Types of Credit
what is Close-End credit
is a loan for a specific amount that must be repaid with interest by a specified date or according to a specified schedule
explain what Credit is
an agreement between two parties in which one party lends money or provides goods or services to another party with the understanding that payment will be made at a later date
explain Credit policy
is written set of guidelines used by an organization to determine how many and which customers will be approved for credit
explain Annual percentage rate (APR)
is the annual cost of credit charged by a lender
what is Secured credit
Credit loans that require collateral
explain what Creditor is
The party extending credit lender
what are Three Cs of credit
are criteria used to evaluate the creditworthiness of consumer credit applicants
what are the Five Cs of banking
Cash flow
Capacity
Capital
Collateral
Conditions
what is Installment loan
Loan for a specific amount of money
explain what Debtor is
The party receiving credit borrower
explain the Three Cs of credit
Character: Current debt, payment history, credit score
Capacity: Regular income and term of employment
Capital: All assets and liabilities
What is cash flow
Movement of money into and out of
a business
what is Principal
Amount of money borrowed
explain what A debtor-creditor
relationship is a legal relationship between two parties based on good faith
what is a Credit report
is a record of credit history and financial behavior for a business or individual
what is Collateral
Property used to secure a loan
what is Finance charge
Total amount paid by a borrower to a lender for the use of credit
explain what Trade credit is?
is a business granting a line of credit to another business for a short period of time to purchase its goods and services
explain Credit score
is a numerical measure of a loan applicant’s creditworthiness at a particular point in time
explain what Conditions are?
Environment in which the business operates