A person or company (like a bank) that lends money or extends credit to someone else

The money or cash reserves you already have (like a down payment), showing you have skin in the game

An asset (like a house or car) that you pledge as backup security for a loan; the lender can take it if you don't pay.

The original amount of money borrowed on a loan, not including interest

The total dollar cost of borrowing money, including interest, service fees, and carrying charges

Debt collector (collection)

A company hired or purchased by a creditor to pursue and recoup unpaid, overdue debts

A company (like Equifax, Experian, or TransUnion) that collects and stores financial information about how you handle money.

Your reputation for paying back debt, judged by your past borrowing history

A detailed written statement of your credit history compiled by a credit bureau.

Your financial ability to repay a loan, usually measured by comparing your income to your existing debt

The long-term track record of your financial behavior, detailing if you pay bills on time and how much you owe.

A standardized score (often called a credit score) that predicts how likely you are to pay back a loan.

A budgeting guideline stating that you should never borrow more than 20% of your annual net income, and your monthly debt payments should never exceed 10% of your monthly net income

A person or company that owes money and is responsible for paying it back

A legal court process that helps individuals or businesses get relief from debts they cannot pay.

Loans backed by collateral (e.g., a mortgage or car loan) that carry less risk for the lender.

Loans not backed by collateral (e.g., credit cards or student loans), relying entirely on your promise to pay

A legal agreement during bankruptcy where a debtor promises to keep paying a specific debt (like a car loan) so they can keep the asse

Involuntary bankruptcy

A bankruptcy process forced upon a debtor by their creditors to demand payment.

A bankruptcy process initiated by the debtor seeking financial relief.

Debts that a bankruptcy court wipes away, meaning the debtor is legally no longer required to pay them back.

A bankruptcy process where a debtor's non-exempt assets are sold to pay off creditors in exchange for wiping out remaining debts.

A bankruptcy process where the debtor keeps their assets but restructures their debt into an approved repayment plan

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Credit Vocab

Question	Answer
Creditor	A person or company (like a bank) that lends money or extends credit to someone else
Capital	The money or cash reserves you already have (like a down payment), showing you have skin in the game
Collateral	An asset (like a house or car) that you pledge as backup security for a loan; the lender can take it if you don't pay.
Principal	The original amount of money borrowed on a loan, not including interest
Finance charge	The total dollar cost of borrowing money, including interest, service fees, and carrying charges
Debt collector (collection)	A company hired or purchased by a creditor to pursue and recoup unpaid, overdue debts
Credit bureau	A company (like Equifax, Experian, or TransUnion) that collects and stores financial information about how you handle money.
Character	Your reputation for paying back debt, judged by your past borrowing history
Credit report	A detailed written statement of your credit history compiled by a credit bureau.
Capacity	Your financial ability to repay a loan, usually measured by comparing your income to your existing debt
Credit history	The long-term track record of your financial behavior, detailing if you pay bills on time and how much you owe.
Credit rating	A standardized score (often called a credit score) that predicts how likely you are to pay back a loan.
20/10 rule	A budgeting guideline stating that you should never borrow more than 20% of your annual net income, and your monthly debt payments should never exceed 10% of your monthly net income
Debtor	A person or company that owes money and is responsible for paying it back
Bankruptcy	A legal court process that helps individuals or businesses get relief from debts they cannot pay.
Secured loans	Loans backed by collateral (e.g., a mortgage or car loan) that carry less risk for the lender.
Unsecured loans	Loans not backed by collateral (e.g., credit cards or student loans), relying entirely on your promise to pay
Reaffirmation	A legal agreement during bankruptcy where a debtor promises to keep paying a specific debt (like a car loan) so they can keep the asse
Involuntary bankruptcy	A bankruptcy process forced upon a debtor by their creditors to demand payment.
Voluntary bankruptcy	A bankruptcy process initiated by the debtor seeking financial relief.
Discharged debts	Debts that a bankruptcy court wipes away, meaning the debtor is legally no longer required to pay them back.
Liquidation	A bankruptcy process where a debtor's non-exempt assets are sold to pay off creditors in exchange for wiping out remaining debts.
Reorganization	A bankruptcy process where the debtor keeps their assets but restructures their debt into an approved repayment plan

Created by: user-1961597

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