Flashcards › Consumer Credit Terms

Credit arrangement to receive cash, goods, or services now and pay for them in the future Creditor an entity that lends money Closed-End Credit credit as a one-time loan that you will pay back over a specific period of time in equal payments Open-End Credit Credit as a loan with a certain limit on the amount of money you can borrow for a variety of goods and services What kind of credit is a credit card? Open-End Credit What kind of credit is a traditional loan? Closed-End Credit Line of Credit maximum amount of money a creditor will allow a credit user to borrow Grace Period Time period during which no finance charges will be added to your account Finance Charge the dollar amount you pay to use credit Net Income Take Home Pay or the amount of income you receive after taxes Annual Percentage Rates (APR) the cost of credit on a yearly basis, usually expressed by a percentage Debt the amount of money you owe on loans Collateral form of security to help guarantee that the creditor will be repaid 5 C's of Credit Character, Capacity, Capital, Collateral, & Credit History Credit Rating measure of a person's ability and willingness to make credit payments on time FICO Fair Isaac & Company Cosigning agreeing to be responsible for the loan payments if the other person fails to make them Chapter 7 Bankruptcy Straight bankruptcy where the debtor sells all or most of his assets to pay off the debts Chapter 13 Bankruptcy a debtor with a regular income proposes a plan for using future income and assets to eliminate debt Identity Theft when someone used your name and personal information to commit fraud Personal Finance - Credit