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|
| Terms |
Definitions |
| A |
|
| Annual Fees |
A yearly fee charged by credit grantors
for the privilege of using a credit card. |
| Annual Percentage Rate |
The cost of credit at a yearly rate. |
| Applicant |
A person applying for credit privileges,
employment or some other benefit. |
| Asset |
Any thing you own that has value or use. |
| Authorized Account User |
The person authorized by the contractually
responsible party to use the account. |
Top |
| B |
|
| Balance Computation Method |
This will determine how your interest
is calculated. There are a variety of methods. The most common is the
average daily balance.
|
| Budget |
A financial plan for saving and spending
money. |
Top |
| C |
|
| Charge Card |
A card which requires payment in full
upon receipt of the statement. |
| Charge Off |
Accounting term to indicate that the
creditor does not expect to collect the balance owed on an account. |
| Collection Account |
An account which has been transferred
from a routine debt to a Collection Department of the creditor's firm
or to a separate professional debt collecting firm. |
| Convenience Checks |
A convenience check is a cash advance
that is used like a regular check. However, the money is charged against
your credit limit. There is usually a grace period and the finance charge
is usually higher than for purchases.
|
| 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. |
| 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 payoff period, the counseling services
can often design a successful repayment plan. |
| Co-Signer |
Person responsible for repaying a debt
if the borrower defaults. |
| Credit |
A trust or a promise to pay later for
goods or services purchased today. |
| Credit Card |
A rectangular piece of plastic used instead
of cash or checks authorizing payment for goods and services. |
| Credit Grantor |
Person or business furnishing consumer
goods and/or services on credit. |
| 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. |
| Credit Limit |
The maximum amount of money which can
be charged on a particular credit account. |
| Credit Repair Companies |
Individuals or Companies that promise
to "clean-up" or "erase" a consumer's bad credit and give him/her a fresh
start. Also known as Credit Clinics. |
| 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. |
| 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. |
Top |
| D |
|
| Debit Card |
Purchases are deducted directly from
the consumer's personal checking account. |
Top |
| 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 |
These are the most common credit card
fees. There might be others. Be sure to read the disclosures with your
credit card agreement.
Annual fee. Some companies charge annual fees for the privilege of using their
credit cards. Most cards that offer rewards (for example, airline miles or
travel awards) charge a yearly fee.
- Balance transfer fee. You might be 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. When you access cash through an automatic transfer
machine (ATM) with your credit card, you are usually charged a
transaction fee. The advance often carries a higher interest rate
than regular purchases.
- Late fee. Payment must be received -- not postmarked -- on the
due date to avoid a late fee. If you are mailing a payment, send
it five days before it is due to avoid a late fee. A typical charge
is $29 per late payment.
- Over-the-limit fee. This fee is applied if your outstanding charges
exceed your credit limit. The fee is typically $20.
|
Finance Charge
|
The finance charge is the cost of credit. It includes
interest, service charges and transaction fees. This charge is calculated
on your balance using different methods.
|
Top |
| G |
|
| Grace Period |
The period allowed to avoid any finance
charges by paying off the balance in full before the due date. |
Top |
| H |
|
| Home Equity Loan |
A loan based on the difference of the
amount of equity paid on a home, and the home's current market value. |
Top |
| 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 or lending money,
usually a percentage of the amount borrowed or loaned. |
Top |
| J |
|
| Judgment |
The official court decision of an action
or suit. This public record may be listed on a credit report in matters
of money and debts owed. |
Top |
| 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. (A lien must be paid and released). |
Top |
| M |
|
| Minimum Payment |
The minimum payment is the minimum dollar
amount that must be paid each month. This is usually two to three percent
of the amount owed and is often based on the balance as the billing date.
|
| 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. |
Top |
| P |
|
| 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. |
| Periodic Rate |
The periodic rate is an interest rate
applied to your balance to calculate the finance charge. For example,
the monthly periodic rate for a card with an 18% APR is 1.5% (18% divided
by 12 months). If your monthly balance were $1,000, you would multiply
it by 1.5% to get your monthly finance charge of $15 ($1,000 x 1.5%=$15).
The daily periodic rate for the same 18% APR is 0.04932% (18% divided
by 365 days).
|
| Personal Line of Credit |
The maximum amount one can owe at any
time, based on income, debt and credit history. |
| Personal Loan |
A loan based on a consumer's income,
debt and credit history. |
| Previous Balance |
The previous balance is the amount you
owed at the end of the previous billing period. Payments, credit and
new purchases during the current billing period are not included. Some
creditors also exclude unpaid finance charges.
|
| 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. |
Top |
| R |
|
| 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. |
| 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. |
Top |
| 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 no real risk factor for creditors and are therefore much easier
to obtain. |
| Smart Card |
An electronic prepaid cash card, usually
sold at banks and exchanged at face value. |
Top |
| T |
|
| Trans Union |
One of the three major Credit Reporting
Agencies. |
Top |
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