Credit and Debt

Mortgage

a conditional conveyance of property as security for the repayment of a loan

PIN

a number you choose and use to gain access to various accounts

Bankruptcy

legal inability to pay off debts/ legal proceeding that helps people whom cannot pay their bills get a fresh financial start by temporarily, or permanently, preventing creditors from collecting debts from them

Secured Loans

loans backed by collateral that the bank can claim if the borrowers do not repay them

Unsecured Loans

loans backed only by the borrowers' good reputation and previous credit rating

Default

loss resulting from failure of a debt to be paid

Pawn Shops

stores that make loans on the value of some tangible possession. they charge high fees and interest rates.

Ownership

the act of having and controlling property

Usury

the act of lending money at an exorbitant rate of interest

Repossession

the action of regaining possession (especially the seizure of collateral securing a loan that is in default)

Identity Theft

the co-option of another person's personal information (e.g., name, social security number, credit card number, passport) without that person's knowledge and the fraudulent use of such knowledge

Due Date

the date on which a financial obligation must be repaid

Lien

the right to take another's property if an obligation is not discharged

Tax Preparers

use their knowledge of federal, state, and local tax codes and publications to prepare tax returns and make sure that their clients do not pay unnecessary taxes.

Co-signed Loans

when someone with strong established credit signs a contract along with the borrower, agreeing to full responsibility of the repayment of the loan

Revolving Credit

A form of credit in which the total amount of the bill does not have to be paid each month; however, a finance charge will be figured on the amount not paid. Additional purchases can be made even though money is owed on previous purchases. The lender typically establishes an approved credit limit to represent the maximum amount of credit available. Credit cards are usually revolving credit.

Minimum Amount Due

A loan payment option that covers the minimum amount due monthly

Fixed Rate of Interest

A loan with an interest rate that will remain at predetermined "fixed" rate for the life or term of the loan. It does not fluctuate.

Credit Score

A rating used by credit reporting companies to help lenders decide whether and/or how much credit can be extended to a borrower.

Credit History

A record of your borrowing and paying habits. Credit reporting companies track your history and supply this information to credit card companies, credit unions, and other lenders.

Credit Rating

An estimate of the ability to fulfill financial commitments, based on previous dealings.

Variable Rate

An interest rate that changes at the discretion of the credit card company or lender

Credit Reporting Agency

An organization that keeps a running record of the financial and credit transactions of credit users and the credit worthiness of consumers. They sell information to creditors, landlords, insurers, employers, and other businesses.

Predatory Lending

Any of a number of fraudulent, deceptive, discriminatory, or unfavorable lending practices. Many of these practices are illegal, while others are legal but not in the best interest of the borrowers.

The Four Cs of Credit

Collateral refers to something of value that a debtor is willing to forfeit if he or she is unable to repay the loan. Capital is the amount of valuable items a credit user has and is willing to let lenders sell should the debtor not pay his or her charges. Capacity is the amount of payments a debtor can afford and the debtor's ability to repay a loan. To determine a debtor's capacity, lenders look at his or her income and employment patterns. Character refers to how trustworthy a debtor is. Lenders will look at a person's credit record to see if the person usually pays his or her bills on schedule.

Bankruptcy Chapters 7,11, and 13

In order to qualify for Chapter Seven (Liquidation Under the Bankruptcy Code), you must have a substantially low income or must be unemployed. Chapter Eleven( Municipality Bankruptcy) however, is for people who are in limited debt and have a more established income. Both of these basically erase any obligation to pay most if not all of your debt. Chapter Thirteen (Individual Debt Adjustment) however refers to the adjustment of debts of an individual with regular income and goes on to allow a debtor to keep property and pay off debts over time, usually three to five years.

Consumer Debt

Money people owe to banks or stores for goods they have purchased

Liquidation

Process by which non-exempt assets are sold and assets distributed equitably among creditors

Home Equity Loans

Second mortgages, used to finance home improvements and other purchases, where homeowners can borrow against the accumulated equity in the home.

Interest [APR]

The interest rate is the percentage of the loan amount that is charged for borrowing money. We can consider this the base fee. It is very important when comparing loan quotes since it directly affects monthly payments.The APR is a calculated rate that not only includes the interest rate but also takes into account other lender fees required to finance the loan. The idea behind APR is to help consumers understand the tradeoffs between interest rate and the fees paid at closing (such as paying higher fees to lower interest rates or increasing interest rates to cover closing costs).

Prepayment

The unscheduled partial or complete payment of the principal amount outstanding on a loan, such as a mortgage, before it is due.

Consolidation Loans

When 2 or more loans is consolidated into one new loan with a longer repayment term and lower monthly payments

Credit Cards

a card that allows a person to charge at the moment and pay later

Charge Cards

a card used for making payments; balance must be paid in full when the statement is received

Secured Credit Card

a credit card linked to a savings account where the lender may claim the funds in the account in the event that payments are not made

Low Credit Rating

a credit rating around 500 or lower is high enough risk that many lenders will refuse a line of credit, and those that do grant one will penalize the borrower with high interest rates and difficult terms.

Bank

a financial institution that accepts deposits and channels the money into lending activities

Line of Credit

a given amount of unsecured short-term funds a bank will lend to a business, provided the funds are readily available

Title for Goods

a legal document that provides a history of ownership and entitlement by the current owner

Installment loans/credit

a loan that is repaid with a fixed number of periodic equal-sized payments

Payday Loans

a loan where a borrower gets a cash advanced based on his paycheck. These loans generally must be repaid on the next payday

Credit Report

a negative record of an individual's or company's past borrowing and repaying, including information about late payments and bankruptcy.

Penalty

a payment required for not fulfilling a contract

Late Fee

a penalty for making a payment after the due date

Collateral

a security pledged for the repayment of a loan i.e. property or assets

Grace Period

a time period during which no finance charges will be added to your account

Debtors Annonymous

a twelve-step program for people who want to stop incurring unsecured debt.

Balance Owed

amount owed on a loan (also called principal balance)

Fixed Interest Rate

an interest rate that does not change from month to month

Variable Interest

an interest rate that moves up and down based on the changes of an underlying interest rate index

Finance Charge

any fee representing the cost of credit, or the cost of borrowing. It is interest accrued on, and fees charged for, some forms of credit

Credit Card Companies

bank or business that allows somebody to purchase goods and services and pay for them later, often with interest

Garnishment

court-ordered procedure by which a portion of a delinquent debtor's wages are paid to satisfy the debt

Cash Advances

money lent: a loan given in cash, especially by an employer or credit card company, in anticipation of the borrower's actual ability to repay it

Consumer Credit Counseling Services (CCCS)

non-profit organization that provides free or low cost counseling and guidance to people experiencing financial difficulty

Overspending

puchasing more than your budget allows

Truth in Lending Act of 1968

requires providers to make certain written disclosures concerning all finance charges and related aspects of credit transactions (including disclosing finance charges expressed as an annual rate)

Credit Limit

the highest amount you may charge on a credit card. Your limit is set by your card company's opinion of your ability to handle debt.

APR (Annual Percentage Rate)

the interest rate paid per year on borrowed money.

Foreclosure

the legal proceedings initiated by a creditor to repossess the collateral for loan that is in default

Minimum Payment

the smallest amount you can pay and remain a borrower in good standing

Mortgage Brokers/Lenders

those responsible for providing funds for a mortgage