APR, Charge-off, Delinquency Assessment, Foreclosure, Grace Period! ARRRGHHHHH
We may be used to hearing some of these words, but what do they actually mean?
There’s a lot of phases out there, so unfortunately we may have missed a few, but hopefully we have covered the main “everyday” words and phases that we keep hearing.
Account Condition
Indicates the present state of the account, but it does not indicate the payment history of the account that led to the current state. For example: open, paid, charge-off, settled, foreclosed etc.
Account Number
This is the unique number that is assigned to your specific account by the creditor and it identifies your account.
Accounts in Good Standing
Credit items that have a positive status and may help demonstrate your creditworthiness favorably.
Activate
In order to prevent fraud, many card issuers require that you call them when you receive your new or replacement card(s) in order that they can verify that the correct person has received it. The issuer will then “activate” the card; until this is done you cannot use the card.
Activity
Activity refers to any transaction that appears on your statement/bill. For example: purchases, cash advances, fees, finance charges and also payments that you have made.
Additional Cardholder/Member
Some card issuers allow you to sign on to your account, an additional cardholder/member, for example a spouse. You must remember that you are still responsible for ALL charges that the additional cardholder/member incurs to the account.
Adjustment
This is the % of the debt that is to be repaid to the credit grantors in a Chapter 13 Bankruptcy
Advance-Fee Loan
A loan that is calculated with all the finance charges and other creditor expenses, so that those charges/fees are deducted from the amount before you receive the principal.
Age Requirement
You must be at least 18 years old to qualify for credit, or you must have a parent/guardian as a co-signer.
Agreement/Card member Agreement
This is the legal agreement between you and your creditor, the creditor will send you an agreement which details the terms and conditions that apply to your card, including: interests rates, transaction fees and the method of calculating interest.
Amount Due
The amount that is due for payment, usually the minimum monthly fee, including any late and/or over limit fees. This Amount Due should not be confused with “Amount Owed/Balance”.
Amount Owed/Balance
Is the amount of money that you owe the card issuer, and includes: unpaid balance from last month, new purchases, cash advances, interest, transactions charges and fees. This Balance/Amount Owed should not be confused with “Amount Due”.
Annual Fee
Some credit card issuers, (but not all) charge you an annual fee for using their card. The fee will vary depending on your card issuer and the application you signed.
Annual Percentage Rate – APR
The cost of credit expressed as a yearly interest rate.
Applicant
The person applying for credit, employment and other benefits.
Application
The form used to apply for credit, employment and other benefits.
Asset
Any thing you own that has a value or use. For example: Property, cars, goods, savings and investments.
ATM
Automated Teller Machine
Automatic Payment
Payments can be transferred from your savings or checking accounts direct to the card issuer, this depend on if your card issuer offers this service and there may be an additional charge.
Authorized Account User
A person allowed by the credit cardholder to charge goods and services on the cardholder’s account, but who is not responsible for repayment of the debt. You must remember that you are still responsible for ALL charges that the Authorized Account User incurs to the account
Available Credit
The amount of credit that is still available for you to use.
Average Daily Balance
The most common method of calculating interest on your account. The general calculation is made by the creditor adding up the amount your own for each day of your billing cycle and dividing that number by the number of days in the billing cycle. Different creditors have slightly different methods for this calculation and this may or may not include purchases.
Bad Credit
Term used to describe a poor credit rating. “Bad Credit” can result in the denial of future credit or higher interest rates.
Balance/Amount Owed
Is the amount of money that you owe the card issuer, and includes: unpaid balance from last month, new purchases, cash advances, interest, transactions charges and fees. This Balance/Amount Owed should not be confused with “Amount Due”.
Balance Transfer
Transferring balances from one creditor to another, usually to take advantage of a lower interest rate being offered on balance transfers.
Balloon Payments
A loan that requires that a single, lump-sum payment be made at the end of the loan.
Bankruptcy
A legal declaration that you are unable to repay your debts, and which requires a proceeding in US Federal Court that may legally release a person from repaying debts owed. The law contains several Chapters which include:
Chapter 7 – Straight Bankruptcy
Chapter 11 – Business Reorganizations
Chapter 12 – Farm Debt Bankruptcy
Chapter 13 – Wage Earner Repayment Plan
Bankruptcy Code
Federal laws governing the conditions and procedures under which persons claiming inability to repay their debts can seek relief.
Bankruptcy Discharge
A court order terminating bankruptcy proceedings on old debts.
Bankruptcy Dismissed
A court order that denied the bankruptcy petition, which means that the debtor is still responsible for all of their debts.
Bill/Billing or Monthly Statement
Details the activity on your account for the billing cycle. For example: Purchases, unpaid balance from the previous month, transaction charges, fees, interest, payments made and the amount due.
Billing Cycle
The time between your last bill/monthly statement and your current bill/monthly statement date, this is usually 28 to 31 days.
Borrower
The person who signs and agrees to the terms of the loan and who has taken responsibility to repay the loan/debt.
Bottom Line
Your monthly income less expenses.
Budget
Financial plan for tracking your spending and includes identifying how you can save money.
Capacity
One of the factors used in accessing your creditworthiness. Capacity is assessed by looking at the borrowers earning ability and the likelihood of continuing income against the amount of debt the borrow has at the time of applying.
Card member Agreement
This is the legal agreement between you and your creditor, the creditor will send you an agreement which details the terms and conditions that apply to your card, including: interests rates, transaction fees and the method of calculating interest.
Cash Advance
A cash withdrawal that you make using your credit card to obtain the money. Your card issuer will apply finance charges for the cash advance and may also apply finance charges and fees.
Cash Advance Fee
A one-time fee, in addition to normal finance charges for making cash advance.
Charge Card
A charge card requires that you pay the balance in full upon receipt of the monthly statement and charges no interest.
Charge Off
The creditor does not expect to collect on the debt and accepts the loss. However, collection agency will continue to solicit payments from the debtor and the debtor still owes the debt until settled.
Civil Action
Any court action against a consumer to try and regain money owed.
Claim Amount
The amount awarded in a court action.
Closed Date
The date an account was closed.
Closing Date
The last day those transactions are posted to your account for that month.
Collateral
Assets that are acceptable as security for a secured loan or other obligation. For example: House, car, savings, bonds, insurance policies and jewelry. Collateral is not required for unsecured loans.
Collection
The referral of past due account(s) to a collection company or other specialist in collecting unpaid debts.
Collection Account
Refers to the status of the an account owed to a creditor when it has been passed to a collection company (as above).
Collection Agency
If you don’t pay your debts, the creditor may decide to send your debt to a collection agency. These are company’s that specialize in collecting unpaid debts. If this happens, your account may be listed as a “collection account” on your credit report.
Co-maker (this is different to a Co-Signer)
A creditworthy co-maker is sometimes required if the applicants qualifications are marginal. The co-maker is legally responsible to repay the charges in the joint account agreement.
Consolidation Loan
A loan, which allows you to consolidate several loans into one single account, with one monthly payment, with one creditor. For example: if you own a home, you can consolidate your debt into a home equity loan, or you can transfer credit card balances onto one card.
Convenience Check (aka transfer check)
Your credit card issuer may send you blank convenience checks, which allows you to shift debts onto the new card.
Consumer
Person who use and/or buys goods and/or services.
Copy charge (aka document Fee/Charge)
Card issuers are required by law to provide you with copies of documents relating to your account and they may charge you a fee for this service.
Co-sign
To sign an agreement with someone, the borrower, and means that you agree to pay the debt if they do not pay.
Co-signer
The person who signs a loan agreement with the borrower and who is responsible for the debt if the borrower does not pay.
Credit
A trust or promise to pay later for goods and/or services that you purchased today. An amount of money that the bank and/or credit card issuer lends you, and you can spend any amount up to your credit limit.
Credit Bureau
The credit bureau keeps records of your credit history; the creditors supply this to them. There are 3 credit bureaus: Experian, Equifax and Transunion.
Credit Card
Your credit card issuer (creditor) will issue you with a credit card, usually a rectangular piece of plastic, and this is used instead of cash for you to make purchases against your available credit limit.
Credit Card Debt
The total unpaid balances on all of your credit cards.
Credit Criteria
Factors that the creditors use to determine your creditworthiness or your ability to repay the debt. They may include: number of credit accounts you have, types of credit, income and your current level of debt.
Credit Counseling
Educational advice given by trained counselors about money management.
Credit Grantor
A person and/or business that provides goods and/or service on credit.
Credit History
A detailed record that shows your credit history, and how you manage your debt. It is available from the credit bureaus in the form of a credit report. The information may include: how many you have open, how many closed accounts, did you pay your accounts on time or late, did they get charged off or sent to collections, how many applications you have made for credit. Information is retained on this report for up to 10 years, and your credit history is used by creditors to determine if you should be granted new credit.
Credit Items
Information reported by current or past creditors to the credit bureaus.
Credit Limit
This is an amount set by the creditor and it dictates how much you can borrow/spend. A credit limit is the maximum that the creditor will allow you to charge on a credit card. Some creditors may set different credit limits on purchases and cash advances. For example: your credit limit is $5,000 and you have spent $4,000, there fore your available credit to spend is $1,000.
Credit Management
The way you handle the money you borrow.
Credit Record/Credit File
Your up to date credit history.
Credit Repair Companies
Companies that promise, for a fee, to “clean-up” or “erase” your bad credit and give you a fresh start.
Credit Report
A report that details your credit history and is available from the credit bureaus. It includes your payment history, did you pay your bills on time, did they get sent to collections or charged-off. How many creditors you have and how much you owe or owed. Applications for new credit are also detailed. Creditors use this information when you apply for credit, insurances and mortgages. Employers can also use this information when you apply for a job. Information stays on your credit report for up to 10 years.
Credit Reporting Agency
A company that gathers, files and sells information about you to creditors and/or employers. In order to facilitate their decision whether to extend you credit or whether to hire you.
Credit Union
A non-profit financial cooperative, which is democratically, owned, which offers a variety of savings and lending services to its members.
Credit Scoring
Tools used to provide a method of determining the risk if they grant you credit, the higher your score the lower the risk. Below details the 2 versions of credit scoring currently being used:
FICO scores range between 350 and 850 points, and
are computed as follows:
Payment History – Contributes to 35% of your score
Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
Presence of adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
Severity of delinquency (how long past due)
Amount past due on delinquent accounts or collection items
Time since past due items (delinquency), adverse public records (if any), or collection items (if any)
Number of past due items on file
Number of accounts paid as agreed
Amounts Owed – Contributes to 30% of your score
Amount owing on specific types of accounts
Lack of a specific type of balance, in some cases
Number of accounts with balances
Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)
Length of Credit History – Contributes to 15% of your score
Time since accounts opened
Time since accounts opened, by specific type of account
Time since account activity
New Credit – Contributes to10% of your score
Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
Number of recent credit inquiries
Time since recent account opening(s), by type of account
Time since credit inquiry(s)
Re-establishment of positive credit history following past payment problems
Types of Credit Used – Contributes to 10% of your score
Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)
VANTAGESCORE ranges between 500 and 999 points, and are computed as follows:
Payment History – Contributes to 32% of your score
Details the history of your payment behavior. Whether your payments have been delinquent, derogatory or satisfactory.
Utilization - Contributes to 23% of your score
The percentage of money that you owe, or that you have used. A large % of your available credit balances are seen as a credit risk.
Balances – Contributes to 15% of your score
This is the amount of recently reported balances, for both current and delinquent accounts. Balances that have increased recently can indicate a credit risk.
Depth of Credit – Contributes to 13% of your score
The length of your credit history and what types of credit you have/had. A long credit history helps give more information into how you manage your credit, and can have a positive effect on your VantageScore. They also look for a mix of various types of credit, such as credit cards, credit cards, auto loans etc.
Recent Credit – Contributes to 10% of your score
The number of credit applications and inquires made. Applying for a number of new accounts recently can indicate a credit risk.
Available Credit – Contributes to 7% of your score
The total amount of available credit you have. Low balances can demonstrate good credit management and a low risk. High balances can indicate potential overuse and can have a negative impact on your score.
Scorecards were scaled consistently across each credit reporting company to create a score range from 501-990 that accommodate natural A, B, C, D, and F grade intervals. Note that there is no E grade.
901 – 990 = A “Super Prime”
If you are within this group, you will be in the top 11% of the population and viewed as very low risk. Which means that you will probably get the best rates and offers from lenders.
801 – 900 = B “Prime Plus”
In this range you are seen to have good money management and are in the top 40% of the population. Lenders will offer “good” rates and offers to people in this range.
701 – 800 = C “Prime”
You are in the top 60% of the population and seen as “creditworthy”. You may get reasonable offers from lenders but some may want to review your credit history more in depth and may require additional documentation from you.
601 – 700 = D “Non Prime”
In this range you are within the LOWEST 38% of the population and will be viewed as a high risk by lenders. Lenders may offer you credit but it will be at less favorable rates.
501 – 600 = F “High Risk”
You are in the LOWEST scoring 19% of the population, and viewed as a VERY RISKY GROUP. Many lenders will NOT extend credit to you. Other may extend credit but may require security deposits and your interest rates may be higher in order to compensate for the high risk.
Credit-worthy
You are judged to be qualified to have credit
Daily Periodic Review
Is your annual interest rate shown on a daily basis. The factor is computed by dividing the yearly rate by 365 days.
Date Filed
The date that a public record was awarded.
Date of Status
The date the creditor last reported information about the account to your credit report.
Date opened
Shows on your credit report the date you opened an account.
Date Resolved
The completion date, also known as the satisfaction date of a public record item.
Debit Card
Linked to your bank account, it allows you to make purchases by using the debit card instead of writing a check. The amount is deducted directly from your bank account.
Debt
The amount of money you owe.
Debt Ratio/Debt Burden
Debt-to-Income Ratio is a very simple method that is used to calculate how much debt you have and then compare it against your take home income, and is used by Financial Institutions to assist in determining your credit worthiness. Your debt-to-income ratio should be kept under 20%.
How to calculate your debt-to-income ratio:
Calculate your monthly Gross Income, which is the amount you make before taxes are deducted and should include alimony payments, child support, dividends, interest and other sources of income, provided you will be able to prove that that income will continue for the foreseeable future
Calculate your total monthly debt payments. Do not include your rent or mortgage, utilities or tax payments.
Divide your total monthly debt payments by your Gross Income
Default
Failed to pay the debt as outlined in the agreement.
Deferred Payment
Payments either put off to a future date or extended over a longer period.
Delinquency
When payments are not being made, as the agreement requires. Delinquency classifications include: 30, 60, 90 and 120 days past due, Charge-off, repossession, collections etc.
Delinquency Assessment/late Fee
A fee that is charged for making a late payment.
Discharge
Granted by the court to release the debtor from the debts after they were included in bankruptcy.
Disclosure
To provide the consumer with their credit history as required by FCRA.
Disclosure Statement
Details the actual cost of the loan, including interest and loan fees. For credit card accounts this can also be in the card member agreement.
Dismissed
When the judge decides that the consumer cannot continue with the bankruptcy, he will dismiss the application/case.
Dispute
If you think your bill (credit card statement) is wrong, you must write to your credit card issuer within 60 days from the date of the statement that the error first appeared in, to dispute the charge/information. The credit card issuer must acknowledge your letter within 30 days, and then must either correct the error or give an explanation why it thinks the statement is correct within 90 days after receipt of your letter (within 2 billing cycles). You do not need to pay the disputed amount when it is being investigated.
If you think an entry on your credit report is wrong, inaccurate or incomplete, you have the right to dispute the entry with the credit bureau. You must write the credit bureau with evidence of the disputed entry, keep a copy of the correspondence for your records and send the letter by certified mail. The credit bureau must respond to your letter within 30 days of receiving your letter.
Due Date
The day the payment is due to a creditor. After that date, the payment can be considered delinquent and incur a late fee/delinquency assessment.
ECOA
Equal Credit Opportunity Act: This act is a federal law and requires that U.S financial institution and other creditors make credit equally available to all creditworthy customers, regardless of race, religion, national origin, sex, color, marital status or age. A creditor in evaluating a consumer’s creditworthiness may not exclude income from pensions, annuities or part-time employment.
Effective Date
The first day your card is activated and ready for you to use, or when new terms become effective.
End-user
The business that receives the report for decision-making purposes that meet the permissible purpose requirements of the FCRA.
Equifax
One of the 3 national credit reporting bureaus:
www.equifax.com
800-685-1111
P.O. Box 740241, Atlanta, GA 30374-0241
Experian
One of the 3 national credit reporting bureaus:
www.experian.com
888-EXPERIAN (397-3742)
P.O. Box 2002, Allen TX 75013
Fair Credit Billing Act
A federal law, which ensures that you can find, and fix billing mistakes and errors.
Fair Credit and Charge Card Disclosure Act
A federal law which ensures that you get the costs involved in credit card plans that are offered to you, by mail, telephone or other means, in order for you to make wise credit choices.
Fair Credit Reporting Action (FCRA)
A federal law established in 1971, and revised in 1997, which governs the actions of the credit reporting agencies and ensures that you have access to your credit report, that you can correct mistakes on your credit reports and be sure that the information is not being misused.
Fair Debt Collection Practices Act (FDCPA)
A federal law established in 1974, which ensures that you are protected from harassment, abusive and unfair treatment by debt collectors.
Federal Reserve
A central bank that monitors and influences the total supply of money and credit. The Federal Reserve Board sets interest rates, maintains the flow of cash to local and regional banks, clears checks, provides deposit insurance, and helps guarantee the stability and security of the U.S banking system.
Finance Charge
The cost of consumer credit, and may include: interest charges, late fees, over the limit fees, transaction fees and any service fees.
Finance Company
A business that makes consumer loans, often to consumers who cannot qualify for credit at a bank They usually charge a interest rate.
Financial Health/Financial Well being
Describes your overall financial situation.
Fixed Expenses
Expenses that you have to pay each week/month that do not vary, for example: rent, mortgage or auto payment
Fixed Rate
An annual percentage that does not vary.
Forbearance
A method of postponing payments, for 6 to 12 months, due to financial hardship. This can be renewed annually up to a period of 3 years. Interest still accrues and is added to the loan balance at the end of the forbearance period.
Foreclosure
A legal process in which the mortgaged property is sold to pay the loan of the defaulting borrower.
Garnishment
A legal process where a creditor has obtained a court judgment against the debtor to seize either full or partial payment from the debtors assets: wages, bank account etc
Generation Identifier
Usually shown after the persons name: Jr., Sr, II, III or IV etc
Goods and Services Dispute
If you have a problem with the quality of service or property that you purchase with a charge or credit card, and you have tried to correct the problem with the merchant, you may have the right not to pay the remaining amount due. However, you MUST have made the purchase in your home sate or, if not within your home state then, within 100 miles of your current mailing address, and the purchase price MUST have been more than $50.
Grace Period
The period of time that you have to pay your bill in full and avoid any interest charges. For example: if you pay off your balance in full September 1st and then buy an item on September 2nd, you will not be charged interest for the timer period between September 2nd and your next statement.
Grace periods are usually 20 to 25 days. There are generally no grace periods for cash advances and if you are carrying a balance.
Guarantor
Person responsible for paying the bill
High Balance
The highest amount that you have owed on the account to date.
Home Equity Loan
A loan that is based on the difference of the amount you owe on your home and the homes current market value.
Household Income
Total income for the household, from wages, commissions, alimony, child support, bonuses, social security, retirement benefits, disability, dividends, interest, unemployment compensation etc.
Installment Credit
Installment credit is used when purchasing autos, household appliances, furniture, etc. Installment credit is considered “closed-end” credit because the borrower and the lender have outlined the specific amount of money needed, a specific monthly payment and a specific time in which the loan will be repaid.
Installment Loan
Very similar to Installment Credit, the loan is paid back by paying the same amount, usually monthly, for a specific period of time. Example: Paying $350 per month for 4 years.
Interest
The rate that the bank or credit card issuer charges for the money it lends to you.
Inquiry
This is found on your credit reports, it is a specific section on the report that details who has requested your credit history. Note: this section may also impact your credit score.
Investigation
If you dispute an item(s) on your credit report, the credit bureau with investigate this with original credit grantor to verify your disputed item(s).
Investigative Consumer Reports
Mainly obtained for specific reasons: background checks, security clearances and for specific jobs. The report similar to your Credit Report, and may also contain that information, but it contains more specific information on the person’s character, habits and life style. This information is usually obtained through interviews of associates.
Involuntary Bankruptcy
This is filed by certain credit grantors against the debtor.
Item-specific Statement
Is an explanation displayed about a particular trade or public record on your credit report.
Joint Account
2 people can jointly share a card, however each person is individually responsible for the outstanding balance on the account. Do not confuse this with being an “additional cardholder” they are separate.
Judgment
Official court decision to take action or suit. This is public information and may be recorded on your credit report in the respect of debts owed by you.
Judgment Granted
The final determination by the court.
Nothing specified under “K”
Late Payment
If you miss the due date for payment, this is considered a Late Payment and most credit card issuers will charge you a late fee. The number of days you are late may also be reported on credit report and may affect your ability to obtain credit in the future.
Late Payment Fee
The fee charged for paying late.
Last Reported
This relates to your credit report and shows the last date that the creditor last reported information about your account.
Lease
A legal and written document that specifics the conditions under which the possession of real estate and personal property are leased by the owner to another individual(s) for a specified period of time.
Legal Judgment
A verdict from the court.
Example: The verdict may be that the person must repay a debt.
Liability
You are liable for the debt. If 2 people applied for the card together both may be held liable for the entire balance. Your liability is detailed within the Card member Agreement that you receive from the issuer.
Example: When you applied for the credit card, by accepting the card, you became liable for any charges, including purchases, fees and interest.
Liability Amount
The amount of money that you are legally responsible for.
Lien
A legal claim against a persons property for non payment of a debt. A lien can be made against a consumer for failure to pay. It means that the consumers property is being used as collateral during repayment of the money that is owed. A right given by law to satisfy the debt. This information is also a public record.
Line of Credit
The maximum amount the borrower can borrow or the maximum that an account can show as outstanding for open-end credit.
Location Number
Is the number used to file court records, using book and page numbers.
Minimum Amount or Minimum Payment
The smallest amount of money that you are required to pay by the due date on most of your credit/charge cards. Your statement will show the minimum amount needed and by what due date.
Monthly Periodic Rate
The rate of interest per month, which is calculated by dividing the annual percentage rate (APR) by 12.
Mortgage
A lien or claim against the property by the buyer to the lender as security for the money borrowed to purchase the property.
1st Mortgage or Primary mortgage
This has priority over the claims of subsequent lenders for the same property.
2nd Mortgage or secondary mortgage
A second loan secured by mortgage or trust deeds, which is “junior” to another mortgage or trust.
Mortgage Identification Number (MIN)
The number follows the homeowner throughout the mortgage and is allocated by the Mortgage Electronic Registration System Inc, which allows the ownership of mortgage rights to be tracked.
Most Recent Date
Specifics the date of payment status or account condition.
Notice of Results
If you have had an item on your credit report investigated (see section “I”), and the investigation has resulted in information being updated or deleted, you may request that the credit bureau send the corrected information in your credit report to eligible credit grantors or employees who had viewed/reviewed your credit report within a specific period of time.
Non-taxable Income
Money that you obtained as income and is not taxable by federal, state or government.
Obsolescence
The amount of time (years) that information can stay on your credit report, at present the FCRA has determined that the obsolescence period is currently 10 years. However, any unpaid tax liens may stay on your credit report indefinitely.
Opt In
If you “opted Out” of receiving pre screened offers, you can Opt In and have your name re-listed to prescreened offer, including credit and insurance offers, marketing lists etc
Opt Out
You can opt out of receiving pre screened offers, from credit and insurance offers, marketing lists etc
Original Amount
The original amount you owed to a debtor.
Outstanding Balance
The total amount that you owe on a loan or credit card.
Over the Credit Limit
If the amount you owe is over your credit limit, you are over the credit limit and may be charged an Over the Limit fee.
Example: If your credit limit is $2000, and you have gone over that limit by $500 you will be over the limit until you bring your balance back under the $2000 and you will be charged a fee each month until the balance is back within your $2000 credit limit.
Over the Limit Fee
The charge that the creditor will charge every month until your balance is back under your credit limit.
Overdraft Agreement
An agreement that you have which allow you to link your, credit card to your checking account or savings account that you hold. This way if you bounce a check, the bank can charge that amount to either of your accounts and you avoid a returned check fee. There may be fees involved in having an overdraft agreement.
Partial Payment
Paying less that the full amount due.
Past Due
When you have not paid the amount due by the due date shown on the statement, this is past due and you may be charged a late fee.
Payment Status
Details your payment history of how you paid your accounts. This will be reflected on your credit reports. Payment status is shown as: current account, 30 days late, 60 days late, 90 days late, 120 days late, delinquent, repossession, charge-off etc.
Periodic Rate
The interest rate for a specific period of time.
Example: the daily periodic interest rate is the cost of credit per day, and the monthly periodic interest is the cost of credit for the month.
Permissible Purposes
The Fair Credit Reporting Act (FCRA) section 604 defines the “permissible” reasons for requesting a credit report. Any requests not meeting these requirements are denied.
Permissible purposes include: insurance underwriting, credit transactions, government financial responsibility laws, employment purposes, court orders, subpoenas, legitimate business needs, and written instructions from the consumer.
Personal Information
Information on your credit report that has been reported about you. Information may include, any name variations, current and past addresses, phone numbers, social security number, date of birth, spouses name, your employers (past and present) etc
Personal Line of Credit
The maximum you can owe based on your income, debt and credit history.
Personal Loan
A loan made to you and based on your income, debt and credit history.
Personal Statement
You can request that a statement be added to your credit report about information contained on it. This statement will be visible to any persons reviewing your credit report.
Petition(ed)
When you apply for bankruptcy and the judge has not yet ruled that it can proceed this is known as bankruptcy petitioned.
PIN
The abbreviation for Personal Identification Number. A security code that is needed to access ATM’s.
Plaintiff
The person who initiates legal action against the defendant in a court case.
Posting Date
The actual date that a transaction, purchase, fee, service charge, cash advance or payment is recorded on your account.
Pre-Approved Credit
An approval for pre-approved credit which has been based upon available data without any further information supplied by you.
Prepayment
An amount of the principal that is paid before it is due.
Previous Balance
The balance due at the end of the last billing cycle.
Prime Rate
Each bank has it’s own prime rate, which they charge to many of their best corporate borrowers. The prime rate is reported daily. The prime rate impacts consumers through loans, credit cards etc as lenders often use this rate as a base for calculating variable interest rates.
Principle
The money owed, but not including the interest due or any other charges incurred.
Promotional or Introductory Rate
An interest rate that is applied for a specified amount of time. Usually for new credit cards and balance transfers, after the time period has expired the interest rate usually increases.
Promissory Note
Lists your rights, responsibilities, how and when the loan must be repaid under the terms of the loan agreement, it is a legally binding document.
Public Record
Information on your credit report about you that is obtained from court records. Public records are available to any person who requests to see them, different states require different requirements for obtaining access.
Quarterly
Divides the year into 4 quarters:
January – March (usually referred to as the 1st quarter)
April – June (usually referred to as the 2nd quarter)
July – September (usually referred to as the 3rd quarter)
October – December (usually referred to as the 4th or final quarter)
Rebate Cards
Some credit card issuers offer you benefits for using their card.
For example: frequent flier miles, discounts and rebates.
Recent Balances
The creditor reports what the most recent balance is that you owe to them.
Recent Payment
The creditor reports what is the most recent payment you made to them.
Reference
Usually given by person(s) who can vouch for you in order to determine your reliability.
Released
When a lien has been satisfied/paid in full.
Reported Since
Details when a creditor first started to report your account to the credit bureau.
Repossession
When your property has been surrendered voluntary or forcibly taken due to no payment of a debt.
For example: if your car is reposed due to none payment of your car loan.
Responsibility (see liability)
Revolve
Carrying over the debt from month to month and paying the interest on the amount that is owed.
Revolving Credit
Credit cards are considered revolving credit. They allow you to pay for all or part of your debt balance owed on the credit card. They are considered unsecured and require no collateral when purchasing items or services.
Risk Scoring Models
Tools used by credit grantors to determine your creditworthiness.
Satisfied
When the debt has been paid to the agreement of all parties it is recorded as “satisfied”.
Secured Credit
A loan made against collateral. For example a house.
Secured Credit Card
You have an agreement with the creditor by giving them a cash deposit which is held in a savings account, the money in this account is used to finance the credit limit on the credit card that the creditor issues to you. This money remains in the savings account until the credit is closed or the issuer decides that a security deposit is no longer needed. Secured credit cards are easier to obtain if you have bad credit, as they pose no significant risk to the creditor.
Security
Property that the borrower pledges for the duration of the loan.
Security Alert – see also Fraud Alert
Can be applied to your credit report if you believe you have been a victim of identity theft. It remains on your credit reports for 90 days. It requests that creditors obtain further proof of identification if any one tries to obtain credit in your name.
Service Credit
Usually an agreement with a utility company, to provide services that you will pay for monthly.
Semi-Annually
Twice a year.
SET Protocol – “Secure Electronic Transaction”
Technology designed to allow secure electronic transactions between card issues, merchants and consumers.
Settle – see also Debt Settlement.
Agree with the lender to repay a % of the original debt. For example 50%.
Signs of Trouble
Indications that you are having financial problems. For example: Making Minimum payments on credit cards, Can’t repay credit card debt within 1 year, Using payday advances, Borrowing from friends and family, Using one credit card to pay the minimum payment on another, using credit cards to buy groceries because you have no funds in your checking or saving accounts.
Smart Card
A card which is an electronic pre paid cash card, usually sold at banks, it contains a Central Processing Unit (CPU).
Source
The business that has supplied the information on your credit report.
Status
Indicates the current status of your account as reported on your credit report. For example: past due, charge etc.
Stored Value Card
A card that has a pre paid value, which can be spent, for that value.
Taxable Income
Money that you earn, salary, bonuses, interest or investments that can be taxed by the federal, state or local government.
Terms
The repayment length that you agree to in your agreement. For example: 12 months, 24 months, 48 months etc
Third-Party Collectors
A collection agency that is under contract with the credit card issuers etc to collect the debt on their behalf.
Transaction Date
The date a purchase is made or when you withdraw cash.
Transaction Fees
Fees that are charged by the credit card issuer for certain transactions. For example, when you obtain cash from an ATM
TransUnion
One of the 3 national credit reporting bureaus
www.transunion.com
P.O. Box 1000,
Chester,
PA, 19022
800-888-4213
Truth in Lending Act
Title I of the Consumer Protection Act. The Act requires that most categories of lenders disclose the annual interest rate, the total dollar amount and the other terms of loans and credit sales.
Unsecured Credit/ Unsecured Debt/ Unsecured Loan
When credit has been obtained with no collateral being pledged. For instance the majority of credit cards are unsecured, as you have not pledged any assets, for example your house or car.
Unused Credit
The amount of credit that you have available before you reach your credit limit.
Vacated
A judgment that was rendered void or set aside.
Variable Expenses
These are expenses that will vary month to month. Fro example: food, utilities etc
Variable Interest Rate
An interest rate that changes based on the fluctuating rates in the banking system, for example the Prime Rate.
Victim Statement
A statement can be onto your credit report to alert future credit granters that your identity has been fraudulently used.
Voluntary Bankruptcy
When you file bankruptcy on your own.
Wage Assignment
When you have permitted the creditor to collect a portion of the debtor’s wages from an employer in the event of default.
Withdrawn
When a decision has been made not to pursue a bankruptcy or lien etc.
Writ of Replevin
A legal document issued by a court authorizing repossession of security
Nothing specified under “X and Y”
Zero Balance
When you no previous outstanding balances on your account.