Consumer Credit Key Terms

Capacity

financial ability to meet credit obligations

Capital

assets/ net worth

Character

Borrowers attitude towards credit obligations

Closed end credit

pay back one time loans in specified period and fixed amounts 

Open End Credit

Loans made on continuous basis, billed periodically for partial payment

Collateral

asset that you pledge to financial institution TO OBTAIN A LOAN

Conditions

refer to general economic conditions that can affect ability to repay loan

Consumer Credit 

Use of credit for personal needs

Consumer Credit Reporting Reform Act

places burden of proof from accurate credit information on credit reporting agency rather than on you

Credit

arrangement to receive cash, goods or service now and pay for them in the future

Credit Bureau

collect credit and other information about consumers

Credit Car accountability, responsibility and disclosure act

places new restrictions on credit card lending and eliminates certain fees 

Debit Cards

electronically subtracts from your account at the moment you buy goods/services

Equal Credit Opportunity Act (ECOA)

starts all credit applicants off on same footing, race, age, sex and marital status may not be used to discriminate in any part of credit dealing

Fair Credit Billing Act (FCBA)

sets procedures for promptly correcting billing mistakes, refusing to make credit card or revolving payments

Fair Credit Reporting Act 

regulates the use of credit reports, requires the deletion of obsolete information and gives consumers access to their files and the right to have erroneous data corrected 

Home Equity Loan

based on the difference between the current market value if your home and the amount you still owe on your mortgage

Interest

periodic charge for the use of credit or other finance charges

Line of Credit

maximum dollar amount of credit the lender has made available to you

Revolving Check Credit 

prearranged loan for a specified amount that you can use by writing a special check