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credit vocabulary
| Term | Definition |
|---|---|
| Creditor | : one to whom a debt is owed especially : a person to whom money or goods are due |
| Capital | especially : relating to or being assets that add to the long-term net worth of a corporation capital improvements |
| Collateral | : property (such as securities) pledged by a borrower to protect the interests of the lender |
| Principal | : a capital sum earning interest, due as a debt, or used as a fund |
| Finance charge | A finance charge is the total dollar cost of borrowing money or using credit, combining ongoing interest and mandatory administrative fees. |
| Debt collector (collection) | When a debt is placed in collection, an original creditor has passed or sold your past-due account to a third-party or collection agency |
| Credit bureau | : a private business that compiles information on consumers' creditworthiness and provides this information to lenders |
| Character | In finance, character refers to a borrower's reputation, trustworthiness, and track record for repaying debts |
| Credit report | A credit report is a summary of your personal credit history and financial data |
| Capacity | Capacity is the maximum amount that something can hold, contain, or produce, or a person's ability to do something |
| Credit history | Your credit history is a detailed record of how you borrow and repay money, which lenders use to decide if you are a safe person to lend to. |
| Credit rating | A credit rating is an independent assessment of a corporation, government, or country's ability to repay its debt obligations. |
| 20/10 rule | The 20/10 Rule of Thumb is a financial guideline designed to help you keep consumer debt at a safe and manageable level. |
| Debtor | A debtor is an individual, company, or government that owes money or obligations to another entity. |
| Bankruptcy | Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. |
| Secured loans | A secured loan is a type of loan backed by a valuable asset, known as collateral, which the lender can seize if you fail to repay the debt. |
| Unsecured loans | An unsecured loan is a type of loan that does not require you to provide collateral, such as a house or a car, to back the borrowed money. |
| Reaffirmation | a voluntary legal contract made during bankruptcy where a debtor promises to repay a specific debt that would otherwise be discharged. |
| Involuntary bankruptcy | Involuntary bankruptcy is a legal process initiated by creditors to force a debtor into bankruptcy when they fail to meet significant debt obligations |
| Voluntary bankruptcy | Voluntary bankruptcy is a bankruptcy proceeding commenced by the debtor; bankruptcy instituted by an adjudication upon a debtor's petition. |
| Discharged debts | A discharged debt is a legal release from personal liability for specific debts, meaning you are no longer legally required to pay them. |
| Liquidation | Liquidation or winding-up is the process in law by which a company is brought to an end and its assets and property distributed to claimants |
| Reorganization | Reorganization is the structural change of a business or system to improve how it works and operate more effectively |
Created by:
Merigail Fair