Vocabulary

• Credit Score – A numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of that person.
• Credit Report – A detailed report of an individual's credit history prepared by a credit bureau.
• Credit Bureau – An agency that collects and researches individual credit information and sells it for a fee to creditors.
• FICO Score – A type of credit score created by the Fair Isaac Corporation that is used by lenders to assess an individual's credit risk.
• Credit Risk – The risk of default on a debt that may arise from a borrower failing to make required payments.
• Credit History – A record of a borrower's responsible repayment of debts.
• Debt – Money owed by one party, the borrower or debtor, to a second party, the lender or creditor.
• Interest Rate – The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.
• Loan – A sum of money that is borrowed, often from a bank, and has to be paid back, usually along with an additional amount of interest.
• Lender – An individual, a public or private group that makes funds available for borrowing.
• Borrower – An individual or company that is using funds, items or services provided by another party with the expectation that it will be paid back.
• Default – The failure to pay back a loan according to the agreed upon terms.
• Bankruptcy – A legal status of a person or other entity that cannot repay the debts it owes to creditors.
• Collateral – An item of value used to secure a loan and subject to seizure if the loan is not repaid.
• Creditworthiness – An assessment of the likelihood that a borrower will default on his or her debt obligations.
• Credit Limit – The maximum amount of credit that a financial institution or other lender will extend to a debtor.
• Credit Card – A payment card issued to users to enable the cardholder to pay a merchant for goods and services.
• Annual Percentage Rate (APR) – The annual rate charged for borrowing, expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan.
• Installment Loan – A loan that is repaid over time with a set number of scheduled payments.
• Mortgage – A loan to finance the purchase of real estate, usually with specified payment periods and interest rates.
• Home Equity Loan – A type of loan in which the borrower uses the equity of his or her home as collateral.
• Auto Loan – A loan to finance the purchase of a motor vehicle.
• Student Loan – A type of loan designed to help students pay for post-secondary education and the associated fees.
• Personal Loan – A loan that is issued and supported only by the borrower's creditworthiness, rather than by a type of collateral.
• Payday Loan – A type of short-term borrowing where an individual borrows a small amount at a very high rate of interest.
• Secured Loan – A loan in which the borrower pledges some asset as collateral for the loan.
• Unsecured Loan – A loan that is issued and supported only by the borrower's creditworthiness, rather than by any type of collateral.
• Foreclosure – The legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property.
• Debt Consolidation – The act of combining several loans or liabilities into one loan.
• Credit Counseling – Professional counseling provided by organizations to help individuals deal with their debt problems.
• Debt Settlement – A negotiated agreement in which a debtor pays less than the total amount owed to clear a debt.
• Credit Utilization Ratio – The percentage of a consumer's available credit that he or she has used.
• Credit Inquiries – A record of a request for your credit report, which is triggered when you apply for credit.
• Debt-to-Income Ratio – A personal finance measure that compares the amount of debt you have to your overall income.
• Credit Fraud – Fraud committed using someone else's identifying information to commit theft or deception.
• Identity Theft – The deliberate use of someone else's identifying information, usually for financial gain.
• Co-signer – A person who signs a loan or credit card application with another person, agreeing to be equally responsible for repaying the debt.
• Credit Freeze – A tool that lets you restrict access to your credit report, which in turn makes it more difficult for identity thieves to open new accounts in your name.
• Credit Repair – The process of fixing a bad credit report, for whatever reason it was damaged.
• Credit Monitoring – The monitoring of a person's credit report for changes in order to detect fraudulent activity.
• Hard Inquiry – A credit report check performed by a lender or credit card issuer when the person or company is considering lending you money or extending you credit.
• Soft Inquiry – A credit report check that does not affect an individual's credit score.
• Subprime Borrower – A person who is considered a high-risk borrower due to a low credit score.
• Prime Borrower – A person who is considered a low-risk borrower due to a high credit score.
• Credit Line – A loan that allows you to borrow and repay funds more than once, up to a set limit.
• Credit Card Balance – The amount of money owed to the credit card company.
• Minimum Payment – The lowest amount of money that you are required to pay on your credit card statement each month.
• Late Payment – A payment made to a creditor or lender after the due date has passed.
• Charge Off – The declaration by a creditor that an amount of debt is unlikely to be collected, often when the debtor becomes substantially delinquent on a debt.
• Credit Card Grace Period – The time during which you are allowed to pay your credit card bill without having to pay interest.