| A | B |
|---|
| 20/10 rule | rule that states that total borrowing should not be more than 20% of one’s yearly take-home pay and monthly payments should not be more than 10% of one’s monthly take-home pay. |
| 30-day accounts | accounts where the borrower has to pay back the full amount borrowed each month. |
| Account disclosure statement | a statement by a creditor that details all of the fees and how interest is calculated on a credit account. |
| Alimony | money paid by one former spouse to the other to help support him or her after a divorce. |
| Annual fee | a yearly charge for the privilege of carrying and using a particular credit card, or other service. |
| APR (credit) | this is the amount of interest a borrower will be charged on credit each year. |
| Balance | current amount owed on a debt. |
| Bankruptcy | the legal act of asking a federal court to declare one unable to pay debts owed to creditors |
| Billing cycle | the length of time between billings on an account, usually 25 to 30 days. |
| Billing statement | a document that a borrower receives, usually monthly, which details all activity on a credit account during the billing cycle. |
| Capacity | refers to a borrower’s ability to repay debt, usually measured by current income and level of outstanding debt. |
| Capital | savings and other assets one can use for financial transactions, such as repaying debts or purchasing items. |
| Cash advance | money borrowed on a credit card account, usually associated with higher interest rates |
| Character | refers to a borrower’s history of paying obligations. |
| Child support | money paid to a former spouse to help support minor children. |
| Closed-end credit | a loan for a specific amount that must be paid in full, plus interest, by a certain date. |
| Collateral | an item of value pledged as a guarantee for payment of a loan which can be repossessed by the lender if the loan is not paid back. |
| Commercial debt-adjustment firm | a private company that negotiates with one’s creditors to work out payment plans and reduce interest rates in order to get debts paid off. |
| Compound interest | Interest that is paid on the amount owed and on interest previously accrued on the debt. |
| Conditions | refers to other circumstances that may impact the ability to obtain credit. |
| Consolidate | to combine two or more debts into one |
| Consumable | items purchased by a consumer that can be consumed, by eating, drinking, or using. |
| Consumer debt | all of the private loans that people have that aren’t secured by real estate. |
| Consumer finance company | a finance company that lends money to consumers to purchase items that are expected to last several years. |
| Credit card | a type of revolving credit where the borrower uses a card to purchase items or borrow money up to a designated credit limit and pay the loan back over time. |
| Credit counseling service | an agency that has counselors to help with budgeting, negotiating with creditors to develop a repayment schedule, and working with creditors to reduce monthly payments and stop collection calls. |
| Credit line/limit | the maximum amount that a person can borrow on a credit account. |
| Credit report | a record of one’s past history of paying bills and outstanding credit. |
| Debt | an amount owed to a lender. |
| Discharged | term used to describe when debts are erased or forgiven. |
| Evicted | legally forced to leave a residence |
| Exempt | property that is protected from liquidation in bankruptcy proceedings. |
| FICO score | created by Fair Isaac Corporation, this is a score calculated using an equation that assigns various weights to different aspects of one’s credit history. |
| Finance charge | how much someone pays the lender for the use of credit usually in interest payments and other fees. |
