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Credit Vocab
Financial Literacy
| Term | Definition |
|---|---|
| Creditor | a party whom money is owed |
| Capital | Wealth in the form of money or assets, taken as a sign of the financial strength of an individual, organization, or nation, and assumed to be available for development or investment |
| Collateral | Secondary, subordinate, or supplementary item accompanying a primary item |
| Principal | A party who designates another (the agent) to act on his or her behalf. |
| Debt collector (collection) | Process of recovering amounts owed to a firm by its customers |
| Credit bureau | a company that collects information relating to the credit ratings of individuals and makes it available to credit card companies, financial institutions |
| Character | Letter, number, punctuation mark, other mark or symbol, and 'space' any element of a given character set |
| Credit report | Document supplied by a bank or a credit reporting agency (such as Dun & Bradstreet) that summarizes an entity's credit history and present financial position, and notifies about any lien in force or pending judgment(s) against the entity |
| Capacity | Specific ability of an entity (person or organization) or resource, measured in quantity and level of quality, over an extended period |
| Credit history | Record of a borrower's payment behavior that reflects his or 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 the loans and credit cards should be no more than 10% of your monthly after-tax income. |
| Debtor | A person who owes money |
| Bankruptcy | Legal procedure for liquidating a business (or property owned by an individual) 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 in case of default |
| Unsecured loans | Loan extended only on the basis of the borrower's financial position, creditworthiness, credit history, and general reputation |
| Reaffirmation | a confirmation of a fact or belief |
| Involuntary bankruptcy | A legal proceeding in which a person or business is requested to go into bankruptcy by creditors, rather than on the person or business' own accord |
| Voluntary bankruptcy | US term for legal proceedings whereby a debtor entity, on its own initiative, files a petition seeking relief from creditors |
| Discharged debts | The cancellation or forgiveness of a debt |
| Liquidation | Winding up of a firm by selling off its free (un-pledged) assets to convert them into cash to pay the firm's unsecured creditors |
| Reorganization | Restructuring of a firm's operations, in order to concentrate on core activities and outsource peripheral ones, often requiring reduction in workforce |
| Finance charge | Total cost of borrowing, including interest charges, commitment fees, and other charges paid by the borrower for availing the loan facility |
Created by:
s.halee.mcatee
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