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| Terms |
Definitions |
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| Annual Fees |
A yearly fee charged by credit grantors for the privilege
of using a credit card. |
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| Annual Percentage Rate |
The cost of credit at a yearly rate. |
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| Applicant |
A person applying for credit privileges, employment
or some other benefit. |
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| Asset |
Any thing you own that has value or use. |
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| Authorized Account User |
The person authorized by the contractually responsible
party to use the account. |
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| B |
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| Bankruptcy |
A proceeding in U.S. Federal Court that may legally release a person from
repaying debts owed. The law contains several chapters which relate to different
methods of relief:
Chapter 7 - Straight Bankruptcy (total liquidation of assets)
Chapter 11 - Business Reorganizations
Chapter 12 - Farm Debt Bankruptcy
Chapter 13 - Wage Earner Repayment Plan |
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| Bankruptcy Discharged |
A court order terminating bankruptcy proceedings on
old debts. |
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| Bankruptcy Dismissed |
A court order that denied one's bankruptcy petition
making the debtor still liable for all debts. |
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| Budget |
A financial plan for saving and spending money. |
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| C |
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| Charge Card |
A card which requires payment in full upon receipt
of the statement. |
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| Charge Off |
Accounting term to indicate that the creditor does
not expect to collect a balance owing on an account. |
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| Collection Account |
Refers to the status of an account owed to a creditor
when it has been transferred from a routine debt to a Collection Department
of the creditor's firm or to a separate professional debt collecting firm. |
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| Consolidation Loan |
A loan usually obtained for the purpose of reducing
the amount of the payments of bills owing by consolidating the bills into
one loan payment. The consumer pays off several bills with the proceeds
from one loan and is left with one consolidated monthly payment. |
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| Collateral |
Property acceptable as security for a loan or other
obligation. |
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| Consumer |
Person who uses and/or buys goods and services for
family or personal use. |
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| Consumer Credit Counseling Service |
Organizations which help consumers find a way to repay
debts through careful budgeting and management of funds. These are usually
nonprofit organizations, funded by creditors. By requesting that creditors
accept a longer pay-off period, the counseling services can often work out
a successful repayment plan. |
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| Co-Signer |
Person responsible for repaying a debt if the borrower
defaults. |
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| Credit |
A trust or a promise to pay later for goods or services
purchased today. |
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| Credit Card |
A rectangular piece of plastic used instead of cash
or checks authorizing payment for goods and services. |
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| Credit Grantor |
Person or business furnishing consumer goods and/or
services on credit. |
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| Credit History |
Record of how a consumer has paid credit accounts
in the past, used as a guide to determine whether the consumer is likely
to pay accounts on time in the future. |
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| Credit Limit |
The maximum amount of money you can charge on a particular
credit account. |
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| Credit Repair Companies |
Individuals or Companies that promise to "clean-up"
or "erase" your bad credit and give you a fresh start. Also know
as Credit Clinics. |
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| Credit Report |
A record or file to a prospective lender or employer
on the credit standing of a prospective borrower, used to help determine
credit worthiness. |
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| Credit Reporting Agency |
A company which gathers, files and sells information
to creditors and/or employers, to facilitate their decisions to extend credit
or to hire. |
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| D |
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| Debit Card |
Purchases are deducted directly from the consumer's
personal checking account. |
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| E |
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| Equal Credit Opportunity Act (ECOA) |
A federal law that requires lenders and other creditors
to make credit equally available without discrimination based on race, color,
religion, national origin, age, sex, marital status, or receipt of income
from public assistance programs. |
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| Equifax |
One of the three major credit reporting agencies,
headquartered in Atlanta, Georgia. |
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| Experian |
One of the three major credit reporting agencies,
formerly known as TRW. |
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| F |
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| Fair Credit Reporting Act |
A federal law, established in 1971, and revised in
1997, which enables consumers to learn what information Credit Reporting
Agencies have on file about them, and to dispute inaccurate data in the
file. It also establishes specific permissible purposes for which credit
reports may be requested, and places time limits on how long adverse information
may be reported. |
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| G |
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| Garnishment |
Legal process whereas a creditor has obtained judgment
on a debt may obtain full or partial payment by seizure of a portion of
a debtor's assets (wages, bank account, etc...). |
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| Grace Period |
The period allowed to avoid any finance charges by
paying off the balance in full before the due date. |
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| H |
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| Home Equity Loan |
A loan based on the difference of the amount you own on your home, and the
home's current market value. |
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| I |
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| Installment Loan |
A credit account in which the amount of the payment
and the number of payments are predetermined or fixed. |
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| Interest |
The cost of borrowing or lending money, usually a
percentage of the amount borrowed or loaned. |
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| J |
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| Judgment |
The official court decision of an action or suit. This public record may
be listed on your credit report in matters of money and debts owed. |
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| L |
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| Lease |
A written document containing the conditions under
which the possession and use of real and/or personal property are given
by the owner to another for a stated period and for a stated consideration. |
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| Lien |
A legal hold or claim of one person on the property
of another as security for a debt or charge. The right given by law to satisfy
debt. (A lien must be paid and released). |
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| M |
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| Mortgage |
A lien or claim against real property given by the buyer to the lender as
security for money borrowed.
1st Mortgage-Also known as the "primary" mortgage-has priority
over the claims of subsequent lenders for the same property.
2nd Mortgage-Also know as the "secondary" mortgage-is a loan secured
by mortgage or trust deed, which lien is "junior" to another mortgage
or trust. |
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| P |
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| Permissible Purposes |
As defined in section 604 of the Fair Credit Reporting
Act, only the named reasons for requesting a credit report are deemed "permissible".
Requests not meeting these criteria must be denied. |
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| Personal Line of Credit |
The maximum amount you can owe at any time, based on your income,
debt and your credit history. |
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| Personal Loan |
A loan based on your income, debt and credit history. |
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| Principal |
The outstanding balance of a loan, exclusive of interest
and other charges. |
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| Public Record |
Information obtained by the Credit Reporting Agency
from court records , such as liens, bankruptcy filings and judgments. Public
records are open to any person who requests to see them. |
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| R |
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| Repossession |
Forced, or voluntary surrender of merchandise as a
result of the customer's failure to pay as promised. There are several types
and descriptions of repossession actions. |
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| Revolving Account |
An account which requires at least a specified minimum
payment each month plus a service charge on the balance. As the balance
declines, the amount of the service charge, or interest, also declines. |
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| S |
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| Secured Credit Card |
A credit card secured by a savings account that has
been established in advance by the borrower. The amount in the account usually
determines the limit on the credit card. These accounts present no real
risk factor for creditors and are therefore much easier to obtain. |
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| Smart Card |
An electronic prepaid cash card, usually sold at banks
and are exchanged at face value. |
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| Trans Union |
One of the three major Credit Reporting Agencies. |
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