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Credit Unit Vocab
for 3/7/2023
| Term | Definition |
|---|---|
| Creditor | one to whom a debt is owed |
| Capital | cash or liquid assets being held or obtained for expenditures |
| Collateral | an asset that a lender accepts as security for extending a loan |
| Principal | money lent to a borrower or put into an investment |
| Finance Charge | a fee charged for the use of credit or the extension of existing credit |
| Debt Collector | a company or agency that is in the business of recovering money owed on delinquent accounts |
| Credit Bureau | a company that collects information relating to the credit ratings of individuals and makes it available to credit card companies, financial institutions, etc |
| Character | the composition of a borrower's financial history and financial health |
| Credit report | a statement that has information about your credit activity and current credit situation |
| Capacity | the financial limit of an organization's ability to absorb losses with its own funds or borrowed funds without major disruption |
| Credit history | the ongoing documentation of an individual's repayment of their debts |
| Credit rating | an estimate of the ability of a person or organization to fulfill their financial commitments, based on previous dealings. |
| 20/10 Rule | total household debt (not including house payments) shouldn't exceed 20% of your net household income. |
| Debtor | a person or institution that owes a sum of money. |
| Bankruptcy | the status of a debtor who has been declared by judicial process to be unable to pay his debts |
| Secured loans | business or personal loans that require some type of collateral as a condition of borrowing |
| Unsecured loans | loans that don't require collateral |
| Reaffirmation | Agreeing to repay the excess loan amount in accordance with the terms of the promissory note |
| Involuntary bankruptcy | a legal proceeding through which creditors request that a person or business go into bankruptcy |
| Voluntary bankruptcy | where you petition for your own Bankruptcy, as opposed to one of your creditors taking action against you, perhaps against your wishes |
| Discharged debts | releases the debtor from personal liability for certain specified types of debts |
| Liquidation | the process of selling off assets to repay creditors and dissolve a business |
| Reorganization | when a bankrupt company restructures its debt obligations without going out of business |
Created by:
lawsonharris
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