CREDIT VOCAB

1. CREDIT VOCAB PF 7.02

2. APR 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 • Annual percentage rate; the annual rate of interst that is charged for using credit

3. add-on clause Asset An item of value you own, including money • A loan contract provision that allows purchases to be added to an existing installment loan, with earlier purchases used as security for later ones

4. Bankruptcy balloon payment A final loan payment that is much larger than the other installments • Legal relief from repaying certain debts

5. Capacity Capital A person’s finacial resources • A person’s ability repay debt from regular income

6. cash credit Character A person’s reputation for honesty and financial history • Used to borrow money; often used to purchase goods and services from sellers who do not give credit. Types of cash crdit include installment loans, single-payment loans, and credit card or check credit limits.

7. closed-end credit Collateral Property that is pledged to guarantee payment of a loan • A one-time extension of credit for a specific amount and period of time

8. collection agency 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 • A business that collects unpaid debt for other companies or organizations

9. consumer finance company Credit The supplying of money, goods, services at present in exchange for the promise of future payment • Businesses that specialize in making small or personal loans

10. credit counseling Creditor A person or business who supplies money, goods, or services to debtors • Guidance provided by trained people who help consumers learn to live within their means

11. credit bureau/ credit reporting agency credit history A pattern of past behavior in regard to repaying debt • 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.

12. credit limit credit rating A creditor’s evaluation of a person’s willingness and ability to pay debts as judged by character, capacity, and capital • The maximum amount of credit that a creditor will extend to a borrower

13. credit report credit score A numerical rating, based on credit report information, that represents one measure of a person’s level of credit worthiness • A record of a particular consumer’s use of credit and account payment patterns

14. debt consolidation loan Default Failure to fulfill the obligations of a loan • A loan that combines all existing debt into a new loan with a more manageable payment schedule

15. Delinquent down payment A portion of a purchase price paid by cash or check at the time of purchase, reducing the amount borrowed • Overdue

16. finance charge grace period Period of time during which the balance on a credit card may be paid in full to avoid finance charges • What the consumer pays for the use of credit, including interest charges and any other fees

17. Garnishment impulse buying Buying items that are not really needed • The legal witholding of a sum from a person’s wages in order to collect a debt

18. installment credit installment loan A loan where you borrow a set amount of money and repay it plus finance charges in a series of scheduled payments • 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.

19. Interest Lien A claim upon property to satisfy debt • A fee paid for the opportunity to use someone else’s money over a period of time

20. Liabilities loan shark Unlicensed lender who operates illegally and chargse excessive interest • Amount a person owes, such as unpaid bills, credit card charges, personal loans, and taxes

21. net worth open-end credit Credit that can be used repeatedly. Sometimes referred to as a line of credit • The difference between your assets and your liabilities. Expressed by the formula: assets – liabilities = net worth

22. Principal regular charge account A type of sales credit that allows customers to purchase goods and services on credit and pay the bill in full in 25-30 days. If you do this, you are not charged interest; however, you may be charged interest if you do not pay the full amount. • The original amount borrowed

23. Repossession revolving credit A form of credit in which the total amount of the bill does not have to be paid each month; however, a finance charge will be figured on the amount not paid. Additional purchases can be made even though money is owed on previous purchases. The lender typically establishes an approved credit limit to represent the maximum amount of credit available. Credit cards are usually revolving credit. • Taking away property due to failure to make loan or credit payments

24. right of rescission sales credit Credit used to purchase goods and services • The right, provided by the Truth in Lending Act, that gives borrowers up to three business days to cancel a loan or other credit transaction for which their home is pledged as security

25. single payment loan secured credit Credit that is backed by a pledge of property • A loan where you borrow an amount of money and repay that amount plus finance charges in one payment

26. unsecured loan - Generally, a loan that only requires a signature promising to repay the loan as stated in the contract; not backed by collateral or pledge of valuables