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Credit
| Term | Definition |
|---|---|
| FICO | A credit scoring system which is used by the 3 major credit reporting agencies. |
| Ranges of FICO scores | 300-850 |
| 3 C's of credit | Capacity, Character, Capital |
| Credit Line | The maximum amount of money you can charge on your credit card. |
| 3 Credit Bureaus | Experian, TransUnion, Equifax |
| Available credit | The amount of money you still have left on your credit card. |
| Minimum Payment | the least amount you can pay to your credit card. You can pay over the minimum amount. |
| High credit score, ___________ interest rate | low |
| Low credit score, ___________interest rate | high |
| High credit score, _______ risk | low |
| Low credit score, ______ risk | high |
| Credit Report | A document containing data about how you use credit. |
| Credit History | A record of your past and present loans and credit card accounts. |
| Credit card statements are sent | monthly |
| What is APR? | Annual Percentage Rate |
| When looking for a credit card, you want a ___________ APR. | low |
| To keep your credit card account in good standing, you must pay | at least the minimum payment due |
| Soft credit check | Does not affect your credit score |
| Hard credit check | Affects your credit score |
| Capital | Net worth - Assets minus liabilities (what you own minus what you owe) |
| Character | Looking at you and whether you have a job, how long you live at your address, etc. |
| Capacity | Do you have the ability to pay back your debt? |
| Collateral | Assets that the lender can take back and use to pay the loan off. |
| Credit Score | This is a number that indicates how reliable you are at paying back your debts. |
| Credit Bureau | A company that gathers information on consumers who use credit. |
| Equal Credit Opportunity Act (ECOA) | A federal law to ensure that all consumers are given an equal chance to obtain credit. |
| Interest | The amount of money paid by a borrower to a lender in exchange for the use of the lender’s money for a certain period of time |
| Lender | A business that makes money available for others to borrow |
| Loan | An agreement where the borrower agrees to repay money to a lender with interest over a period of time. |
| Revolving Credit | A type of credit allowing an individual to borrow certain amount of money, repay the money borrowed with interest when it is due, and then borrow the money again. |
Created by:
Nancyp28
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