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Credit Union
A nonprofit financial institution offering similar services as a commercial bank and operated as a cooperative, owned and controlled by the people who use its services. Credit unions are known for offering low interest rates on loans and high rates on savings accounts.
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Credit
An extension of money received by a borrower on an agreement to repay the debt. Credit may involve a closed-end loan extension or an open-end revolving balance. Below lists several examples of the two types of credit:
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Creditworthiness
The risk level of a borrower, as viewed by a lender. Borrowers likely to make timely payments on debt are considered a better risk by lenders.
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Debt Consolidation Loan
An advancement of money to pay off financial liabilities and transform multiple debts into one loan at a reduced interest rate and monthly payment.
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Debt Consolidation
The process of combining multiple debts into a one large debt to lower interest charges and create a more manageable budget by dealing with only one lender. This process usually extends the repayment length to reduce monthly payments.
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Debt Management
A plan created to help a consumer pay off debts and sustain financial responsibility. Debt management programs may, but do not always, include debt negotiation, budgeting and financial counseling.
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Debt Negotiation
The process that takes place between a creditor and debtor, or an agency representing the debtor, to settle on a repayment amount less than the initial balance.
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Debt Relief
A solution to handle multiple debt obligations. This solution occurs with three basic kinds of debt relief: debt consolidation, debt settlement and credit counseling.
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Debt Settlement
A debt-relief method provided by a third-party firm who acts on behalf of debtors to help resolve debts by working with the creditor and client to settle the debt. Creditors agree to waive part of the debt and accept the remaining sum as full repayment.
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Debt-Relief Company
A firm that specializes in resolving debt problems on behalf of its customers. These companies may be called debt consolidation firms, debt settlement firms or debt management firms.
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