Intro To Debt Credit_EFp by fanzhongqing

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INTRODUCTION

  TO DEBT
     &
  CREDIT




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DEFINITIONS:

Auto-Pay:         Check by Phone, Consumers routing and account number are taken, after
                  the consumer has authorized us to take a payment. The information is
                  processed electronically, you may use a real check number or a mock
                  check number. These payments take 30 days for funds to clear.

CBR:              Credit Bureau Report, shows all credit activity, open accounts, paid
                  accounts, delinquent accounts, and inquiries.

Charged Off:      A line of credit is charged off when a payment has not been made for 180
                  days or more. When a Guarantor or Originator charges off a line of credit,
                  they are no longer liable for the debt. They will not apply payments, or
                  provide payment options. This basically means the originator has given
                  up and will sell the account to a collection agency or law office for
                  recovery.

Closed Credit:    Usually a medical or utility or cellular phone bill. This type of credit is
                  established by opening a utility or cell phone account, or failing to pay a
                  medical bill. These are a set amount, with little or no interest rate, and
                  with no extended time for repayment. Based on a 30 day billing period,
                  payments may vary. There are no set minimum payments, and the bill is
                  required to be paid in full each month. When kept current these are
                  beneficial to establish a credit score.

Credit:           Given to a consumer by a guarantor, can be in the form of a Credit Card,
                  Mortgage, Cellular Phone Service, Auto Loan, Personal Loan, Etc.

Debt:             To owe money or assets.

Default:          A line of credit is defaulted when a payment is not made for 30 days or
                  more.

Deferment:        This is given to the consumer by the Guarantor, it allows the consumer a
                  specific amount of time with out having to make payments due to
                  hardship. In most cases and unless otherwise specified the balance will
                  continue to accrue interest until payments resume.

Dunning Letter:   This document is required by the FDCPA to be sent to each consumer
                  upon acquisition of their account. It defines the debt, and defines the
                  consumers right to dispute the debt. You may not demand payment until
                  thirty days have passed from the date the consumer received this letter.

EFT:              Electronic Funds Transfer – usually with a credit or debit card, instant
                  approval or declination. A consumer can stop pay for 30 days after the
                  payment is processed.


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Guarantor:           Issues a line of Credit

Identity Theft:      This is when a consumer’s social security number and name have been
                     used to fraudulently open a line of credit.

Interest Rate:       Interest is a percentage that accrues monthly to a delinquent debt. It is
                     initially calculated on the original balance of the debt, but will be
                     calculated to the balance at the end of each month. For example: The
                     debt is $1000.00, after one month passes the debt is now 1023.76, the
                     interest for the next month will be based on $1023.76. The balance will
                     grow very quickly if you keep this trend.

Mock Check Number: Used to save the consumers checks. If a consumer uses their own check
                  number that check must be voided out, if we use a mock check number,
                  they will not have to. The mock check number should be a number that
                  will never be reachable by the consumer, 9000 is the best place to start.

Open Credit:         Usually a Mortgage or Auto Loan, and usually Guaranteed by a bank. An
                     open line of credit is when a loan is taken out for a specific amount of
                     money, there is an annual interest rate (APR) applied, and a monthly
                     payment amount is established. These lines of credit are paid off over
                     extended periods of time, and once the balance is brought to zero the line
                     of credit is closed permanently. When kept current these are extremely
                     beneficial to a credit score.

Originator:          Honors a line of credit (if you have a Sears Card with an HSBC Logo,
                     HSBC is the Guarantor, and Sears is the Originator).

Paid in Full:        To accept the full amount due to satisfy an account. If a consumer pays in
                     full it will show on their credit report that the ‘account has been satisfied
                     in full.’

Payment Plan (PPA): Partial payment arrangements are given to those unable to pay the balance
                    in full. During the payment process their credit report will show that
                    ‘payments are being made’. Upon receipt and clearance of the final
                    payment the credit report will show that the account has been satisfied in
                    full.

Revolving Credit:    Usually a Credit Card, or Department Store Card. This type of credit is
                     based on a 30 day billing period. The balance can be paid down and
                     charged back up over and over. When kept current these are fairly
                     beneficial to a credit score.




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Sat Letter:            Satisfaction Letter, a notice to consumer that their account has been
                       satisfied in full, must clearly show the original account number, and the
                       amount accepted for satisfaction.

Settlement:            To accept less than the amount due to satisfy an account. If a consumer
                       settles a delinquent line of credit it will show on their credit report that
                       ‘the amount paid was less than the amount actually owed’.

Statute of Limitations: Each state has set forth a statute of limitations for any action being taken
                       against a consumer who owes a debt. This statute states that after a
                       specified period of time (usually between 7 and 10 years) a delinquent
                       account is no longer able to be pursued. After the statute has run out, you
                       may not report the debt as delinquent on a Credit Report, you may not take
                       any legal action, and you may not demand payment in full. This used to
                       be limited knowledge. In the past 5 years several large TV Networks have
                       presented to the general population the definitions of their rights,
                       specifically when the statute of limitations has run out.




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