Unit 1: Effective Consumerism, Credit, and Identity Theft Vocabulary

A complete list of vocabulary flashcards based on Unit 1 lecture notes, covering consumer skills, credit fundamentals, credit scoring, card terms, and identity theft.

Set Goals

The first step to being an effective consumer: decide what you want and create a plan.

Think Critically

The second step to being an effective consumer: careful consideration of alternatives and their possible outcomes (analyzing and evaluating decisions).

Do Research

The third step to being an effective consumer: becoming informed by reading, observing, and asking questions.

Manage Daily Finances

The fourth step to being an effective consumer: budgeting and comparing income vs. expenses.

Plan for Financial Security

The fifth step to being an effective consumer: plan for a financially sound future through saving, investing, and insurance.

Credit

Borrowed money for goods and services, with a promise of repayment, representing your past history of borrowing.

Principal

The original amount borrowed in a loan.

Interest

The fee charged for borrowing money.

Duration

The length of the loan.

Secured Credit

A loan that is backed by collateral (something of value).

Unsecured Credit

A loan that is only backed by a promise to pay.

Character

One of the $3$ C's of credit referring to credit history, payment history, and amount of debt.

Capacity

One of the $3$ C's of credit referring to whether you have the means to pay for your loan based on job and income.

Collateral

One of the $3$ C's of credit consisting of items of value used to back a loan.

Credit Bureau

A company that collects credit information on consumers, such as Experian, TransUnion, and Equifax.

Credit Report

The record of all consumer transactions and payment patterns.

Credit Rating

The evaluation of all information in your credit report.

Credit Score

The number awarded to a consumer based on their credit rating, ranging from $300 - 850$.

Payment History

A credit score factor accounting for $35\%$ of the score, based on paying your bills on time.

Amount Owed (Debt Ratio)

A credit score factor accounting for $30\%$ of the score, based on debt you have on all credit accounts.

Length of Credit History

A credit score factor accounting for $15\%$ of the score, based on how long established credit accounts have been open.

New Credit

A credit score factor accounting for $10\%$ of the score, based on how much new credit you have tried to open in the last $2\,\text{years}$.

Types of Credit

A credit score factor accounting for $10\%$ of the score, based on the mix of different credit types (such as Credit, Auto, Home).

Debit

A payment tool connected to a checking account where money is taken out immediately, having no impact on credit.

Private Label (Store Brand) Credit Cards

Credit cards that can only be used at a single store.

General Purpose Credit Cards

Credit cards that can be used at millions of businesses worldwide.

Annual Fee

A yearly fee to use a credit card.

Annual Percentage Rate (APR)

The interest rate charged on a credit card balance.

Penalty APR

A higher interest rate applied due to late payment.

Minimum Payment

The least amount you can pay for the bill not to be late.

Balance

How much you still owe on your billing statement.

Finance Charge

A fee charged to keep a balance on a credit card.

Grace Period

The time from the end of your billing cycle to the date your payment is due (close to $1\,\text{month}$).

Credit Limit

The maximum amount of credit available to you.

Cosigner

A person with a stronger credit history than the borrower who guarantees the loan.

Identity Theft

The illegal use of an individual's personal information, such as Social Security number, bank/checking accounts, credit card numbers, or online account manipulation.

Federal Trade Commission

The organization that can help if you become a victim of identity theft.