Credit in America
a person or business that loans money to others.
Creditor
a loan for a specific amount that must be repaid in full, including all finance charges, by a specified due date.
Closed-end Credit
Requires creditors to resolve billing errors within a specified period of time.
Fair Credit Billing Act
Honestly representing goods & services
Informing customers about all rules and regulations, interest rates, credit policies, & fees
Keeping credit users informed about credit policy changes
Creditors Responsibilities to you
credit use = no more than 20% of your yearly take-home pay, payments = no more than 10% of monthly take-home pay.
20/10 Rule
the value of property you possess (such as bank accounts, investments, real estate, and other assets) after deducting your debts.
Capital
providing a service for which you will pay later.
Service Credit
Designed to eliminate abusive collection practices by debt collectors.
Fair Debt Collection Practices Act
Annual Percentage Rate (APR) Formula
2*n*f / P (N+1)
reorganization form of bankruptcy for businesses
Chapter 11 Bankruptcy
enables a borrower to use credit up to a stated limit.
Open-end Credit
a pre-established amount that can be borrowed on demand with no collateral
Line of Credit
Designed to prevent discrimination in the evaluation of creditworthiness.
Equal Credit Opportunity Act
Comparison shop and avoid impulse buying.
Use credit wisely
Check out businesses before making credit purchases.
Your Responsibilities to Yourself
(payment plan bankruptcy) Allows debtors to keep most of their property and to pay a portion of their debts over 3 to 5 years.
Chapter 13 bankruptcy
a person who borrows money from others.
Debtor
the total dollar amount of all interest and fees you pay for the use of credit.
Finance Charge
Also known as the Truth-in-Lending Act
Requires lenders to fully inform consumers about all costs of a credit purchase before an agreement is signed
Consumer Credit Protection Act
Simple Interest Formula
P x R x T
legal process that relieves debtors of the responsibility of paying their debts or protects them while they try to repay.
Bankruptcy
nproperty pledged to assure repayment of a loan.
Collateral
when purchases are not billed to the customer until much later than the standard billing time.
Deferred Billing
Regulates the collection, dissemination, and use of consumer credit information
Fair Credit Reporting Act
Limit your spending
Make payments promptly
Read and understand terms
Your Responsibilities to Creditors
(Straight Bankruptcy) wipes out most debts in exchange for giving up most assets.
Chapter 7 Bankruptcy