5 C's
Wage Assignment
..., - most state restrict amount of wages assignabl
Principle
..., a truth, a rule, or a law
Capacity
Can you repay the loan? Current income, debts you already have insured, large amount of debt in proportion to your income lenders probably will not extend more credit.
Living Within Your Means
Spending money that you have without going over.
Numerical range of FICO Score
...The FICO Score uses a numerical range of 300 to 850, where higher scores also indicate lower credit risk. The Equifax Credit Score can be used to calculate a score for not only your Equifax credit file, but also your Experian and TransUnion credit files.
Non-Secured Loan
...loan that is not backed up by collateral
Three advantages to using credit
1. Being able to get a mortgage (and getting a good rate, which applies to car loans as well, which will actually save you money if you decide to finance) to allow you to buy a house and build equity. 2. Ability to cover emergency expenses. 3. Do simple things like rent a car, rent movies, buy stuff online (although this can be done just as easily with a debit card).
Three risks to using credit
1.High interest rates 2.Easy to spend 3.Missing on repayments is costly
FICO Score breakdown
A FICO score is a credit score developed by FICO, a company that specializes in what's known as "predictive analytics," which means they take information and analyze it to predict what's likely to happen.
Interest
A sum paid or charged for the use of money or for borrowing money
Annual Fee
An amount that credit card companies can charge for the use of a credit card.
5 C's or Credit
Collateral, Credit History, Capacity, Capital, Character.
Capital
What are your assets? Lenders want to make sure that you have enough capital to pay back a loan. If you lost your source of income you could still repay the loan.
Collateral
What if you do not repay the loan? What assets do you have to secure the loan?
Credit History
What is your credit history? Responsible use of credit obtain copy of credit report from credit bureau. Equaifax. Experian. TransUnion.
Character
Will you repay your loan? Creditors want to know what kind of person they are lending money to. Stability, trustworthy.
Installment loan
a loan repaid with interest in equal periodic payments
Two ways to pay off credit card debt
pay off debt with the highest interest rate, and pay off the the lowest debt
Default Payment Clause
. Any payment not made within days after it is due in accordance with this Agreement shall bear interest above the.
Disclaimer
..., A denial of responsibility or knowledge
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.
Creditor
..., A person to whom money is owed
Grace Period
..., A time period during which no finance charges will be added to your account
Fair Credit Reporting Act
..., Act that protects privacy of background information and ensures that information supplied is accurate.
Truth in Lending Act
..., An act which requires lenders to inform borrowers of all direct, indirect and true costs of credit.
Collateral
..., An asset that a bank hold as security for the repayment of a loan
Annual Percentage Rate
..., Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan.
Open ended Credit
..., Credit as a loan with a certain limit on the amount of money you can borrow for a variety of goods and services
Fair Credit Billing Act
..., Federal legislation that outlines the patient's rights regarding errors on a bill.
Security Interest
..., Interest given to creditors
Equal Credit Opportunity Act
..., Laws Regulating Home Mortgage Lending (3)
Secured Loan
..., Loan that is backed up by collateral
Credit Limit
..., The maximum amount of credit a lender will extend to a customer
Consumer Credit Reporting Reform Act
..., TransUnion, Equifax, and Experian
Closed ended Credit
..., a loan for a specific amount that must be repaid in full, including all finance charges, by a stated due date
Fair Debt Collection Practices Act
..., added to Consumer Credit Protection Act, makes abusive and deceptive collection practices illegal
Debt
..., an obligation to pay or do something
What is credit?
..., buying a good or service now and paying for it later
Credit Insurance
..., insurance that protects non-retailing businesses from abnormal bad-debt losses
Fiance Charge
..., the charge for using a credit card, comprised of interest costs and other fees.
primary credit reporting agencies
...Equifax Experian TransUnion