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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 |
Created by:
laurenlend
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