Credit Vocab
A three-digit number (ranging from 300-850) based on an individual's credit history detailed in a credit report
Credit Score
A loan taken by individuals and businesses to make real estate purchases without paying the entire value of the purchase up front.
Mortgage
Something, typically money, that you owe to a person or a business.
Debt
The cost you pay each year to borrow money, including fees, expressed as a percentage
APR
Debt tied to a specific tangible asset that can be used as collateral and repossessed if payments are not made.
secured debt
A consumer-reporting company that collects and sells information about how individual people manage their credit (e.g. Equifax)
Credit Bureau
A document with information about a person’s credit activity and history
Credit Report
A small loan, offered through a business, lent at a high interest rate, and meant to be paid as soon as you receive your next paycheck.
Payday Loan
A measurement of your outstanding debt divided by your total available credit; a general rule of thumb is to keep this under 30%
Credit Utilization Rate
A credit card service that allows cardholders to withdraw a certain amount of cash, either through an ATM or directly from a bank, typically at a high interest rate or for a fee
Cash Advance
Original amount of money borrowed, separate from interest or fees.
principal
A method of debt repayment whereby the borrower prioritizes paying down debts with the highest interest rates first
Avalanche or High Rate Method
A person who has permission to use and/or carry another person's credit card, but isn't legally responsible for paying the bill
Authorized User
The paying off of debt over time in equal installments; part of each payment goes toward the loan principal while the other part goes toward interest
amortization
A method of debt repayment whereby the borrower prioritizes paying down debts with the smallest balances first
Debt Snowball Method