Credit Vocab
A three-digit number (ranging from 300-850) based on an individual's credit history detailed in a credit report
Credit Score
A legal proceeding carried out to allow individuals or businesses freedom from their debts, while simultaneously providing creditors an opportunity for repayment
Bankruptcy
A budgeting method that allocates 50% to needs, 30% to wants, and 20% to savings and debt repayment
50/30/20 Rule
The cost you pay each year to borrow money, including fees, expressed as a percentage
APR
An attempted recovery of a past-due credit obligation or debt by a collection department or agency
Collections
A budgeting method where money for monthly spending is taken out in cash and placed in labeled envelopes according to budget categories. Spending occurs only from the corresponding envelopes.
Cash Envelope Budget
A document with information about a person’s credit activity and history
Credit Report
A declaration by a creditor that an amount of debt is unlikely to be collected; occurs when a consumer becomes severely delinquent on a debt
Charge-Off
A strategy where you save a specified amount of your paycheck before doing anything with the rest of your money
Pay Yourself First
A credit card service that allows cardholders to withdraw a certain amount of cash, either through an ATM or directly from a bank, typically at a high interest rate or for a fee
Cash Advance
A type of bankruptcy for people and businesses with limited incomes, which sells off their assets to repay their debts. It is also known as “liquidation bankruptcy”
Chapter 7 Bankruptcy
A person who has permission to use and/or carry another person's credit card, but isn't legally responsible for paying the bill
Authorized User
A type of bankruptcy for people who can afford monthly payments, which allows them to keep their assets. It is also known as “reorganization bankruptcy”
Chapter 13 Bankruptcy