chapter 6 of intro to personal finance

Loan

A sum of money borrowed from a lender that is expected to be repaid in equal payments over a specific period of time.

Credit cards

Financial tools that allow repeated use of credit as long as regular monthly payments are made.

Good uses of Credit

Instances where credit can be beneficial, such as for convenience, emergencies, major purchases, reservations, education, protection against fraud, and to take advantage of "free credit."

Interest

The cost paid for using credit, representing the money paid to the lender for borrowing money.

Finance charge

The total dollar amount paid to use credit, including interest and other required charges or fees.

Credit application

A form or interview providing information to the lender about the applicant's ability and willingness to repay debts.

Credit score

A statistical measure used to rate an applicant's creditworthiness and likelihood of repaying debt.

Tiered pricing

Lenders offering lower interest rates to applicants with higher credit scores.

FICO score factors

Components affecting the FICO credit score, including amounts owed, length of credit history, new debt, types of credit used, and payment history.

Bankruptcy

Legal processes, such as Chapter 7 and Chapter 13, for individuals facing financial difficulties, with long-term impacts on credit and financial opportunities.