3-in-1 (Credit Report): a comprehensive credit report containing credit information from all three of the major credit reporting agencies.

Account Review: a review of a consumer's credit history by one his/her creditors.

Active Account: an account for which activity has been reported to a Credit Reporting Agency in the last 90 days.

Adjustment: the percentage of a debt that is to be repaid to the creditor in a Chapter 13 bankruptcy.

Alias: a name reported in your credit file that differs from your primary or given name. This commonly occurs if you've applied for credit or loans under different variations of your name such as Robert instead of Bob or Chris instead of Christine.

Amortization: The reduction of a mortgage loan by regular payments.

Amount Due: generally, the minimum monthly payment you must make, not the total amount you owe.

Annual Fee: a yearly fee charged by a credit card company for the convenience of having their credit card, regardless if the card is used or not.

Application Fee: a fee charged by a credit card company or bank for processing an application for credit, generally regardless of approval decision.

APR: annual percentage rate.

Asset: any holding that has a monetary value or use. Houses, real estate, cars, jewelry, and stocks & bonds are considered assets.

Authorized User: a person allowed to charge goods and services on a credit card by the primary user of that card. Unlike users of a joint credit card account, authorized users are not legally responsible for payment.

Auto Loan: a terms used to identify a variety of auto loan products, including a new auto loan, a used auto loan, and an auto refinancing loan.

Auto Refinancing: refinancing the equity portion of an existing auto loan for the purpose of obtaining cash for whatever reason or possibly to reduce the interest rate, or to use the value of an auto that is paid off (no lien) to obtain cash for whatever reason.

Auto Title Loan: a short-term loan, usually no longer than 30 days. A car title is used to secure the loan. This means if the loan is not repaid, the lender may take the car and sell it to get the loan money back. Most title lenders will only make the loan on autos without any liens (no unpaid loans).

Average Daily Balance: A method of calculating interest by considering the balance owed or invested at the end of each day of the period rather than the balance owed or invested at the end of the week, month, or year.

Balance Transfer Fee: a fee imposed for making a balance transfer such as to a 0 interest intro period.

Balance Transfer: the process of moving credit card debt from one credit card to another, typically from one with a higher interest rate to a lower interest rate, often one with a special 0% introductory period.

Balloon Payment: a final payment at the end of a loan term that is considerably larger than the regular periodic payments. Often associated with a second mortgage.

Bankruptcy: a legal process in which a debtor asks the court for relief from its creditor and lenders. Two main consumer bankruptcy filings are Chapter 7 and Chapter 13.

Billing Cycle: a period of time between billings, typically monthly.

Billing Statement: a review; typically a printout, which lists all the purchases, payments and other debits and credits made to a bank or credit card account within the billing cycle.

Capacity: an estimate of the amount of debt you can handle, largely based on your income in relation to the amount you already owe. See debt-to-income ratio.

Capital: a measure of your 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 -- a fully paid car, for example, shows that you've successfully paid off an auto loan.

Cash Advance Fee: pertaining to a credit card cash advance, this is a fee that is imposed when the cardholder takes out a cash advance against the credit limit.

Cash Advance: pertaining to a credit card cash advance, this is cash borrowed against the credit card balance.

Charge Card: a credit card without a credit limit requiring the balance to be paid in full at the end of each month.

Chargeoff: debt that has been determined uncollectible by the original creditor, usually after the debtor has become seriously delinquent.

Closing Costs: expenses that buyers incur in the transfer of ownership of a property. Closing costs may include taxes, origination fees, attorney's fees, and other costs.

Collateral: property you pledge as a guarantee for a secured loan. If you fail to repay the loan, the creditor can take the property. Sometimes used in place of capital as one of the three Cs.

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.

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

Consumer Credit Counseling Service (CCCS): organizations that help consumers find a way to repay debts through careful budgeting and fund management. CCCS's are usually non-profit organizations funded by creditors. By requesting a longer pay-off period from creditors one-by-one, a CCCS can often design a workable repayment plan on behalf of the consumer.

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.

Consumer: an individual who purchases products and services.

Co-signer: someone who agrees to share responsibility with the primary applicant for a loan or credit card. A consumer with poor credit may need a co-signer to get a loan or to qualify for favorable terms. Because co-signers are liable for debts incurred, co-signed accounts appear on the cosigner's credit report.

Credit Bureau: an agency (TransUnion, Equifax, Experian) that collects and maintains individual credit information and complies it into a credit report.

Credit Card: a transportable account which can be used to make purchases anywhere the brand is accepted.

Credit Crunch: when credit is costly or difficult to obtain, either due to high risk or regulations.

Credit Fraud/Identity Theft: 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 Inquiry: an entry on a credit report that shows a business; such as a credit card company, bank, loan lender, employer, etc, has requested a copy of the report

Credit Limit: the maximum amount that can be borrowed on a credit card.

Credit Report: a report maintained by a credit bureau detailing a consumer's credit history

Credit Risk: the likelihood of a consumer to pay back an outstanding debt.

Credit Score: a numerical summary of the information contained in a consumer's credit report.

Credit Utilization: the amount of credit available, credit limits and the amount already used.

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

Daily Rate: the daily rate is 1/365th of the annual percentage rate (APR).

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

Debt Settlement: negotiating and agreeing to repay a reduced amount of the balance owed.

Debt to Income Ratio: the percentage of income that goes toward paying debt.

Debtor: one who owes a debt.

Default Rate: a default rate is the highest interest rate charged by a creditor or lender.

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

Delinquency: past-due payment on a credit account such as a credit card or loan.

Discharge: to release a debtor from responsibility for a debt, often as a result of bankruptcy.

Discretionary Income: income remaining after taxes are deducted or calculated and necessary expenses have been paid.

Dismissed Bankruptcy: an instance in which a judge has ruled against a consumer's petition for bankruptcy, sometimes at the consumer's request. Such cases are recorded in the public records section of the consumer's credit report, and the debts covered in the bankruptcy remain outstanding.

Disposable Income: income remaining after taxes have been paid.

Dispute: to question the accuracy of information on a credit report.

Downpayment: 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.

Equity Loan: using the equity in property (such as a home or car) to secure a loan.

Equity: the value of a property (such as a home or car) minus any lien.

FCRA: The Fair Credit Reporting Act is a federal law that details how consumer credit information can be collected, shared, sold and used

FICO score: The version of a consumer's credit score developed by and named after the Fair Isaac Corporation. The score is a rating of credit.

Finance Charge: cost of credit calculated using the APR and the balance.

Fixed Rate: an interest rate that remains constant, regardless of economic indicators.

Foreclosure: a legal proceeding in which the bank can take possession of and sell a mortgaged property when the borrower does not satisfy contractual obligations.

Fraud Alert: if you suspect that you're the victim of identity theft or credit fraud, you may contact 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.

  

Free personal finance software to manage checkbook register entries and to track expenses.

   

FTC: The Federal Trade Commission (FTC) is a government agency that protects consumers against unfair business practices.

Garnished Wages: a court order for an employer to withhold a certain amount of an employee's wages as repayment for debt or other judgment.

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 (wages, bank account, etc.).

Grace Period: a period of time in which credit card charges can be paid without any interest charges.

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. All the inquiries caused by the consumer purchasing their credit reports are soft inquiries.

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.

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.

Inquiry: an instance in which all or part of your credit file is accessed by a company or individual. There are different types of inquiries. Inquiries stay on your credit report for not more than two years. See also hard inquiry, promotional inquiry, and soft inquiry.

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

Interest Rate: the amount charged by a lender for borrowing money.

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

Introductory Rate: a special rate, typically below-market such as a 0 intro period, offered for the initial billing cycles of the credit card issuer.

Investigation: the process a credit reporting company undertakes in order to verify credit report information disputed by a consumer. For more information, see correcting inaccuracies on your credit report.

Involuntary Bankruptcy: a bankruptcy instigated by creditors rather than the debtor.

Joint Account: a credit or loan account held by two or more people. All account holders assume legal responsibility for the repayment of the account.

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 court order to pay a certain amount of money to another party.

Late Fee: a fee charged when payment is received after the due date.

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 credit limit established by a creditor.

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. For example, if you borrow $75,000 to buy a $100,000 house, the LTV is 75%. As a general rule, the lower the LTV, the more favorable the terms of the loan will be.

Minimum Payment: the minimum amount that must be paid to avoid defaulting.

Mortgage Loan: a term used to identify a broad range of home loan products, including a new home loan as well as refinancing an existing mortgage home loan.

Net Income: your total income from employment and other sources, minus 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.

Nonrevolving Credit: credit that cannot be used after payment, such as an auto loan.

Open Account: an account that is still active or still being paid.

Opting Out: limiting the sharing of information about you to others, such as opting out of credit or insurance offers that were not initiated by you.

Origination Fee: the fee a lender charges to process a home loan. It may include the costs to check the applicant's credit report, prepare documents, inspect the property, and conduct an appraisal.

Over Limit Fee: a fee charged for exceeding the credit limit.

Payday Loan: a short term, high risk loan with no credit check, which can be used for any reason such as to cover expenses until the next payday.

Periodic Rate: an interest rate expressed in daily or monthly terms, calculated by dividing the annual percentage rate by 365 or by 12.

Personal Line of Credit: the maximum amount one can owe at any time, based on income, debt and credit history.

Personal Loan: a secured or unsecured loan which offers cash for any reason. Secured personal loans typically use a home as collateral and have higher credit limits. Unsecured personal loans are generally smaller amounts.

PITI: Principal, Interest, Taxes and Insurance. An acronym representing the main components of a monthly mortgage payment.

Points: charges levied by a mortgage lender, usually paid at closing. One point equals 1% of the value of the loan.

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.

Prime: good credit people who obtain low, market interest rates.

Principal: the outstanding balance of a loan, exclusive of interest and other charges.

Promotional Inquiry: a type of soft inquiry made to your credit report for the purpose of disclosing that a credit report was furnished in connection with a preapproved offer. If your credit history matches a creditor's criteria, that creditor gets only limited information -- not your full credit report.

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.

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.

Repossession: the act of a creditor regaining possession of an item sold to you.

Return Check Fee: a fee charged by a creditor or lender when a payment check is returned due to Non Sufficient Funds (NSF).

Revolving Balance: the total balance of all revolving credit accounts.

Revolving Charge Account: an account that requires at least a specified minimum payment each month plus a service charge on the balance. As the balance declines, the amount owed for the service charge, or interest, also declines.

Revolving Credit: credit that can be used repeatedly up to a certain limit as long as payments are made to keep the balance below the established limit.

Second Mortgage: a mortgage taken out on a home that has an existing mortgage. A home equity loan is a type of second mortgage.

Secured Credit Card: a credit card that requires pre-paying (advanced deposits) to make purchases/charges with the card.

Secured Loan: a loan obtained by using property or assets of equal or greater value to the amount borrowed.

Security Freeze: a security freeze limits reporting a credit file to third parties, such as credit grantors or other companies and agencies, except those exempted by law or those for whom the consumer authorizes.

Signature Loan: a loan obtained by signature alone without any collateral, but may require a credit check.

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.

Statute of Limitations: the amount of time a creditor or debt collector can sue for repayment of a debt. View the statute of limitations for debt by state.

Student Loan Default: a state of delinquency on student loans occurring after the terms of the contract are violated, e.g. have not made a payment or other arrangements for at least 270 days.

Subprime: bad credit people who do not qualify for market interest rates due to no credit history, late payments, chargeoffs, etc.

Tax Lien: the right, usually by the county, state, or federal government, to take possession of property due to a delinquency on taxes.

Three C's: name for the traditional trio of basic criteria lenders consider when deciding whether to approve a loan: character, capacity, and capital (or collateral).

Trade-In Value: The value of a used vehicle traded in to a dealership as part of a purchase or downpayment.

Tradeline: a credit industry term for an account listed on a credit report.

Universal Default: the lender enforces default terms on a borrower that has defaulted with another lender.

Unsecured Loan: a loan based on your promise to repay, not on pledged collateral.

Vacated: a judgment that has been rendered void or set aside is said to be vacated.

Variable Interest Rate: an interest rate that increases and decreases based on another interest rate.

Voluntary Bankruptcy: a bankruptcy filed at the consumer's request.

Wage-Earner Plan: the three- to five-year repayment schedule in a Chapter 13 bankruptcy. The consumer must turn over disposable income to a bankruptcy trustee, who in turn repays creditors.

Writ of Replevin: a court document authorizing repossession of a debtor's property.

Zombie Debt Collection: collecting on old, defaulted accounts once thought to be uncollectable.