Term | Definition |
credit | an arrangement to receive cash, goods, or services now and pay for them in the future. |
consumer credit | the use of credit for personal needs |
creditor | a financial institution, merchant or individual that lends money |
closed-end credit | credit as a one-time loan that you will pay back over a specified period of time in payments of equal amounts |
open-end credit | credit as a loan with a certain limit on the amount of money you can borrow for a variety of goods and services |
line of credit | maximum amount of money a creditor will allow a credit user to borrow |
grace period | a time period which no finance charges will be added to your account |
finance charge | the total dollar amount you pay to use credit |
net income | income you receive ...take home pay |
annual percentage rate | cost of credit on a yearly basis expressed as a percentage |
collateral | a form of security to help guarantee that the creditor will be repaid |
simple interest | interest compounded only on the principal, the amount that you borrow. |
cosigning | this means that you agree to be responsible for the loan payments if the other person fails to make them |
bankruptcy | legal process in which some or all of the assets of a debtor are distributed among the creditors because the debtor is unable to pay his or her debts |
finance | give or get money for |
title | document showing ownership |
portion | part |
pledged | promised |
promptly | on time |
imposters | people who deceive others by assuming different identities |
repossess | take back |
confidential | private |
credit rating | measure of a person's ability and willingness to make credit payments on time |
FICO score | a credit score between 350 and 850 used to determine how risky a borrower is. |