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Glossary of Credit terms - Ch. 6

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a bank, finance company, credit union, business, or individual to which money is owed
creditor
use of credit for personal needs
consumer credit
a periodic charge in exchange for the use of credit
interest
a type of credit where one receives a one-time loan that is paid back over a specified period of time and in = payments
closed-end credit
borrowing money for a variety of goods and services with a certain limit of the amt. of money one can borrow
open-end credit
maximum amt. of money the creditor has made available to a person
line of credit
a time period during which no finance charges are added to one's account
grace period
total dollar amt. you pay to use credit
finance charge
income you receive (take-home pay)
net income
how much credit costs you on a yearly basis, expressed as a percentage
APR
smallest amt. you can pay and remain in good standing
minimum monthly payment
interest computed ONLY on the principal
simple interest
the amount you borrow
principal
a measure of a person's ability and willingness to make credit payments on time
credit rating
you agree to be responsible for loan payments if the other party fails to make them
co-signing
a legal process in which some of all of the assets of a debtor are distributed amount creditors because the debtor is unable ot pay his/her debts.
bankruptcy
condition of being deeply in debt
indebtedness
a form of security to help guarantee that the creditor will be repaid
collateral

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