Front Page / Issue Briefs / Economy & Jobs & Children Youth and Families / Access to Credit and Personal Finance Training / Overview
Issue Brief
Access to Credit and Personal Finance Training - Overview
Goal Statement one sentence that further defines the topic
- To improve the accessibility of credit, personal finance training, and other financial services for low income individuals and families.
Local/State/National Information additional information on this topic at the local, state, national, global level
Policy Options / Model Programs link to profiles of specific policies or program models, grouped by type
Glossary of Terms key words or phrases that the layperson needs to know to understand this issue
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Financial Literacy: "A combination of awareness, knowledge, skill, attitude, and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing."
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Low-income: It is used to describe people "who earn less than, or at least not significantly more than, the poverty level. Low-income persons have less disposable income than others and may sometimes struggle to pay their bills. Low income persons often have low job-security, and are strongly correlated with low education levels". Although this definition is based on the poverty level, the poverty level might differ accross nations and/or regions. In the US, poverty tresholds are used as a federal poverty measure and they are updated each year by the Census Bureau.
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Financially Educated: "(1) being knowledgeable, educated, and informed on the issues of managing money and assets, banking, investments, credit, insurance, and taxes; (2) understanding the basic concepts underlying the management of money and assets (e.g., the time value of money in investments and the pooling of risks in insurance); and (3) using that knowledge and understanding to plan, implement, and evaluate financial decisions."
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Credit: "Credit is an agreement whereby a financial institution agrees to lend a borrower a maximum amount of money over a given time period. Interest is typically charged on the outstanding balance".
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Credit Score: A credit score is a number between 300-850 that showcases a consumer's creditworthiness, and is determined by the consumer's credit history consisting of number of open accounts, total levels of debt, and repayment history. Credit scores are used by lenders to evaluate whether the individual will repay the loan in a timely manner. The higher credit score indicates that there is a greater probability for the consumer to pay the loan on time and the borrower looks as a better consumer to potential lenders.
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Credit Union: Credit Union is a not-for-profit, member-owned, cooperative organization that provides financial services at reasonable rates to its members. Credit Unions may provide services such as financial education and outreach to its consumers, in-school credit union branches, and small business needs. Members of a Credit Union have shared interests as part of an institution designed to help other members.
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Saving: "Saving is income received by households that is not spend not paid to the government in taxes". It can be stored in savings accounts and used to increase income through investments.
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Investment:
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Microcredit/Microloan:
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Personal Finance: "Personal finance is the process of planning and managing personal financial activities such as income generation, spending, saving, investing, and protection."
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Financial Inclusion:
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Financial Services:
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