| When dealing with credit, there are a
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| | financial protection where the borrower
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| multitude of terms that you should
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| | is unable to pay rent or mortgage
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| understand. These terms are used
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| | payments, has no credit or means of
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| frequently when dealing with credit and
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| | paying for it, and is unable to reconcile
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| will help you better comprehend exactly
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| | with collection agencies. There are two
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| what is involved in your credit. Read
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| | methods of filing for personal
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| through this credit terminology guide and
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| | bankruptcy: Chapter 7 and Chapter 13. A
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| educate yourself on the world of credit.
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| | Chapter 7 bankruptcy eliminates all debts
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| Adjusted Balance - Adjusted Balance is a
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| | (minus taxes and possibly alimony
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| method of calculating your credit balance
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| | payments) by taking all non-exempt
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| and Annual Percentage Rate (APR) where
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| | property (as set forth in Chapter 7
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| payments and/or credits made during the
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| | filing) and converting it to cash to pay
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| billing cycle are subtracted from your
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| | off debts. A Chapter 13 bankruptcy allows
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| balance at the end of the previous
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| | a borrower with a steady income to pay
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| billing cycle. This method is more
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| | off bills over a 36 to 60-month period.
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| advantageous to borrowers and credit card
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| | Chapter 13 filing is only available to
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| holders. Unlike Average Daily Balance
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| | those who have predictable income and a
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| calculations, new purchases during that
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| | means of paying off their debt over the
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| billing cycle are not included in
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| | established period of time.
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| Adjusted Balance calculations, and
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| | Credit Score - A credit score is a
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| interest is only applied to the balance
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| | statistical calculation of the credit
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| remaining after payments are credited to
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| | information obtained in a consumer's
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| your account.
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| | credit report. A common credit score type
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| Amortization - Amortization is a payment
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| | is the FICO score, others include Beacon
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| plan that allows the borrower to reduce
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| | and Empirica. They are all used to
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| his/her debt through monthly payments of
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| | calculate the future probability of you
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| principal.
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| | repaying any loans, based on your
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| Annual Percentage Rate (APR) - APR is the
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| | historical credit history.
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| yearly rate lenders charge borrowers to
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| | FICO - FICO is a mathematical equation
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| borrow money (also called the cost of
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| | calculation lenders use to evaluate the
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| credit). Lenders must divulge the APR
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| | risk associated with lending you money.
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| they are charging prior to finalizing the
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| | FICO stands for Fair Isaac Company, the
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| deal. Lenders can not reveal or make
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| | company that originally created the
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| changes to the APR after the lender
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| | formula.
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| borrower contract has been signed.
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| | Liquidation - Liquidation is the process
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| However, some credit card companies and
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| | of converting assets into cash to pay off
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| loan companies state in their agreement
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| | creditors. This process is used in
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| that they can change your APR when
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| | personal and corporate bankruptcy as a
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| interest rates or indexes change.
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| | solution to getting out of debt with
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| Average Daily Balance - The Average Daily
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| | lenders.
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| Balance is a method of calculation of
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| | Repossession - Repossession is the forced
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| your credit balance and interest. It's
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| | or voluntary surrender of merchandise as
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| the practice of crediting your account
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| | a result of the customer's failure to pay
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| from the day your payment is received. In
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| | what is owed. If you purchase an item on
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| other words, it's a daily tracking of
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| | credit and fail to pay for it, the entity
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| what you owe. When calculating the
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| | that sold it to you reclaims it.
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| Average Daily Balance, the lender adds
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| | Revolving Account - A Revolving Account
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| the beginning balance for each day in the
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| | is an account that requires a minimum
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| billing period and then subtracts any
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| | payment each month in addition to a
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| payments and/or credits made to your
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| | service charge. When the balance
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| account that day. The end result is your
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| | decreases, the service charge/interest
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| Average Daily Balance. New purchases
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| | also declines.
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| aren't necessarily added to your account
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| | Credit terminology can be confusing. If
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| the day of the purchase, and won't show
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| | you're investigating credit options and
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| in your daily balance. When the purchase
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| | want to know what's involved, use this
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| is charged to your account, it affects
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| | guide to get you up to speed on some of
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| your balance.
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| | the more common credit terms.
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| Bankruptcy - Bankruptcy is a form of
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