Credit

Open‐end credit

A line of credit established in advance so that a borrower does not have to apply for credit each time new credit is desired. Also known as revolving credit

Closed‐end credit

A loan of a certain amount of money that a borrower must repay in a specified number of equal payments. Also known as installment credit

Unsecured Loan

A loan that doesn't require any collateral.

Credit score

A numerical summary of your credit history that indicates your credit worthiness (likelihood of repaying a loan as agreed)

Lender

A person or organization who makes funds available for others to borrow

Co‐signer

A person who is equally responsible for paying back debt under the credit terms

Credit card

A plastic card that you can use to access a line of credit that has been established in advance

Credit report

A record of a person's use of credit

Credit history

A record of the borrower's past loans and credit‐related transactions

Interest

A sum paid or charged for the use of money or for borrowing money

Amortization Schedule

A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero.

Collateral

A valuable asset that is pledged to ensure loan payments.

Annual fee

A yearly fee that may be charged for having a credit card

Credit reporting agencies

Agencies that create credit reports based on the information they receive from lenders regarding a borrower's account history with that lender. Sometimes called credit bureaus

Loan

An amount of money given to the borrower for a set period of time. After the set time has passed, the money must be paid back plus interest. Payments are normally made over a series of months.

Returned payment fee

Fee charged if the cardholder makes a payment but does not have enough money in that account to cover the payment

Over‐the‐limit fee

Fee charged if the credit card account balance goes over the set credit limit

Late payment fee

Fee charged when a credit card holder does not make the minimum monthly payment by the due date

Secured Loan

Loan that is backed up by collateral

Credit

Refers to goods, services and/or money received in exchange for a promise to pay back a definite sum of money at a future date

Borrower

Someone who receives something with a promise to return it or its equivalent

Schumer Box

Terms and fees of a credit card in an easy to read box on all credit card applications and solicitations

Introductory rate

The APR charged during the credit card's introductory period after a credit card account is opened

Balance transfers

The act of transferring debt from one credit card account to another

Annual percentage rate (APR)

The cost of credit expressed as a yearly interest rate

Penalty APR

The interest rate charged on new transactions if the penalty terms in the credit card contract are triggered

Credit limit

The maximum dollar amount that can be borrowed

Principal

The original amount borrowed

Foreclosures

When a borrower fails to keep up with mortgage payments and the lender takes possession of the property