Loans
What is a loan?
Money borrowed that must be repaid with interest
What is credit?
The ability to borrow money with the promise to repay later
What is debt?
Money owed by one party to another
What is payment history?
This factor makes up about 35% of most credit scoring models
\What is revolving credit?
This type of credit allows borrowers to repeatedly borrow up to a limit as balances are repaid
What are personal loans?
Loans specifically for personal use
What is a credit score?
This number summarizes your creditworthiness
What is taking on debt?
The act of borrowing money that must be repaid
What is credit utilization?
About 30% of a credit score is determined by this ratio comparing balances to limits
What is secured credit?
This category of credit requires borrowers to pledge an asset as protection for the lender
What is a fixed-rate mortgage?
A mortgage with the same interest rate for the entire term
What is a credit report?
This report lists your credit accounts and payment history
What is interest?
This extra cost is charged by lenders for borrowing money
What is length of credit history?
This factor measures how long your credit accounts have been open
What is unsecured credit?
This type of credit does not require collateral from the borrower
What is the debt-to-income ratio?
Lenders compare your monthly debt payments to your income using this ratio
What is low risk?
Borrowers with high scores are considered this type of credit risk
What is repayment?
When you pay back money you borrowed
What is new credit?
Opening several new accounts affects this portion of your score
What are the main types of credit?
Revolving credit,Installment credit,Open credit
What is APR?
This rate includes both interest and certain loan fees
What is interest?
A lender charges this extra cost for borrowing money
What is unsecured debt?
Debt not backed by collateral
What is credit mix?
Having both credit cards and loans improves this scoring category
Why is having different types of credit helpful?
Having different types of credit can improve your credit score because it shows lenders you can manage different kinds of debt.