Goal 9 Debt and Credit Objective: Summarize the impact and risks of credit.
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Your Credit score is a snapshot of your credit history (profile) at the specific moment your score is given. Your score is based on your credit report, which contains your entire credit history. This document includes the good and bad of your credit –related decisions, the latter of which stay on your credit report for seven years. Having a good credit score is important because the power of a good score is growing in significance; credit checks are now customary when trying to get an apartment or new job.
Capital: assets the customer has that show stability and investments show money management skills
Collateral: Collateral refers to assets the borrower uses to secure the loan. When a homeowner takes out a home equity loan, that money is secured by the property. Business people may take out loans and use the assets of the business to secure the funds
Conditions: outside forces that may be a loan risky. The state of the economy, high unemployment in the area of expertise of the individual, etc.Read more: Name the Five C's of Credit Management | eHow.comhttp://www.ehow.com/list_7308269_name-five-c_s-credit-management.html#ixzz2N4C8i9na
I: Mortgage: A loan to finance the purchase of real estate usually with specified payment periods and interest rates. The borrower (mortgagor) gives the lender (mortgagee) a lien on the property as collateral for the loan.
If you get into debt, buying property (house, car, condo) may be more difficult. If you own property and get into debt it may be harder to make your monthly mortgage payments and thus lose your property to foreclosure
Foreclosure: legal process by which an owner’s right to a property is terminated, usually due to default on payments.
Defaulting on a car loan or loan for merchandise is called repossession of property.