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|
| Terms |
Definitions |
| A |
|
| Annual Fee |
A yearly fee charged by credit
grantors for the privilege of using credit. |
| Annual Percentage Rate |
The cost of credit expressed
as a percentage per year. |
| Applicant |
A person applying for credit
privileges, or some other benefit. |
| Asset |
Any item you own that has
economic value or use. |
| Attachment |
A lien against personal property. |
| Authorized Account User |
The person authorized by
the contractually responsible party to use the account. |
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| B |
|
| Bankruptcy |
A legal declaration of insolvency. |
| Budget |
A financial plan for saving
and spending money. |
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| C |
|
| Charge Card |
A card which requires payment
in full upon receipt of the statement. |
| Charge Off |
Accounting term to indicate
that the creditor has removed a loan from its balance sheet because
collection is unlikely. |
| Collection Account |
An account that has been
transferred from a routine debt to a Collection Department of the creditor's
firm or to a separate professional debt collecting firm. |
| Collateral |
Property acceptable as security
for a loan or other obligation. |
| Consumer |
Person who uses and/or buys
goods and services for family or personal use. |
| Credit |
A trust or a promise to pay
later for goods or services purchased today. |
| Credit Card |
A payment card issued for
making retail purchases or obtaining a cash advance from a credit line. |
| Credit Grantor |
Person or business that loans
money or furnishes consumer goods and/or services on credit. |
| Credit History |
Record of how a consumer
has paid credit accounts in the past that can be used as a guide to determine
whether the consumer is likely to pay accounts on time in the future. |
| Credit Limit |
The maximum amount of money
that can be charged on a particular credit account. |
| Credit Report |
A record or file to a prospective
lender on the credit history of a prospective borrower that is used to
help determine credit worthiness. |
| Credit Reporting Agency |
A company that 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 |
|
| Debit Card |
A bank card that draws funds
directly from the consumer's personal deposit account as opposed to a
line of credit. |
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| E |
|
| 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 major credit
reporting agencies, headquartered in Atlanta, Georgia. |
| Experian |
One of the three major credit
reporting agencies, formerly known as TRW. |
| Top |
| F |
|
| 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. |
| Fees |
An amount charged by a creditor
for services it provides. Below are some common credit card fees. Other
fees may also be charged. Be sure to read all disclosures when applying
for credit.
 Annual
fee. A fee charged for the privilege of using credit. Some cards
that offer rewards (for example, airline miles or travel awards)
charge an annual fee.
Balance
transfer fee. A fee charged for moving balances from one credit card
to another. This fee is usually a percentage of the balance transferred.
It might have a minimum and a maximum limit.
Cash
advance fee. A fee charged for accessing cash through an automatic
teller machine (ATM) or at a bank with your credit card, you
are usually charged a transaction fee. The advance often carries
a higher interest rate than regular purchases.
Late
fee. A fee charged for payments that are not received by their due
date. If you are mailing a payment you should send it at least five
days before it is due to avoid a late fee.
Over-the-limit
fee. A fee that is applied if your outstanding charges exceed your
credit limit.
|
Finance Charge
|
The finance charge is the cost of credit.
It includes interest, certain service charges and transaction fees. This
charge is calculated on your balance using different methods.
|
| Foreclosure |
A legal proceeding initiated by a creditor
to take possession of collateral that secured a defaulted loan. |
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| G |
|
| Garnishment |
A process initiated by
a court order through which a lender can obtain money owed to a borrower
who has defaulted on a loan, directly from a third party.
For Example, a borrower's employer can be required to pay a portion
of the borrower's paycheck directly to creditors that have obtained
a judgment against the borrower. |
| 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 |
|
| Home Equity Loan |
A loan that can typically
be used for any purpose that is secured by a mortgage on the borrower's
home. |
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| I |
|
| 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 money
that is usually expressed as a percentage of the amount borrowed. |
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| J |
|
| Judgment |
A legal determination made
by a court of law that may result in a legal claim or lien against the
property of another. |
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| L |
|
| 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. |
| 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. |
| Line of Credit |
A commitment by a bank to
lend funds to a borrower up to a specified amount over a specified future
period. |
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| M |
|
| Minimum Payment |
The minimum payment is the
minimum dollar amount that must be paid each month. On a credit card
account, the minimum payment can be as little as two to three percent
of the amount owed and is often based on the balance on the billing date.
|
| Mortgage |
A security interest in 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 |
|
| Personal Loan |
A loan based on a consumer's
income, debt and credit history. |
| Principal |
The outstanding balance of
a loan, exclusive of interest and other charges. |
| 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
them. |
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| R |
|
| Repossession |
Forced or voluntary surrender
of collateral as a result of the borrower's failure to repay a loan.
There are several types and descriptions of repossession actions. |
| Revolving Account |
A credit account that usually
requires at least a specified minimum payment each month plus a Finance
charge on the balance. As the balance declines, the amount of the Finance
charge, or interest, may also decline. |
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| S |
|
| 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 limited risk for creditors and are, therefore,
much easier to obtain than unsecured credit. |
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| T |
|
| Trans Union |
One of the three major Credit
Reporting Agencies. |
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Borrowing
Basics
