Intro to Credit
This is an example of an asset
Value of your personal items, accounts, cash, retirement accounts
This term refers to the length of time over which a loan is scheduled to be repaid.
Loan term
The age you can open a credit card in your own name.
18
This term refers to the total amount of money that a person or organization owes to creditors.
Debt
This is the first step in establishing a credit score, often involving a secured credit card or a small loan
Opening a credit account
The amount of money you owe on your credit care excluding interest and fees.
Credit card balance
This type of loan is often used to pay for higher education expenses and can be either federal or private.
Student loan
This is the term for the amount of money you can borrow on a credit card.
Credit limit
The term for making payments that only cover the minimum amount leading to a slow reduction of the principal.
Minimum payment
Anything above this number is considered a healthy credit score.
670
Open credit that can be used if you are in the credit limit. Payment amounts vary.
Revolving credit
This type of loan is typically used to purchase a home and is secured by the property itself.
Mortgage
The process of paying off your credit card every month to avoid interest.
Paying in full
Type of debt that is usually unsecured and involves borrowing money from a financial institution with no collateral.
Personal loan
This factor accounts for 10% of your credit score and refers to the different types of credit accounts you have, including credit cards, mortgages, and auto loans.
Credit mix
This type of interest is calculated on the initial principal and also on the accumulated interest of previous periods.
Compound interest
This type of loan requires the borrower to provide collateral, such as a car or house, to secure the loan
Secured loan
This fee is charged when you withdraw cash using your credit card.
Cash advance fee
This term refers to the process of combining multiple debts into a single loan with a lower interest rate.
Debt consolidation
These two items make up the majority of your credit score.
Time and payment history.
These are the three basic components of lines of credit.
Principal, interest rate, term
Loans used to finance a purchase for a specific amount of time. Regular payments are made.
Installment loans
This type of credit card offers points, miles, or cash back for purchases made with the card.
Rewards credit card
This term refers to the process of paying off debt over time through regular payments.
Amortization
This ratio, ideally kept below 30%, compares your credit card balances to your credit limits.
Credit utilization ratio