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Credit
Term | Definition |
---|---|
Creditor | party to whom money is owed |
Capital | wealth in the form of money or assets |
Collateral | specific pledged as a secondary security by a borrower or guarantor |
Principal | capital as a distinct from the income derived from it |
Finance Charge | total cost borrow, including interest charges, commitment fees, and other charges paid by the borrowed for availing the loan facility |
Debt Collector | recovering amounts owed to a firm by its customers |
Credit Bureau | agency that researches and collects individual credit information and sells it for free to creditors so they can make a decision on granting loans |
Character | one of the five key factors considering in evaluation of a loan application is the applicants credit history and reputation in the community |
Credit Report | document that summarizes an entity’s credit history and present financial position and notifies about any lien in force or pending judgments against the entity |
Capacity | borrower’s ability to repay a debt on a timely basis, determined by deducting total cash outflow from the borrowers total income during a month |
Credit History | record of a borrowers payment behavior that reflects his/her ability to repay a loan |
Credit Rating | evaluation of the timely repayment ability of an individual, firm, or debt security |
20/10 Rule | Money borrowed should total below 20% of your annual after-tax income; not including mortgage/rent. Payments on all loans and credit cards should be no more than 10% of your monthly after-tax income |
Debtor | person who owes money |
Bankruptcy | legal procedure for liquidating a business which cannot fully pay its debts out of its current assets |
Secured Loans | Loan agreement under which a borrower pledges a specific asset or property which the lender can seize of default |
Unsecured Loans | Loan extended only on the basis of the borrower’s financial position, credit worthiness, credit history, and general reputation |
Reaffirmation | legal contract that states your promise to repay all or a portion of a debt |
Involuntary bankruptcy | a person or business is requested to go into bankruptcy by creditors, rather than on the person or business’ own accord |
Voluntary bankruptcy | US legal term proceedings whereby a debtor entity, on its own initiative, files a petition seeking relief from creditors |
Discharged Debts | cancellation or forgiveness of a debt |
Liquidation | winding up of a firm by selling off its free assets to convert them into cash to pay the firm’s unsecured creditors |
Reorganization | readjustment of a firm’s debt and capital structure after a bankruptcy or receivership order |