Unit 5: Managing Credit Vocabulary

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Amounts Owed

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How much you owe each creditor individually and in total; 30% of your credit score is based on this.

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Annual Percentage Rate (APR)

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The cost you pay each year to borrow money, including fees, expressed as a percentage.

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Authorized User

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A person who has permission to use and/or carry another person's credit card, but isn't legally responsible for paying the bill.

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Bankruptcy

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A legal proceeding carried out to allow individuals or businesses freedom from their debts, while simultaneously providing creditors an opportunity for repayment.

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Buy, Borrow, Die Strategy

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A tax strategy used by wealthy Americans that involves taking out low-interest loans to use as income.

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Chapter 7 Bankruptcy

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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'.

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Chapter 13 Bankruptcy

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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'.

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Charge-Off

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A declaration by a creditor (usually a credit card account) that an amount of debt is unlikely to be collected; occurs when a consumer becomes severely delinquent on a debt.

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Collections

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An attempted recovery of a past-due credit obligation or debt by a collection department or agency.

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Consumer Financial Protection Bureau (CFPB)

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A U.S. government agency that helps protect consumers by regulating financial products and services, like mortgages, credit cards, and student loans.