Credit Basics - Take Charge Today

Alternative Credit

A source of credit that may combine elements of open and closed-end credit and usually have higher interest rates and fees than other forms of credit.

Closed-end credit

AKA installment credit, is a loan which you must repay in a specified number of equal monthly payments.

Open-end credit

Also known as revolving credit, is extended as a line of credit established in advance so you do not have to apply for credit each time credit is desired.

Pawn loan

A loan based on the value of personal property.

Payday Loan

A short term loan that provides immediate cash by securing a borrower's written check or receiving authorization for automatic withdrawal from the borrower's depository institution account.

Refund Anticipation Loan

Short term cash advance secured by a taxpayer's expected refund.

Rent to Own

Tangible items such as furniture, electronics, or household appliances are leased with the condition that the item will be owned by the renter if the term of rent is completed. Buying this way is higher than if you went out and purchased the item.

Title Loan

The borrower gives the lender his/ her automobile title in exchange for a set amount of cash. The lender holds the title until the loan is paid. If the loan is not repaid as agreed the lender keeps titles to the item.

Annual Percentage Rate

The cost of credit expressed as a yearly interest rate.

Balance Transfers

The act of transferring debt from one credit card account to another.

Credit Card

A plastic card that you can use to access a line of credit that has already been established.

Introductory Rate

The APR charged during the credit card's introductory period after a credit card account is opened.

Annual Fee

A yearly fee that may be charged for having a credit card.

Late Payment Fee

Fee charged when a credit card holder does not make the minimum monthly payment by the due date.

Over the Limit Fee

Fee charged if the credit card account balance goes over the set credit limit.

Variable rate APR

An APR that may change depending on other factors.

Closed-end Credit

A loan of a certain amount of money that a borrower must repay in a specified number of equal payments. Also known as installment credit.

Credit

Refers to goods, services, and or money received in exchange for a promise to pay back a definite sum of money at a future date.

Credit History

A record of the borrower's past loans and credit-related transactions.

Credit Limit

The maximum dollar amount that can be borrowed.

Credit Report

A record of a person's use of credit.

Credit Score

A numerical summary of your credit history that indicates your credit worthiness (likelihood of repaying a loan as agreed.)