U5.1 Managing Credit Unit Vocab

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.

• A type of tax deduction that reduces taxable income.

• A financial penalty imposed for late tax payments.

• A government program that provides tax relief to low-income individuals.

Debt Consolidation Loan

• A type of loan that combines a person’s existing debts into a single loan with one monthly payment.

• A loan used to purchase a new car.

• A type of loan that is only available for home purchases.

• A loan that helps to pay for education expenses.

Thin File

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

• A type of financial document used for loan applications.

• A file that contains extensive credit history and information.

• A term for a credit report that is incomplete.

Charge-Off

• A declaration by a creditor that an amount of debt is unlikely to be collected; occurs when a consumer becomes severely delinquent on a debt.

• A process where a debtor is declared bankrupt and all debts are forgiven.

• A legal action taken by creditors to recover debts through court proceedings.

• A temporary suspension of payments on a loan due to financial hardship.

Repossession

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

• The process of selling property to pay off a debt.

• The act of transferring ownership of property to another party.

• The legal procedure to reclaim a loan from a borrower.

Secured Credit Card

• A type of credit card that requires a cash deposit as collateral, which serves as a credit limit and reduces the risk for the lender.

• A credit card that offers rewards points for every purchase made.

• A type of credit card that does not require any collateral and has a high credit limit.

• A credit card that is exclusively for online purchases.

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.

• A method for borrowers to negotiate lower interest rates on their loans.

• A type of insurance that protects lenders against borrower default.

• A financial strategy used to increase property value through renovations.

Hard Inquiry

• An inquiry into your credit history that can improve your credit score.

• An inquiry into your credit history, typically in advance of applying for a loan.

• An inquiry that has no effect on your credit score.

• An inquiry that remains on your credit history for one year.

Credit Score

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

• A measure of a person's income level and financial stability.

• A score that indicates the amount of debt a person has.

• A rating given by banks to assess loan applications.

Fair Debt Collections Practices Act

• A law that limits what debt collectors can do while trying to collect debts.

• A regulation that allows debt collectors to harass consumers for payments.

• A guideline for consumers to ignore debt collection calls.

• A policy that encourages debt collectors to use aggressive tactics.