FINANCIAL TERMS, RULES, AGENCIES: Credit

Revolving Credit

A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customer's current cash flow needs.

Installment Loans/Credit

A loan that is repaid by the borrower in regular installments.

Pawn Shops

A pawnbroker's shop, especially one where unredeemed items are sold to the public.

Consumer Credit Counseling Services (CCCS)

A process that is used to help individual debtors with debt settlement through EDUCATION, budgeting and the use of a variety of tools with the goal to reduce and ultimately ELIMINATE DEBT.

Grace Period

A provision in most loan and insurance contracts which allows payment to be received for a certain period of time AFTER the actual DUE DATE.

Payday Loans

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.

Creit Report

A report that shows the specifics of someone's ability to pay back things on time.

Pawn Ticket

A ticket issued by a pawnbroker in exchange for an article pawned, bearing particulars of the loan.

Debtors Anonymous

A twelve-step PROGRAM for people who want to stop incurring unsecured debt.

Secured Credit Card

A type of credit card that is backed by a savings account used as collateral on the credit available with the card.

Variable Rate

A type of loan in which the interest rate is not fixed.

Cash Advances

Allows cardholders to WITHDRAW cash, either through an ATM or over the counter at a bank or other financial agency, up to a certain limit.

Auto Finance Companies

Allows someone to acquire a CAR with any arrangement OTHER THAN a single lump payment. The provision of car finance by a third party supplier allows the acquirer to provide for and raise the funds to compensate the initial owner, either a dealer or manufacturer.

Bankruptcy: CHAPTER 13

Also called a WAGE EARNER'S PLAN. It enables individuals with regular income to develop a plan to repay all or part of their debts.

Line of Credit

An amount of credit extended to a borrower.

Bankruptcy

Like a RESET BUTTON on all your debts, only used when someone is in COMPLETE FINANCIAL FAILURE.

Title for Goods

Ownership of real property which is totally free of claims against it and therefore can be sold, transferred, or put up as security (placing a mortgage or deed of trust on the property).

Predatory Lending

Predatory lending is any lending practice that imposes unfair or abusive loan terms on a borrower.

Credit Score

Someone's personal SCORE that shows how credible they are with paying things back.

Collateral

Something PLEDGED as security for repayment of a loan, to be FORFEITED in the event of a default.

Usury

The ILLEGAL action or practice of lending money at unreasonably high rates of interest.

Credit Rating

The RATING of an individuals ability to pay things back on time.

Co-signed Loans

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.

Balance Owed

The balance you owe.

Consolidation Loans

The combining of several unsecured debts into a single, new loan that is more favorable.

Default

The failure to promptly pay interest or principal when due.

Late Fee

The fee incurred by being LATE with a payment.

APR (Annual Percentage Rate)

The interest rate for a whole year (annualized).

Credit Limit

The maximum amount a credit card company will allow someone to borrow on a single card.

Liquidation

The process by which a company (or part of a company) is brought to an end, and the assets and property of the company are REDISTRIBUTED.

Tax Preparers

The process of preparing tax returns, often income tax returns, often for a person other than the taxpayer, and generally for compensation.

Foreclosure

The process of taking possession of a mortgaged property as a result of the mortgagor's failure to keep up mortgage payments.

Prepayment

The satisfaction of a debt or installment payment before its official due date.

Repossession

The taking back of property by a lender or seller from the borrower or buyer, usually due to default.

Finance Charge

The total cost of credit a customer must pay on a consumer loan, including interest.

Identity Theft

When someone steals your identity.

Lien

A RIGHT to keep POSSESSION of property belonging to another person until a debt owed by that person is discharged.

Secured Loans

A SECURED loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan.

Unsecured Loans

A UNSECURED loan that is issued and supported only by the borrower's creditworthiness, rather than by a type of collateral. An unsecured loan is one that is obtained without the use of property as collateral for the loan.

Charge Cards

A card that provides a payment method enabling the cardholder to make purchases which are paid for by the card issuer, to whom the cardholder becomes indebted.

Garnishment

A court order directing that money or property of a third party (usually wages paid by an employer) be seized to satisfy a debt owed by a debtor to a plaintiff creditor.

Bank

A financial institution.

Home Equity Loans

A home equity loan is a type of loan in which the borrower uses the equity of his or her home as collateral. Home equity loans are often used to finance major expenses such as home repairs, medical bills, or college education.

Mortgage

A legal agreement that conveys the conditional right of ownership on an asset or property by its owner (the mortgagor) to a lender (the mortgagee) as security for a loan.

Promotional Rate

A limited-time offer of a higher rate of return on a certificate of deposit (CD) offered by banks and credit unions to attract new deposits.

Credit History

An individuals history of paying things back.

Variable Interest

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.

Fixed Interest Rate

An interest rate that does not change over the life of a loan or other form of credit.

3 C's of Credit

Capacity, Character, Collateral.

Credit Cards

Cards that use credit (borrowed money).

Credit Card Companies

Companies that GIVE credit cards.

Due Date

Date on which a debt must be paid.

Consumer Debt

Debt of Consumers.

Truth in Lending Act of 1968

Designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed.

Credit Reporting Agency

Firms that collect, store, analyze, summarize, and sell credit related information on persons and firms for a fee.