NGPF Managing Credit Vocabulary

Match the following

• Bankruptcy

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

• Authorized User

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

• Charge-Off

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

• Amounts Owed

• 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

• Annual Percentage Rate (APR)

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

Match the following

• Credit

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

• Collections

• A certified financial advisor who works for an accredited nonprofit specializing in helping consumers repay debt in a responsible manner

• Credit Bureau

• An agreement in which a borrower receives something of value now and agrees to repay the lender in the future, generally with interest

• Consumer Financial Protection Bureau

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

• Credit Counselor

• A consumer-reporting company that collects and sells information about how individual people manage their credit (e.g. Equifax)

Match the following

• Credit Report

• A three-digit number (ranging from 300-850) based on an individual's credit history detailed in a credit report

• Credit History

• A document with information about a person’s credit activity and history

• Credit Utilization Rate

• A record of a person's use of credit over time; 15% of your credit score is based on the length of your credit history

• Credit Score

• A measurement of your outstanding debt divided by your total available credit; a general rule of thumb is to keep this under 30%

Match the following

• Debt

• A method of debt repayment whereby the borrower prioritizes paying down debts with the smallest balances first

• Debt Snowball Method

• Something, typically money, that you owe to a person or a business

• Debt Management Plan

• An agreement made between a creditor and a consumer in which the total debt balance owed is reduced and/or fees are waived, and the reduced debt amount is paid in a lump sum instead of revolving monthly

• Debt Settlement

• A detailed plan drawn up by a debt management company (DMC) and sent to an individual's creditors (entities they owe money). It groups several credit card debts into one payment, cuts your interest rate and creates a 3- to 5-year repayment plan.

Match the following

• Default

• A government organization whose role is to protect consumers and competition by preventing anti-competitive, deceptive, and unfair business practices through law enforcement, advocacy, and education

• Federal Trade Commission (FTC)

• A law that protects consumers from discrimination in the granting or denying of credit

• Emergency Fund

• Money set aside for unanticipated expenses or loss of income

• Equal Credit Opportunity Act

• A federal law that helps to ensure the accuracy, fairness and privacy of the information in consumer credit bureau files

• Fair Credit Reporting Act

• Long-term failure to repay a loan according to the terms agreed to, which has a substantial negative impact on the borrower's credit score

Match the following

• FICO Score

• The most commonly used credit score

• High Rate Method

• The rate charged for borrowing money usually expressed as a percent of the amount borrowed

• Hard Inquiry

• An inquiry into your credit history, typically in advance of applying for a loan. Hard inquiries can negatively affect your credit for 12 months and remain on your credit history for two years.

• Interest Rate

• A method of debt repayment whereby the borrower prioritizes paying down debts with the highest interest rates first

• Foreclosure

• A legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments by forcing the sale of the property

Match the following

• Payment History

• A history of the payments you have made on all credit you have obtained; 35% of your credit score is based on this

• New Credit

• The taking back of property after a borrower has defaulted on payments

• Lawsuit

• A measurement of your assets (money you've saved or things of value you own) minus your liabilities (money you owe others); also called wealth

• Repossession

• The number of recently opened credit accounts and all new credit inquiries; 10% of your credit score is based on this

• Net Worth

• A civil legal action by one person or entity (the "plaintiff") against another person or entity (the "defendant"), to be decided in a court

Match the following

• Tax Lien

• A legal claim by a government entity to take an individual's property or income when their taxes are not paid in full

• Thin File

• An inquiry into your credit history as part of a background check. This does not affect your credit score.

• Types of Credit

• Also known as your credit mix. This can include a mix of accounts from credit cards, retail accounts, installment loans, finance company and mortgage loans. 10% of your credit score is based on this.

• Soft Inquiry

• A term used to describe someone with little to no credit history