Defining Credit
An agreement where either money, goods, or services are obtained or borrowed with the promise to repay them later.
What is credit?
How suitable someone is to receive a loan.
What is Creditworthiness?
What is a personal loan?
The initial amount that the borrower owes in a loan, without interest.
What is Principal?
This factor is referred to by companies to determine a borrower's creditworthiness and whether or not they should give them the loan they're requesting.
What is a credit score?
A financial tool which is used to make small purchases without paying upfront, with the debt from making these purchases being repaid at the end of each month.
What is a credit card?
This loan has many different variations and is usually paid off in a 10-30 year term, which tends to cause regular rate increases over time.
What is a home loan?
The span of time in which the loan will be paid off.
What is Term?
Companies which store and collect individual’s credit-related information to create credit scores and credit reports.
What are Credit Bureaus?
Three major credit bureaus in America.
What are Equifax, Transunion, and Experian?
These loans are mostly taken out by young adults to help them through financial struggles in college and end up being paid off over 10 years.
What are student loans?
Something promised to the loaner in case the borrower defaults on their loan.
What is Collateral?
A detailed report of your credit history procured by credit bureaus.
What are credit reports?
The rating which credit score between 580-669 receive.
What is a fair (credit) score?
This loan allows you to borrow the same amount of money multiple times after you've repaid the debt from the previous payment.
What is a revolving loan?
This determines how much the debt which the borrower owes the loaner increases over time.
What is Interest Rate?