Loan Mechanics
A fee charged by a lender for starting a new loan.
What is an Origination Fee?
Locking your credit file so no new accounts can be opened in your name.
What is a Credit Freeze?
This is the year Schut's son was born.
2018
A long-term loan specifically used to purchase a house.
What is a Mortgage?
A "line of credit" used by businesses to cover daily operating expenses.
What is a Business Line of Credit?
The maximum amount you are allowed to borrow on a line of credit.
What is a Credit Limit?
The newer scoring model created by the three credit reporting bureaus to compete with FICO.
What is VantageScore?
The law that gives you the right to dispute and fix errors on your credit report.
What is the FCRA (Fair Credit Reporting Act)?
Financing for furniture or appliances, often featuring 0% interest for one year.
What is Retail/Consumer Financing?
A card that requires a cash deposit to serve as your credit limit; used to build credit.
What is a Secured Credit Card?
The specific time window (usually 10 years) you can take money out of a HELOC.
What is the Draw Period?
A credit check for things like background checks or pre-approvals that does NOT hurt your score.
What is a Soft Inquiry?
The law that requires lenders to show you the APR and total costs upfront.
What is the TILA (Truth in Lending Act)?
Borrowing a lump sum of cash based on the equity built up in your home.
What is a Home Equity Loan?
A card that can only be used at one specific retailer, like Best Buy or Target.
What is a Closed-Loop Card (or Store Card)?
Trading an old loan for a new one, typically to secure a lower interest rate.
What is Refinancing?
This status occurs when you are late on a payment, but the account remains open.
What is Delinquency?
The law stating you cannot be denied credit based on gender, race, or religion.
What is the ECOA (Equal Credit Opportunity Act)?Category 4: Types of Installment Loans
A short-term, very high-interest loan usually due on your next payday.
What is a Payday Loan?
A standard card (Visa, Mastercard) that can be used at almost any business.
What is an Unsecured/General Purpose Credit Card?
A penalty for paying off your debt sooner than originally planned.
What is a Prepayment Penalty?
Collectively, Experian, Equifax, and TransUnion are known as these.
What are Credit Bureaus?
The law that stops debt collectors from using threats, harassment, or lies.
What is the FDCPA (Fair Debt Collection Practices Act)?
A loan specifically intended for purchasing a car, truck, or SUV.
What is an Auto Loan?
A "line of credit" that lets a homeowner borrow against their equity as needed.
What is a HELOC (Home Equity Line of Credit)?