Credit Basics Word Scramble
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Term | Definition |
Closed-end Credit | Loan which you, the borrower, must repay the amount in a specified number of equal payments |
Open-end Credit | Extended line of credit (limit on card) established in advance |
Recommended amount to borrow | The total amount of credit should never exceed over 20% of your annual net income, less than 10% of your monthly income |
Benefits of using money saved instead of credit | No interest, no contract, not spending future income |
disadvantage of using money instead of credit | No "rainy day" fund |
credit | Get good today, pay back another day |
Credit availability depends on.... | if lenders trust you will pay back the loan as agreed |
features of alternative credit | may combine elements of closed and open-end credit, usually has higher interest rates, and usually has higher fees |
Title and Pawn loan | Borrower gives the lender their car title or personal property in exchange for cash (based on value of item) |
Payday loan | Short term loan that provides immediate cash by securing a borrower's pay check or automatic withdrawal form |
Rent-to-own | Borrower leases tangible items with the condition that the item will be owned by the renter if the item of rent is completed |
Refund anticipation loan | lender gives borrower a loan based upon their anticipated tax refund |
Credit application | a form requesting information about a credit applicant |
Why might a lender check a persons credit history? | to evaluate your credit report and score |
what information does the credit application include? | social security number, credit history, ability to pay credit, etc. |
What is the trade off to no credit history check? | higher interest rates and fees |
credit sources | private mortgage companies, government (student loans), depository institutions (Bank of America), etc. |
Credit limit | amount of money the borrower can spend on a credit card |
interest | pay principal plus pre-determined percentage |
minimum payment | a minimum amount of money a borrower must pay back by the due date |
APR | annual percentage rate |
late payment fee | a fee that is added to the amount that a person must pay because they didn't make the payment by the due date |
over-the-limit fee | a fee when a person spends over the credit limit |
Penalty APR | higher interest charged on new transactions when the term are not met on the contract |
credit card | type of credit, has pre determined amount of money on it that the person holding the card has to pay back to the lender |
debit card | card that directly takes money from a persons bank account. You pay it back immediately without and interest or fees |
bankruptcy | When a debtor’s assets are sold to settle unpaid debts and the debtor is no longer responsible for further debt beyond what was recovered. |
Certified Mail | Mail that gives the sender proof of receipt from the U.S. Postal Service. |
Credit History | A summary of a person’s borrowing and repayment history. |
Credit Report | A report on a person’s creditworthiness that includes identifying information, credit cards, late payments, bankruptcies, and savings balances. |
Fair Credit Reporting Act (FCRA) | Federal law giving consumers the right to view and correct their credit information. |
FICO Expansion Score | A creditworthiness score that, like the regular FICO score, is based on nontraditional accounts and financial information sources and is designed for young persons, new immigrants, or others without a traditional credit history |
FICO Score | Credit score from 300–850 that rates how likely a person is to fall 90 days behind in a payment. |
Foreclosure | When a bank takes back a property and auctions it off to recover the unpaid loan amount. |
Installment Loan | Loan with equal number of payments of the same amount over a fixed period of time. |
Lien | A promise to reclaim an item bought with loaned money if the loan is not repaid. |
Created by:
itskatie_98
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