credit
This represents a borrower’s reputation and history of repaying debts, often checked via credit reports
what is Character
The yearly interest rate charged for borrowing money, expressed as a percentage
Annual Percentage Rate
A written plan that balances income and expenses over a set period.
Budget
A financial institution that is owned by its members rather than shareholders
Credit Union
The total value of all assets owned minus all liabilities owed
Net Worth
A lender checks this to measure your ability to repay a loan based on current income and expenses.
capacity
A fee charged for paying a bill after the due date
What is a Late Fee
Costs that remain the same every month, such as rent or mortgage payments
Fixed Expenses
This type of account allows limited transactions and offers a higher interest rate than a checking account
Money Market Account
The knowledge, skills, and experience a worker acquires that determines their income potential
Human Capital
This term refers to the assets or property a borrower pledges to a lender to secure a loan
Collateral
The total amount of interest paid on a loan, including interest earned on previous interest
What is Compound Interest
Costs that fluctuate, such as groceries or utility bills
Variable Expenses
A time deposit account that pays interest, usually requiring funds to be left in for a specific term.
Certificate of Deposit
A share of a company's net profits paid to stockholders
Dividend
This is the money or tangible assets that an individual owns, often used as a safety net in underwriting
What is Capital
The period between the purchase date and the date finance charges begin to accrue.
What is a Grace Period
Money set aside specifically for unexpected emergencies, such as medical bills or job loss
Emergency Fund
The process of ensuring a check has been signed by the owner before it can be deposited
Endorsing
The highest score range for a FICO model, indicating top-tier creditworthiness
850
These refer to the economic factors, such as interest rates or the purpose of the loan, that affect lending
What are Conditions
A high-interest loan that is meant to be paid back upon the borrower's next paycheck
Payday Loan
The process of investing in a variety of assets to reduce overall risk.
Diversification
A nine-digit number on a check that identifies the specific financial institution
Routing Number
The cost of the next best alternative that is given up when a choice is made
Opportunity Cost