-end credit
Extended as a line of credit established in advance so that the borrower does not have to apply for credit each time new credit is desired. Examples of this kind of credit include credit cards.
A credit arrangement where the amount of money borrowed continues to change as payments and purchases are made (i.e. credit card)
installment
to pay for in regular, small amounts over time
finance charge
A fee for borrowing money, added to a monthly credit card bill.
credit history
a summary of a person’s borrowing and repayment history
credit bureau
a private firm that maintains consumer credit data files and provides credit information to authorized users for a fee
credit report
a detailed record of your personal credit and financial transactions
credit rating
an evaluation of a consumer’s credit history
credit score
a numerical rating given to individuals that represents their creditworthiness
cosigner
A responsible person who signs a loan as a co-borrower and thereby agrees to pay the obligation if the primary borrower fails to do so
APR
Annual Percentage Rate
grace period
a time period during which no finance charges will be added to your account
credit limit
the maximum amount of credit a lender will extend to a customer
consumer finance companies
businesses that specialize in making small or personal loans
loan sharks
unlicensed lenders who charge illegally high interest rates
down payment
a partial payment made at the time of purchase
balloon payment
A final loan payment that is much larger than the other installments
acceleration clause
A provision in an installment loan contract that gives the seller the right to declare the whole balance due if the buyer misses even one installment payment
add-on clause
A loan contract provision that allows purchases to be added to an existing installment loan, with earlier purchases used as security for later ones
right of rescission
The right to cancel a loan within three business days
delinquent
Past due
default
act of failing to meet a financial obligation
repossession
taking away property due to failure to make loan or credit payments
collection agency
A business that collects unpaid debt for other companies or organizations
lien
the right to take another’s property if an obligation is not discharged
garnishment
Court-ordered procedure by which a portion of a delinquent debtor’s wages are paid to satisfy the debt
credit counseling
a service to help consumers manage their debt load and credit more wisely
debt consolidation loan
A loan that combines all existing debt into a new loan with a more manageable payment schedule
bankruptcy
the legal proceeding by which a bankrupt person’s assets are distributed among those to whom he or she owes debts
