Credit Report Glossary

Annual Fees: A yearly fee charged for the privilege of using a credit card.
Annual Percentage Rate: The rate charged for one year of credit.
Applicant: The person applying for credit, employment, or some other benefit.
Asset: Property that has a value.
Authorized Account User: A person authorized by the account holder to use the account.

Bankruptcy: A legal proceeding that may release a person from debt. This includes Chapter 7 – total liquidation of assets, Chapter 11 – business reorganization, Chapter 12 – farm debt, Chapter 13 – repayment plan.
Budget: A financial plan.

Collection Account: An account, which has been turned over to a collection department or agency because normal attempts to collect have not been successful.
Consolidation Loan: Loan obtained to help reduce the amount of payments on bills owed. This is done by combining the bills into one loan payment. The borrower then pays off several bills with the proceeds from the one loan.
Collateral: Property used to secure a loan or other obligation.
Consumer: Person who purchases goods and services for their or their family’s personal use.
Consumer Credit Counseling Service: Usually these are nonprofit organizations that help consumers find a way to repay debts through careful budgeting. These organizations often request that creditor accept a longer pay-off period, which in turn, lowers monthly payments.
Co-Signer: Person who guarantees that a debt will be paid. If the borrower fails to meet payment, the co-signer becomes responsible.
Credit: A promise to pay later for items purchased now.
Credit Card: A card that’s used instead of cash or checks. The borrower then must repay the credit card company the amount of the purchase plus any interest that’s accrued.
Credit History: A record of how the consumer has paid accounts in the past. This is usually used as a guide to determine whether a borrower is a “good risk”.
Credit Limit: The maximum amount that can be charged on a credit card or account.
Credit Report: a record sent to prospective lenders, employers, and insurers that state the credit standing of a consumer.
Credit Reporting Agency: A company that gathers information about consumers and sells it to creditors/employers/insurers.

Debit Card: A card that deducts the purchase price directly from the person’s personal checking account.
Debt Management Programs: A program in which the creditors are paid off through a plan worked out by the program.
Debt Reduction Settlement: A settlement made for less than the full price of a debt. Usually done through negotiation.

Equal Credit Opportunity Act (ECOA): A federal law that protects consumers’ rights against discrimination.
Equifax: One of the three major credit reporting agencies.
Experian: One of the three major credit reporting agencies.

Fair Credit Reporting Act: A federal law that enables consumers to learn what information credit reporting agencies has on file and allows the consumer to dispute errors.

Garnishment: Legal seizure of a portion of assets (such as wages, bank accounts, etc.) in order to repay a debt.
Grace Period: Period of time in which you can avoid finance charges by paying off the balance before the due date.

Home Equity Loan: A loan that’s based on the amount of equity (the amount paid) on a home.

Installment Loan: A loan in which the amount and number of payments are fixed.
Interest: The cost of borrowing (or lending) money. Usually a percentage.

Judgment: An official court decision on an action or suit.

Lien: A legal claim made against a borrower’s property in order to secure a debt.

Mortgage: A claim placed against real property in order to secure a debt. 1st Mortgage – often known as the “primary” has priority over the claims of other lenders for the same property.

Personal Line of Credit: A maximum amount one can owe at any time.
Personal Loan: A loan based on consumer’s income, debt, and credit history.
Principal: The outstanding balance of a loan that does not include the interest or other charges.
Public Record: Information obtained from court records.

Repossession: Surrender of merchandise required as a result of the inability for a customer to pay as promised.
Revolving Account: An account that requires a minimum payment each month plus a service charge on the remaining balances. As the balance declines, so do the service charges.

Secured Credit Card: A credit card that’s secured by a savings account in which the credit limit amount has already been established.

Trans Union: One of the three major credit reporting agencies.

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