The ability to borrow money or access goods or services with the understanding that you'll pay it back later, usually with interest. It's essentially a financial trust extended to you.
Credit
Is a percentage that represents the amount of your available revolving credit you're currently using.
Credit Utilization Ratio
Is an auto loan an example of revolving or installment credit?
Installment
The expenses beyond the purchase price of a home that buyers and sellers incur to finalize a real estate transaction.
Closing Costs
What might a landlord check before renting to you?
Your credit history
The original amount of money borrowed, excluding any interest or fees.
Principal
This is a three-digit number that summarizes your creditworthiness based on your credit report. Higher scores generally indicate lower risk for lenders.
Credit Score
What credit score will help you secure a lower interest rate on an auto loan, reducing your monthly payments and the total cost of the vehicle.
Good (650-730)
A bond, deed, or other document kept in the custody of a third party and taking effect only when a specified condition has been fulfilled.
Escrow
Is a recurring payment made once a year for the continued use of a service, membership, or access to specific benefits.
Annual Fee
The fee charged for borrowing money, typically expressed as a percentage of the loan balance.
Interest
What does APR stand for?
Is a type of loan used to finance the purchase of a vehicle, whether new or used.
Auto Loan
A legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.
Mortgage
Is a type of loan where you can borrow money, pay it back, and then borrow it again from the same account, without needing to apply for a new loan each time.
Revolving Credit
The amount of money you owe to creditors.
Debt
Is the maximum amount of money a lender, like a bank or credit card company, allows you to borrow on a credit card or line of credit at any given time.
Credit Limit
What is a lien in terms of auto loans?
Legal claim on a car by a lender.
A type of insurance that protects lenders against financial losses if a borrower defaults on their home loan.
PMI
This is a great credit score.
750-840
Is a record of your financial responsibility, specifically your ability to repay debts, which is documented in your credit report.
Credit History
Is a detailed record of an individual's credit history, including information about their credit accounts, payment history, and public records.
Credit Report
If a car costs $30,000 and you get a car loan for 60 months at 6.2% interest, what would the monthly payments be?
$531
What does the P stand for in PITI?
Principal
The action or process of gradually writing off the initial cost of an asset.
Amoritization