Credit and Debt Flashcards
Vocabulary/terms
Credit
Money that someone borrows with the promise of paying the lender back later.
Interest
Fees charged on your outstanding credit based on how long it goes unpaid.
Credit Card
A payment card that is used to spend borrowed money rather than the money you actually have.
Credit Limit
The maximum that a person can borrow (can be based on your credit score, income, and/or debt)
Annual Percentage Rate (APR)
The total of all financing costs of using a credit card, tells the borrower how much it costs to own certain credit cards.
Credit Card Fees
extra money you have to pay back added onto the amount you borrowed based on interest rates
How to build good credit
Pay off loans and bills on time, don borrow more than you can pay off in a month.
Credit history
a record of you past in borrowing and paying back money/debt
Credit bureaus
an organization that collects individuals credit history/info
Credit report
a summary of an individuals present and past line of credit (includes credit score)
Fair Credit Reporting Act
A federal law that limits sharing peoples financial info to firms that have legal evaluation purposes.
Fair Issac Corporation (FICO)
A corp that created a model that can calculate someones credit score/FICO score.
Credit Score
A numeric score that analyzes a persons credit history to judge how safe it is for a lender to lend them credit.
3 main companies that produce credit scores
Equifax, Trans Union, and Experian
Financing a car
getting a loan directly from a lender to pay for a car, agreeing to pay off the amount over time.
