Credit Glossary of Terms

Accelerated Payment – A scheduled payment plus an additional payment as it leads to paying off debt quicker and paying less interest over life of loan.

Account Condition – Indicates the present state of the account, but does not indicate the payment history of the account that led to the current state. (i.e. open, paid, charge off, repossession, settled, foreclosed, etc.) Of the account.

Account monitoring – lenders might want to review your credit report on a regular basis as they continue to manage their financial risk. This type of monitoring is called account monitoring as it scans credit reports for certain risk characteristics as defined by the lender. Federal law specifically permits lenders to monitor consumer’s accounts.

Account information – It includes the creditor's name and address, your account number, the account status (current, paid, closed, etc.), the type and terms of the account and additional information as reported to us by your creditors.

Account number – The unique number assigned by a creditor to identify your account with them.

Accounts in Good Standing – Credit items that have a positive status on your credit report and should reflect favorably on your creditworthiness.

Adjustment – Percentage of the debt that is to be repaid to the credit grantors in a Chapter 13 bankruptcy.

Affinity card – Is a card that is offered jointly by two organizations. One is a credit card issuer and the other is a usually a professional association or other non-bank company.

AKA – Also Known As

Alias – A second name or other name that differs from your given name. This occurs if you have applied for credit under different variations of your name or there was typing errors in the data entry.

Amount Due – The minimum monthly payment due, not the total amount you owe.

Annual fee – A yearly fee charged by credit grantors for the privilege of using a credit card. Credit card issuers often require you to pay a special charge once a year for the use of their service.

Annual percentage rate (APR) – A measure of how much interest credit will cost you as it is expressed as an annual percentage.

Annual income – Your total yearly income.

Applicant – A person applying for credit privileges, employment or some other benefit.

Appraisal – An expert judgment or estimate of the quality or value of real estate made by a licensed appraiser as of a specified date.

Appraisal fee – The charge for estimating the value of property offered as security.

Asset – Anything owned by an individual that has a cash value. This includes property, goods, savings or investments.

Authorized User – Person permitted by a credit cardholder to charge goods and services on the cardholder’s account but who is not responsible for repayment of the debt. The account displays on the credit reports of the cardholder as well as the authorized user. ­

Available Credit – The amount of credit available on a credit account it is the maximum credit limit minus the current balance.

Average daily balance – The average daily balance is a method used to calculate finance charges on an account. It is calculated by adding the outstanding balance on each day in the billing period, and dividing that total by the number of days in the billing period.

Bad debt – A debt that a lender has determined the borrower is not going to repay.

Balance – The total amount of money owed on a loan or credit account, or the total amount of money in a checking or savings account. In the case of a credit card, it includes any unpaid balance from the previous month, new purchases, cash advances, and any charges such as an annual fee, late fee or interest.

Balance Transfer – To transfer one or more credit balances from one credit card or credit card to another card.

Balloon loan – A short term fixed rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principal at a time specified in the contract.

Balloon Payments – A loan with a balloon payment requires that a single, lump-sum payment be made at the end of the loan.

Bank – An institution that accepts funds for deposits lends money and may offer other financial services such as insurance, brokerage or trust accounts.

Bankcard – A credit or debit card issued by a bank or other financial institution.

Bankruptcy - Chapter 7 – A type of bankruptcy where debtors repay debts according to a plan accepted by the debtor, the creditors and the court. Plan payments usually come from the debtor's future income and are paid to creditors through the court systems and the bankruptcy trustee.

Bankruptcy - Chapter 11 – A chapter of the Bankruptcy Code that provides a type of bankruptcy where certain assets of the business or individual are sold to pay off a portion of all existing debts.

Bankruptcy - Chapter 13 – A type of bankruptcy usually used by businesses rather than individuals. Used as an alternative to liquidation under Chapter 7.

Bankruptcy Code – Federal laws governing the conditions and procedures under which persons claiming inability to repay their debts can seek relief.

Better Business Bureau – A voluntary, nonprofit group established by businesses to improve the code of business practices and to define fair standards and ethics in the conduct of the business. The Better Business Bureau is neither a government agency nor a consumer group.

Bill – A list of charges for goods sold, work performed or services provided to the person who has agreed to pay the costs.

Billing cycle – The number of days between statements.

Budget – A financial plan itemizing income and expense during a projected time period. A financial plan for saving and spending money.

Buy down – A lump sum payment made to the creditor by the borrower or by a third party to reduce some or all of the consumer's debt.

Cash advances – The cash withdrawn on your credit card at a bank office or ATM. Cash advances usually carry fees and a higher APR than other charges.

­Capacity – A factor in determining ones credit worthiness. Capacity is assessed by weighing a borrower’s earning ability and the likelihood of continuing income against the amount of debt the borrower carries at the time the application for credit is made. While capacity may be considered in a credit decision, the credit report does not contain information about earning ability or the likelihood of continuing income.

Card member Agreement – A written document that provides details of your agreement with the credit card issuer.

Capital – A measure of a person’s current assets, including savings, investments, and property. Capital reassures a lender by providing a means of repaying your loan in case you default. It may also provide evidence that you've met financial obligations in the past.

Card Identification Number – Known as the CID is the three-digit number at the far right on the back of your credit card and is also called a card verification (cvv) number. Merchants may ask for the CID to verify that you have the card in your possession at the time you make a transaction. When using a Secure Online Account Number, please use the three-digit CID generated for that secure account number.

Cash down – Total amount of cash used in a purchase.

Cash on hand – Cash you have for the down payment and all closing costs.

Character – Ones character is one of the three Cs, the traditional set of criteria lenders use to evaluate an application. In most cases, character is determined by your credit report and credit score.

Charge Card – A specific kind of card that requires full payment of your balance with each billing cycle. Typically charge cards do not charge interest, but late fees can apply if full payment is not received by the due date.

Charge-Off – The action of transferring accounts deemed uncollectible to a category such as bad debt or loss. Collectors will usually continue to solicit payments, but the accounts are no longer considered part of a company’s receivable or profit picture.

Civil action – Any court action against a consumer to regain money for someone else. Usually, it will be a wage assignment, child support judgment, small claims judgment or a civil judgment.

Claim Amount – The amount awarded in a court action.

Closed Account – An account that has been closed by you or your creditor. Such accounts remain on your credit report for seven years from the date of last activity.

Collateral – Property you pledge as a guarantee for a secured loan. If you fail to repay the loan, the creditor can take the property.

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.

Collection Agency – A firm assigned by a creditor to collect overdue amounts. Some creditors have internal collection departments. Like creditors, collection agencies report account information to consumer reporting agencies.

Co-maker – A creditworthy co-maker is sometimes required in situations where an applicant’s qualifications are marginal. A co-maker is legally responsible to repay the charges in the joint account agreement.

Co-signer – Person who pledges in writing as part of a credit contract to repay the debt if the borrower fails to do so. The account displays on both the borrower’s and the co-signer’s credit reports.

Consolidation Loan – A loan obtained in order to combine multiple debts into one, typically at a lower interest rate.

Consumer – An individual who purchases products and services.

Consumer Debt – Debt incurred for items that aren't considered tangible investments such as credit card debt, car loans, and personal loans made by family members.

Consumer Statement – Under the Fair Credit Reporting Act, you have the right to add a consumer statement to your credit file to explain disputed information about your accounts.

Credit – A trust or promise to buy now and pay later under designated terms for goods or services.

Credit accounts – Any loan or debt listed on your credit report is considered a credit account.

Credit application – A form used by a lender to obtain personal, financial and credit information to appraise an applicant's credit worthiness.

Credit availability – The amount of credit you have remaining on your credit account. It equals your credit limit minus your credit balance.

Credit Balance – The amount owed on a credit card. Not to be confused with a minimum payment.

Credit Bureau – A credit reporting company.

Credit card rate – Annual interest rate you pay on outstanding credit card balances.

Credit Card Issuer – A bank or other institution that extends consumers credit through a credit card.

Credit File – The collection of an individual's credit history, identifying information, and other records maintained by a credit reporting company.

Credit Fraud – A crime that involves using another person's identity (e.g. name, Social Security Number or other personal information) to acquire credit or make purchases.

Credit History – A record of how a consumer has paid credit accounts in the past. It is used as a guide to determine whether or not the consumer is likely to pay future accounts on time.

Credit investigation – In terms of your credit report, an investigation is the process a consumer credit reporting agency goes through in order to verify credit report information disputed by a consumer. The credit grantor who supplied the information will be contact-used to verify the disputed information.

Credit limit – The maximum amount an individual or business can borrow in connection with a specific loan.

Credit Limit/Credit Line – The amount of credit issued by a lender. Credit Repair Agency – Are Companies that claim they can clean up a consumer's bad credit.

Credit Report – A report that a prospective lender or employer obtains from a consumer reporting agency that displays the manner in which a consumer has met his or her past credit obligations. It is used to help determine creditworthiness of the potential borrower.

Credit Risk – The likelihood of a consumer to pay back an outstanding debt.

Credit Score – A numerical estimation of the likelihood that you'll meet debt obligations. A creditor gets your information from a credit reporting company and applies a credit scoring model to calculate your credit score.

Credit Scoring – A tool used by credit grantors to provide an objective means of determining risks in granting credit. Credit scoring increases efficiency and timely response in the credit granting process. Credit scoring criteria is set by the credit grantor.

Credit union – A mutual association formed by persons with a common affiliation such as employees, a union or a religious group in which pooled savings are made. The funds are invested for appreciation and members may borrow at competitive rates.

Creditor – A company that enables consumers to make purchases on credit and/or lends consumers money. Sometimes used interchangeably with lender.

Creditworthiness – The ability of a consumer to receive favorable consideration and approval for the use of credit from an establishment to which they applied.

Daily Periodic Rate – A credit card's annual percentage rate divided by 360 days.

Debit Card – A card that allows purchases to be deducted directly from a consumer's personal checking account.

Debt – A specified sum of money that is legally owed from one to another.

Debt consolidation – The act of paying off all outstanding debt with a single loan.

Debt-to-income ratio – The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her gross monthly income.

Debtor – One who owes a debt.

Default – Failure to fulfill an agreed-upon financial obligation, such as making a loan payment.

Delinquent account – Accounts classified according to the time past due. The most Common classifications are 30, 60, 90 and 120 days past due. It also includes accounts that have been charged off, gone to collectors, liens, bankruptcies or court judgment.

Discharge – A debt that a court declares no longer needs to be repaid due to bankruptcy. Alimony, child support, liability for willful and malicious conduct and certain student loans cannot be discharged.

Disclosure – A credit report provided to the consumer which shows the nature of what is in his or her credit records as outlined by the FCRA (Fair Credit Reporting Act).

Dismissed – When a consumer files for bankruptcy, the judge may decide to not allow the consumer to continue with the bankruptcy. If the judge rules against the petition, all debts are reinstated and the bankruptcy petition is dismissed.

Discretionary Income – The money you have left over when all expenses and other financial obligations are paid.

Disposable Income – Money left over after taxes are deducted.

Dispute – If a consumer believes an item of information on their credit report is inaccurate or incomplete, they may challenge, or dispute the item. To question the accuracy of the information on a credit report.

Down payment – The initial amount paid in cash toward the total price of a home or car. A large down payment may help you get a more favorable interest rate and let you avoid having to buying mortgage insurance.

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.

Equifax – One of the three credit reporting bureau’s

End-user – The person or company who is the ultimate recipient of information. Sometimes information passes a number of different processes before reaching the end user.

Escrow – Property or money held by a third party until the agreed upon obligations of a contract are met.

Experian – One of the three major credit reporting bureau’s.

Fair Credit Reporting Act – A federal law that among other things enables consumers to learn what information consumer reporting agencies have on file about them and to dispute errors in the file. It also specifies certain permissible purposes for which credit reports may be furnished. It provides consumers with the right to obtain a copy of their report at no charge if they have been turned down for credit.

Finance Charge – The cost of a loan expressed as a dollar amount.

Finance Company – A company that mainly lends money to consumers who cannot qualify for credit at a credit union or bank.

Fixed Rate – An interest rate that remains constant for the life of the loan.

Foreclosure – The legal process by which a creditor may sell mortgaged property to recover a defaulted mortgage.

Fraud Alert – If you suspect that you're the victim of identity theft or credit fraud you may contact-us the credit reporting agencies and place a fraud alert on your credit file. Such an alert will prevent new credit accounts from being opened without your express permission.

Fair Credit and Charge Card Disclosure Act – Is a part of the Truth in Lending Act requiring the disclosure of the costs involved in credit card plans that are offered by mail, telephone or applications distributed to the general public.

Fair Credit Billing Act – A federal law that provides a specific error resolution procedure to protect credit card customers from making payments on inaccurate billings.

Fair Credit Reporting Act (FCRA) – A federal law governing the actions of credit reporting agencies. Enacted by the US Congress in 1970 and amended in 1996, the FCRA protects consumer rights by limiting access to your credit report.

Fair Debt Collection Practices Act – A federal law prohibiting abusive and unfair debt collection practices.

Federal tax withholding – Total amount of moneys withheld from your take-home pay for federal taxes. This amount will appear on your pay stub.

Federal Trade Commission – A federal agency which administers and enforces rules to prevent unfair business practices.

Fees – Any of a variety of charges.

FICA – The amount withheld from your paycheck for Social Security taxes. You pay half of your FICA tax; your employer pays the other half.

Finance charge – Amount of interest charged to you by a lender. Finance charges are usually included in the monthly payment total.

Financial institution – An enterprise such as a bank whose primary business and function is to collect money from the public and invest it in financial assets such as stocks, bonds, and loans to others.

Fixed rate – An interest rate that does not change during the term of the loan.

Flagging an account – Identifying an account for a specific purpose or reason and temporarily suspending activity on the account until the problem that caused it to be flagged is resolved.

Garnishment – A legal process whereby a creditor has obtained judgment on a debt allowing him to receive full or partial payment by seizure of a portion of the debtor's assets.

Generation Identifier – Generation identifiers are Jr., Sr., II, III, IV, etc.

Geographical Code – This information is received from the Census Bureau and represents the state, Metropolitan Statistical Area, county, tract and block group of the reported address. This code is similar to a zip Code.

Gross Monthly Income – What you earn before taxes are deducted.

Grace period – The period before interest begins to accrue on new purchases.

Guarantor – The person ultimately responsible for paying a bill.

Hard Inquiry – An indication on your credit file that a lender has obtained a copy of the report in order to evaluate your loan or credit application. An excess of hard inquiries within a six-month period may lower your credit rating. .

High Balance – The highest amount that you have owed on an account to date.

High risk – High risk consumers have delinquencies, bankruptcies, charge-offs or public record items on their credit report. These are indications to lenders that a consumer has been an irresponsible user of credit, and will likely be so in the future.

Home Equity – The part of your home you actually own, or the home's current market value minus the amount you still owe. See also home equity loan.

Home Equity Loan – A loan secured by a primary residence or second home to the extent of the excess of fair market value over the debt incurred in the purchase. Interest on a home equity loan may be tax deductible, but if you fail to pay your home equity loan, your home could be sold to pay off the debt.

Identity theft – A form of fraud in which a consumer's financial information is illegally acquired for the purpose of making unauthorized purchases and transactions with their credit cards, or with funds from their checking or savings accounts.

Income tax rate – This is your federal, state and local income tax rates combined. Your income tax rate is important in determining the amount you can save if you use a home equity loan to consolidate your debt.

Installment Loan – A credit account in which the amount of the payment and the number of payments are predetermined or fixed.

Interest – The cost of borrowing or lending money, usually a percentage of the amount borrowed or loaned.

Investigative consumer reports – These are consumer reports that are usually ordered by a prospective employer for sensitive jobs where background checks and security clearances are necessary. An investigative consumer report might contain information obtained from a credit report, but it is more comprehensive than a credit report. It contains subjective material on an individual's character, habits and mode of living, obtained through interviewing the associates and neighbors of the person being investigated.

Involuntary bankruptcy – A petition filed by certain credit grantors (instead of by the individual or business) to have a debtor judged bankrupt. If the bankruptcy is granted, it is known as an involuntary bankruptcy.

Item-specific Statement – Offers an explanation about a particular trade or public record item on your report, and it displays with that item on the credit report.

Joint account – Typically a bank account in the names of two (or more) persons. Arrangements can be made such that either individual or all signatures are required when drawing checks.

Joint Credit Report – A combined report created by merging the credit files of joint applicants and used by creditors to assess a joint application for credit, usually involving a mortgage. Note that the credit files remain separate.

Judgment – A determination by a court of law that, in the case of credit, may require a person to fulfill an obligation -- to pay a debt, for example. When a judgment has been satisfied the consumer has fulfilled its requirements and is no longer liable. Information about judgments is recorded in the public records section of a credit report.

Judgment granted – A final determination issued by a court for the rights of the parties involved in a lawsuit.

Late Fee – A fee attached to a delinquent account.

Late Payment – A payment delivered after its due date. Payments that are late by 30 days or more may be reported to credit reporting agencies and added to your credit report. A fee charged when a payment has not been received by the specified due date

Lease – A contract that allows you the right to use or occupy property over a specific length of time, during which you make regular payments and after which you do not own the property.

Lender – A company that lends money to consumers or enables them to make purchases on credit. Sometimes used interchangeably with creditor.

Liability – In the context of credit, legal responsibility for the repayment of a debt.

Lien – A legal claim upon real or personal property as security for or payment of a debt.

Line of credit – A line of credit works like a credit card, except you don't charge purchases. Instead, a person with a line of credit would use checks to make purchases which are drawn on a line of credit rather than on an amount on deposit.

Loan – An extension of money that is to be repaid.

Loan-to-Value Ratio (LTV) – The ratio of the amount of a home loan to the appraised value of the home.

Loan origination rate – The percentage the lending institution charges to cover some of its processing costs in making a loan in addition to the interest it will earn.

Loan payment – The payment you make to your creditor on a loan. Also, the amount of your standard monthly payment.

Loan type – Home, auto, personal and home equity are all loan types. The two most common loans types, home equity and personal, differ in fees, rates and tax deductibility of interest. Home equity loans often have higher fees, but usually have lower rates and a tax deduction for interest paid. Personal loans do not have a tax deduction for interest paid, and have a higher interest rate, but often have lower upfront fees. These are important considerations when choosing a loan.

Low risk – Low risk consumers have paid their bills on time, held their credit accounts for several years, and do not have large outstanding balances. In general, they have proven to lenders that they are responsible, prudent users of credit.

Market value – How much something is worth in the marketplace. Market value can change based on supply and demand. In terms of automobiles, it is frequently the value of the automobile after a lease term is over.

Medicare – A U.S. government program of hospital insurance and voluntary medical insurance for persons aged 65 and over, and for certain disabled persons under 65. A certain amount is withheld from your take-home pay to cover Medicare.

Medium risk – Medium risk consumers most likely have credit reports that have one or more delinquencies, high outstanding debt or relatively new credit accounts. Such consumers are usually able to obtain credit, but at higher interest rates than medium low or low risk consumers.

Minimum Payment – The smallest payment you can make on a revolving credit account to maintain your account status as being paid as agreed to keep the account in good standing.

Monthly PMI payment – Monthly cost of Private Mortgage Insurance (PMI). For home loans secured with less than 20% down and is calculated by multiplying your starting loan balance by your PMI percent and dividing by 12.

Mortgage – A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of a debt and states the manner in which it shall be paid. The note states the actual amount of the debt that the mortgage secures and renders the mortgagor personally responsible for repayment.

Mortgage loan – Short-term or long-term use of property or money with the consent of the owner of the property or money. Usually the loan of money has an agreed-to repayment schedule and an interest charge.

Net Income – Your total income from employment and other sources, minus taxes.

Notice of results – If you've requested an investigation of information on your credit report, you're entitled to receive a Notice of Results if your information was updated or deleted. You may request that the credit bureau send the corrected information in your credit history to credit grantors and employers who reviewed your information within a specific period of time. If your investigation does not result in a change to your credit history, the results will not be sent.

Obsolescence – The term used to describe how long negative information should stay in a credit file before it is no longer considered relevant to the credit granting decision. The FCRA has determined the obsolescence period to be 10 years in the case of bankruptcy and 7 years in all other instances.

Obsolete Information – After seven years, negative information on your credit report is considered "obsolete" and should automatically fall off your credit report. The exception is a Chapter 7 bankruptcy, which remains on your report for 10 years.

Open Account – An account that is still active and still is paid.

Opt-out – A consumer request for removal of his/her name from future targeted marketing solicitations by direct marketers, banks and credit reporting agencies.

Original Amount – The original amount owed to a creditor.

Outstanding debt – The total amount of debt you owe to your creditors.

Overdue – An outstanding bill or account not paid when due.

Paid accounts – Accounts that have been paid in full.

Past due – An account reflecting late payments or payments received after an agreed upon time for settlement.

Payment status – Reflects the history of payments on an account, including any delinquencies or late payments occurring during the previous seven years.

Penalty Rate – A higher APR the credit card company charges after the customer has made late payments, exceeded their credit line, or otherwise did not abide by the card member Agreement.

Periodic Rate – An interest rate expressed in daily or monthly terms, calculated by dividing the annual percentage rate by 360 or by 12.

Permissible purposes – As defined by the Federal Fair Credit Reporting Act, and various state regulators, the circumstances under which a third party may obtain a consumer credit report. Permissible purposes include credit transactions, employment purposes, insurance underwriting, government laws, court orders, subpoenas, written instructions of the consumer.

Personal credit line – The maximum amount one can owe at any time based on income, debt and credit history.

Personal information – The personal information section on your credit report includes your name (and any name variations), driver's license number, Social Security number, date and year of birth, spouse's name, employers, personal phone numbers and information about your residence. This information is reported to credit bureaus by your creditors or other sources.

Personal statement – You can add a personal statement that will appear at the beginning of your credit report. Your personal statement may include a general explanation about the information on your report.

Petition – If a consumer files for bankruptcy, but a judge has not yet ruled that it can proceed, the process is known as a bankruptcy petition.

Personal Identification Number (PIN) – A security code that the customer uses with debit and credit cards to authorize transactions such as cash advances. This PIN is different from the user ID and password customers use to access account information online.

PITI – An amount representing the components of a monthly mortgage payment. They include principal, interest, taxes, and insurance.

Plaintiff – One who initially brings legal action against another (defendant) seeking a court decision.

Points – Charges charged by a mortgage lender usually paid at closing.

Potentially negative items – Any information on your credit report that may have a negative impact on your ability to obtain credit. This may include your account information payment history, bankruptcy, liens or judgment information.

Pre-approved credit card – Pre-approved offers are mailed to your home because you meet the risk criteria of the company making the offer. A pre-approved offer is not guaranteed as you can still be turned down when you apply.

Principal – The amount of debt that does not include interest.

Principal payment – Total of principal paid per month on your mortgage.

Privacy policy – A statement that discloses a company's practices related to their collection and used personal information, which the information may be shared with and for what purposes, what choices are available to the consumer regarding the collection and use of their data, what security procedure is used, and how a consumer can correct any inaccuracies.

Property tax rate – The rate at which your property is taxed per year.

Public record data – When included as part of the credit report, this information is limited to tax liens, lawsuits and judgments that relate to the consumer's debt obligations.

Purchase price – The amount, before taxes, fees and closing costs that you pay for an item like a home or auto.

Prepayment Penalty – A fee assessed by a lender when you pay off your loan ahead of schedule. The penalty compensates the lender for interest payments it would have received based on the loan's payment schedule.

Primary User – The person under whose name a credit card account is listed. A primary user can authorize other people to use the account, but the primary user is ultimately responsible for repaying all charges.

Prime Rate – The interest rate charged by banks on loans to the largest and highest-rated customers. This economic indicator often serves as the basis for variable interest rates. It is one way that a credit card company determines APRs.

Public Record – Information obtained from court records about such things as state or federal tax liens, bankruptcy filings and judgments against you in civil actions.

Qualifying Ratio – The ratio of your monthly expenses to your gross monthly income. Creditors use qualifying ratios to evaluate loan applications.

Recent Balance – The most recent balance owed on an account as reported by the creditor.

Recent Payment – The most recent amount paid on an account as reported by the creditor.

Refinancing – Restructuring your home loan to get a lower interest rate or to borrow money from the amount you've already paid on a loan.

Released – This means that a lien has been satisfied and paid in full.

Repossession – After a borrower is significantly behind on payments, a creditor takes possession of property pledged as collateral on a loan contract to pay off the remaining loan amount.

­Responsibility – Indicates who is responsible for an account; can be single, joint, co-signer, etc.

Retail card – A plastic payment card issued by a specific retailer or group of retailers for limited use at their own outlets

Revolving Account – Credit automatically available up to a predetermined maximum limit so long as a customer makes regular payments.

Revolving credit account – An account from which credit is automatically available up to a predetermined maximum limit as long as a customer makes regular payments.

Revolving Balance – The total balance of all revolving credit accounts.

Revolving debt – Debt owned on an account that the borrower can repeatedly use and pay back without having to reapply every time credit is used. Credit cards are the most common type of revolving debt.

Risk Scoring Models – A numerical determination of a consumer’s creditworthiness. Tool used by credit grantors to predict future payment behavior of a consumer.

Sales tax – Total amount of sales tax on a purchase.

Sales tax rate – Percentage sales tax to be charged on a purchase. Sales tax for buying is charged on the total sales amount. In the case of a lease, sales tax is only due on the amount of the lease and is added to each lease payment.

Satisfactory accounts – Are accounts that are current or have been paid satisfactorily.

Score factors – Score factors are elements from your credit report that drive your credit score. For example, such elements as your total debt, types of accounts, number of late payments and age of accounts are what determine your credit score. Score factors can have a positive or negative affect on your credit score.

Secured credit – Loan for which some form of acceptable collateral, such as a house, car or deposit has been pledged.

Security alert – A statement that is added to one's credit report when a credit bureau is notified that the consumer may be a victim of fraud. It remains on file for 90 days. A Security Alert suggests that creditors should request proof of identification before granting credit in that person's name. Once a security alert has been added, your report will no longer be available for online viewing.

Security interest – The creditor's right to take property or a portion of property offered as security for a loan.

Service charge – A component of some finance charges, such as the fee for triggering an overdraft checking account into use.

Settlement costs – This includes all fees paid to the lender and mortgage broker, and certain other fees paid to third parties for services that the lender requires the borrower to purchase. The remaining settlement costs involve payments to third parties, which lenders do not control and for which they cannot ordinarily provide accurate information until later in the origination process. As the borrower, you should shop around because the lender knows what they are.

Secured Credit Card – A credit card secured by a savings account.

Secured Loan – A loan for which an item of property has been pledged in case of default. A mortgage is an example of a secured loan.

Smart Card – An electronic prepaid cash card, usually sold at banks and exchanged at face value

Social Security Number (SSN) – The unique nine-digit number assigned to every legal resident of the United States by the Social Security Administration. Because no two people are assigned the same number, the SSN is usually the main identifying factor in a person's records, including credit reports.

Soft Inquiry – An instance in which your credit report is accessed without affecting your credit rating. Soft inquiries include your own requests for your credit report, promotional inquiries by credit card companies, and "checkup" inquiries by your existing creditors.

Statement – A bill summarizing all of the activity on an account within a specified period of time. A credit card statement is the monthly bill from a credit card issuer that describes and summarizes the activity on an account. Most credit card statements include the outstanding balance, purchases, payments, credits, finance charges and other transactions for the month.

Statement date – The date on which a statement is created, and the date used to calculate finance charges for the statement period.

Statistical models – Statistical models are used to generate credit scores. Modelers analyze credit reports from millions of consumers to identify the variable that most likely determine future creditworthiness, which is expressed in the form of a credit score.

Status – On the credit report, this indicates the current status or state of the account.

Surcharge – An extra fee for using a service. Surcharges are also referred to as convenience fees and are commonly presented when using ATMs.

Taxable fees – Any fee that is subject to sales tax. When buying a home, this usually includes title transfer fees.

Tax Lien – A charge upon real or personal property for the satisfaction of debts related to taxes

Term – The length of time you have to pay back a loan.

Third-party collectors – Collectors who are under contract to collect debts for a credit department or credit company; collection agencies.

Three C's – Name for the traditional basic criteria lenders consider when deciding whether to approve a loan – character, capacity, and collateral.

Three in one credit report – A comprehensive credit report containing credit information from all three of the major credit reporting agencies.

Trade line – Each specific credit relationship with a business is tracked over time as a trade line on your credit report. This means that you can have multiple accounts with the same bank, but your payment history will be identified separately for each account. Trade line information on your credit report includes company, date account was opened, credit limit, type of account, balance owed and payment profile.

Transaction fees – Fee charged for certain uses of your credit line, credit card or ATM card. Example - fees charged to get a cash advance from an ATM, or to buy theater tickets over the phone.

Transunion – One of the three major national credit reporting bureau’s

Truth in Lending Act – The Truth in Lending Act requires lenders to disclose the annual percentage rate of the total cost of the loan and other terms.

Unsecured Loan – A loan based on your promise to repay, not on pledged collateral.

Unsecured credit – Credit issued for which no collateral has been pledged. A loan that is granted only on the basis of a customer's written agreement that the loan amount will be paid.

Up-front costs – Any fees you are required to pay in advance before you receive a loan. This could include appraisal fees, loan origination fees and document preparation fees, etc.

Variable Interest Rate – An interest rate that changes according to a predefined formula based on an economic indicator such as the prime rate. For example, a credit card's annual percentage rate might be the prime rate plus 5%.

Variable rate – A variable rate loan allows for an interest rate that may fluctuate over the life of the loan. The rate is often tied to an index that reflects changes in market rates of interest. A fluctuation in the rate causes changes in either the payments or the length of the loan term.

Verification – With regard to credit reports, verification is the process of checking the accuracy of information. Credit grantors or employers may use your credit report information to verify your application information is correct or you may verify your own credit information in case of inaccuracy.

Victim statement – A statement that can be added to a consumer's credit report to alert credit grantors that the consumer's identification has been used fraudulently to obtain credit. It remains on file for seven years unless the consumer requests to have it removed.

Voluntary Bankruptcy – A bankruptcy filed at the consumer's request.

Zero Balance – When your billing statement shows no outstanding balance and no new charges have been incurred.

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