Credit and Debt Vocabulary

Alternative credit

Short-term loan that provides immediate cash by securing a borrower's written check or automatic withdrawal form Alternative credit can be used by people who have little or no credit history.

Co-signer

The act of signing for another person's debt which involves a legal obligation made by the cosigner to make payment on the other person's debt should that person default. Having a cosigner is way for individuals with a low income or poor/limited credit history to obtain financing. Having a cosigner is way for individuals with a low income or poor/limited credit history to obtain financing.

Collection agency

a business or other entity that specializes in debt collection, i.e. pursues payments of debts owed by individuals or businesses. A collection agency is also known as a debt collector.

Refund anticipation loan

short-term cash advance secured by a taxpayer's expected tax refund. If the tax refund is less than expected, the borrower owes the lender the difference. Taxpayers are generally charged fees and interest to obtain a Refund anticipation loan.

Credit

the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future. Credit can be divided by secured and unsecured.

Title loan

the borrower gives the lender his or her automobile title in exchange for a set amount of cash. The lender hold the title until the loan is repaid, if the loan is not repaid as agreed, the lender keeps title to the item. In a title loan situation, the lender holds the title until the loan is paid back.

Borrower

A legal term for a person or entity that obtains funds from a business or individual for a specified period of time upon condition of promising to repay the loan. Borrower is an individual, organization or company that is using funds, materials or services on credit.

Foreclosures

the process of taking possession of a mortgaged property as a result of the mortgagor's failure to keep up mortgage payments. Foreclosure is the process by which a homeowner's rights to a property are forfeited .

Annual percentage rate (APR)

An annual percentage rate (APR) is the annual rate that is charged for borrowing, expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan. Annual percentage rate is corresponding sometimes to a nominal APR and sometimes to an effective APR.

Annual fee

Any fee that is charged on a yearly basis Annual fee is a separate fee from interest rate on purchases.

Returned payment fee

a charge a credit card company may assess to a customer's account if the customer attempts to pay a credit card bill with a check that is returned unpaid. Returned payment fees discourage credit card customers from submitting checks that they know will not clear because their checking account has insufficient funds.

Over the limit fee

a fee charged when your balance goes over your credit limit. Over the limit fee is one of things that have to consider, when we choose a credit card.

Pawn loan

a loan based on the value of personal property. The personal property is held until the borrower repays the loan, including any fees. Pawn loan is a easy way to borrow money.

Closed-end credit

a loan which you must repay in a specified number of equal monthly payments A mortgage is an example of closed-end credit.

Credit score

a number assigned to a person that indicates to lenders their capacity to repay a loan. A credit score is based on, among other things, a person's past credit history.

Credit history

a record of a borrower's responsible repayment of debts. A credit history is a record of a borrower's responsible repayment of debts.

Payday loan

a relatively small amount of money lent at a high rate of interest on the agreement that it will be repaid when the borrower receives their next paycheck. A payday loan is a small, short-term unsecured loan.

Credit report

a report detailing a person's financial history specifically related to their ability to repay borrowed money. A credit report is a record of the borrower's credit history from a number of sources, including banks, credit card companies, collection agencies, and governments.

Credit card

a small plastic card issued by a bank, business, etc., allowing the holder to purchase goods or services on credit. Credit cards charge interest and are primarily used for short-term financing.

Credit reporting agencies

agencies that will report an individuals or businesses. Credit reporting agencies are generally one of two types: reporting either on individuals or on businesses.

Pre-Approved

an evaluation of a potential borrower by a lender that determines whether the borrower qualifies for a loan from the lender, or the maximum amount that the lender would be willing to lend. Pre-Approved is an evaluation of a potential borrower by a lender that determines whether the borrower qualifies for a loan from the lender.

Penalty APR

an existing balance (i.e. purchases you have already made) is if you are 60 days delinquent in making a minimum payment. The Penalty APR is the interest rate that is applied to either a portion or the entirety of your balance once your credit card is in default.

Introductory rate

an interest rate charged to a customer during the initial stages of a loan. An introductory rate is also known as a teaser rate.

Variable-rate APR

an interest rate on a loan or security that fluctuates over time, because it is based on an underlying benchmark interest rate or index that changes periodically. When the Prime Rate goes up or down, your variable rate APR may change, depending on whether your issuer updates your rates monthly or quarterly.

Lender

an organization or person that lends money. A lender can be an individual, or a public or private group.

Rent-to-own

furniture, electronics, or household appliances are leased with the conditions that the item will be owned by the renter if the term of rent is completed. The cumulative end amount a consumer pays to lease an item is typically much higher than if the consumer bought the item from the onset. Rent to own is also known as rental purchase.

Late payment fee

is charged to a borrower who misses paying at least their minimum payment by the payment deadline. When we choose a credit card, late payment fee is one of things that have to consider.

Open-end credit

is extended as a line of credit established in advance, so you do not have to apply for credit each time credit is desired. Credit card is one of the examples of Open'end credit.

Balance transfers

is where part or all of a debit balance you owe to another lender is transferred from one credit card to another, usually to save money on interest rates. A balance transfer credit card can be good way to slow down and take stock of your debt.

Credit limit

refers to the maximum amount a credit card company will allow someone to borrow on a single card. When we use a credit card, we have to consider the credit limit.