Glossary
Annual Percentage Rate (APR): The total amount of interest and finance charges you are required to pay per year on a specific credit card balance, expressed as a rate.
Bankruptcy: A legal option that allows those with overwhelming financial obligations to seek a fresh start. Bankruptcies appear on credit reports for up to 10 years and can significantly lower credit scores.
Charge Card: A credit account in which you are required to pay the entire balance you spend at the end of each month.
Charge-off: An account that has gone unpaid for more than 180 days. The creditor may write off the account as "bad debt" for tax purposes. However, the debt still exists and is collectable with fees and interest.
Collection Agency: An organization that acts on behalf of a creditor to collect from the borrower the balance on past-due accounts.
Credit Card: A revolving credit account that allows consumers to make purchases up to a pre-determined limit and pay back what's borrowed, plus interest, in incremental amounts.
Credit History: A record of a consumer's credit activity over time.
Credit Report: A report containing a consumer's credit history that is compiled by a credit bureau. It includes information about open and closed accounts, personal information, public records and inquiries.
Credit-Reporting Bureau: A business that collects information from lenders and issues credit reports to consumers. The three main credit-reporting bureaus are Experian, Equifax and TransUnion.
Credit Score: A three-digit number, usually between 300-850, that expresses the risk you pose to lenders. The higher the number, the less "risky" you are. This means you may qualify for more attractive loan terms and insurance premium rates.
Debit Card: A card that is tied to your bank account. When you make a purchase with it, the money is automatically withdrawn from your bank account. This is not a form of credit.
Default: Failure to make a payment on a loan as agreed in its terms.
Delinquencies: Failure to make a loan payment on time.
Equifax: One of the three main credit-reporting bureaus.
Equifax Information Services
PO Box 740241
Atlanta, GA 30374
1-800-685-1111
www.equifax.com
Experian: One of the three main credit-reporting bureaus.
Experian Consumer Assistance
(Call for mailing address for your state)
1-888-397-3742
www.experian.com
Fair Isaac: Company that created the FICO score.
myFICO Consumer Division
200 Smith Ranch Road
San Rafael, CA 94903
1-866-406-7204
www.myFICO.com
Finance Charges: The amount of interest, transaction fees, balance transfer fees, etc., you are charged from your credit card company each month. Finance charges are assessed each month for as long as you have your card, and are usually expressed in terms of actual dollar amounts, not percentages.
Home Equity Line of Credit (HELOC): A HELOC works similarly to a credit card, though the collateral is the borrower's equity in his/her house. This often means a lower interest rate. With a HELOC, you'll receive either a checkbook or a credit card to use to access the funds. Interest does not begin accruing until you've made a purchase. This is not the same as a traditional second mortgage or refinancing.
Home Equity Loan: A traditional home equity loan is also known as a second mortgage and sometimes referred to as "refinancing." You receive a lump sum of money that pays off your existing mortgage and leaves some money left over for something else. Interest begins accruing immediately.
Inquiries: A listing of everyone who has asked to review your credit report. It can include landlords, potential lenders, employers, and insurers. Only inquiries resulting from your application are factored into your credit score.
Installment Loan: This is a credit account that you pay back a set amount to every month for a period of time. For example, car, student loans and mortgages are installment loans.
Interest Rate: The fee, expressed as a percentage, charged to the borrower for a loan.
Mortgage: An installment loan you use to pay for a condo or house. A lien is placed on the property until you pay off the loan according to its terms and schedule.
Past-due:An account in which the borrower has failed to make an on-time payment.
Phishing: The practice of trying to fraudulently acquire sensitive information, such as usernames, passwords and credit card details, by masquerading as a trustworthy entity in an electronic communication.
Revolving credit: A credit account in which you have a pre-determined limit and are authorized to borrow up to that limit at any time. Credit cards and Home Equity Lines of Credit (HELOC) are an example of this type of account.
Tax lien: A claim on property by the government to secure payment of taxes owed.
Terms: Your agreement with your creditor as to how often you'll make payments on an account and for how long.
TransUnion: One of the three main credit-reporting bureaus.
TransUnion
PO Box 1000
Chester, PA 19022
1-800-888-4213
www.transunion.com
