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Level 60

Ways to Protect Credit & Use Credit Wisely


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APR
Annual percentage rate; the annual rate of interest that is charged for using credit
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
Asset
Any financial claim or piece of property that is subject to ownership
Bankruptcy
Legal relief from repaying certain debts
Balloon Payment
A final loan payment that is much larger then the other installments
Capacity
A person's ability repay debt from regular income
capital
wealth that is used to produce more wealth
Cash Credit
Used to borrow money; often used to purchase goods and services from sellers who do not give credit. Types of cash credit include installment loans, single-payment loans, and credit card or check credit loans
Character
A person's reputation for honesty and financial history
Closed-and-Credit
A one-time extension of credit for a specific amount and period of time
Collateral
property that is pledged to a lender to guarantee payment in the event that the borrower is unable to make debt payments **this type of debt is secured debt**
Collection Agency
A business that collects unpaid debt for other companies or organizations
Cosigner
A responsible person who signs a loan as a co-borrower and therevy agrees to pay the obligation if the primary borrower fails to do so
Consumer Finance Company
Business that specialize in making small or personal loans
Credit
The supplying of money, goods, services at present in exchange for the promise of future payment
Credit Counseling
Guidance provided by trained people who help consumers learn to live within their means
creditor
person or institution to whom money is owed
Credit Bureau/Credit Reporting Agency
An organization that keeps a running record of the financial and credit transactions of credit users and the credit worthiness of consumers. They sell information to creditors, landlords, insurers, employers, and other businesses.
Credit History
A pattern of past behavior in regard to repaying debt
Credit Limit
The maximum amount of credit that a creditor will extend to a borrower
Credit Rating
A creditor's evaluation of a person's willingness and ability to pay debts as judged by character, capacity, and capital
Credit Report
A record of a particular consumer's use of credit and account payment patterns
Credit Score
A numrical rating, based on credit report information, that represents one measure of a person's level of credit worthiness
Debt Consolidation Loan
A loan that combines all existing debt into a new loan witha more manageable payment schedule
default
occurs when an institution is unable to make interest payments or pay off the amount owed on a debt instruments at maturity
Delinquent
Overdue
Down payment
A portion of a purchase price paid by cash or check at the time of purchase, reducing the amount borrowed
Finance charge
What the consumer pays for the use of credit, including interest charges and any other fees
Grace Period
Period of time during which the balance on a credit card may be paid in full avoid finance charges
Garnishment
The legal withholding of a sum from a person's wages in order to collect a debt
Impulse Buying
Buying items that are not really needed
Installment Credit
A form of credit that may be used to purchase expensive items like cars or major appliances. With installment credit, the buyer makes payments in equal dollar amounts that include finance charges
Installment Loan
A loan where you borrow a set amount of money and repay it plus finance charges in a series of scheduled payments
interest
the price paid for the use of borrowed money
Lien
A claim upon property to satisfy debt