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chp 16 Study Guide
POB Chapter 16 Credit Test Study Guide
| Term | Definition |
|---|---|
| creditor | The party extending credit |
| consumer credit | Credit granted to individual consumers by a retail business |
| business credit | Credit granted to a business by a financial institution or another company |
| installment loan | A loan for a specific amount of money that is repaid with interest in regular payments. |
| interest rate | represents the cost of a loan and is expressed as a percent of the amount borrowed |
| Open-end credit | An agreement that allows the borrower to use a specific amount of credit over a period of time. It does not automatically close when the balance is paid off. |
| proprietary credit card | A card that can only be used only in the stores of the company that issued it |
| credit policy | A written set of guidelines used by an organization to determine how many and which customers will be approved for credit |
| credit report | a record of credit history and financial behavior for a business or individual. |
| credit score | a numerical measure of a loan applicant’s creditworthiness at a particular point in time. |
| accounts receivable aging report | Report that shows when accounts receivables are due, as well as the length of time accounts have been outstanding |
| annual percentage rate (APR) | Annual cost of credit charged by a lender. |
| closed-end credit | Loan for a specific amount that must be repaid with all finance charges by a specified date or according to a specified schedule. |
| accounts receivable | List of the individuals or businesses that owe money to a company. |
| debtor | Party receiving credit. |
| finance charge | Total amount paid by a borrower to a lender for the use of credit. |
| principal | Amount of money borrowed |
| secured credit | Credit loans that require collateral. |
| credit bureau | Private firm that maintains consumer credit data and provides credit information to businesses for a fee. |
| trade credit | Line of credit granted from one business to another for a short period of time to purchase goods and services. |
| collateral | Property that a borrower uses to secure a loan. |
| credit risk | The potential that credit will not be repaid. |
| collection agency | Company that collects past-due bills for a fee. |
| Three C's of Credit | Criteria used to evaluate the creditworthiness of consumer credit applicants, which includes character, capacity, and capital |
| Unsecured Credit | credit granted based on a signed credit agreement alone. |
| The five C's of banking | Criteria lenders use to evaluate the creditworthiness of businesses, including cash flow, capacity, capacity, collateral, and conditions. |
| amortization table | a schedule that shows the amount of interest and principal for each payment so a loan can be repaid within a specific period of time. |
| Truth in Lending Act | A Federal Act that requires money lenders and credit card companies to state the APR of loans when they advertise a rate. |
| Simple Interest | A formula based on the principal, interest rate, and length of time of a loan. |
| Customer Loyalty | The continued and regular patronage of a business even when there are other places to purchase the same or similar products. |
Created by:
mrstephens
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