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Glossary
Glossary
Glossary | |
| Terms that are on use on this site. | |
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| There are 14 entries in the glossary. | |
| Pages: 1 | |
| Term | Definition |
| Charge-Off | When a creditor or lender writes off the balance of a delinquent debt, no longer expecting it to be repaid. A charge-off is also known as a bad debt. Charge-off records remain on your credit report for 7 years and will harm your credit score. After a debt is charged-off, it can be sold to a collections agency. |
| ChexSystems | A credit reporting company that tracks your banking history and provides this data to banks when you apply for a new checking account. Negative records, such as bounced checks, can be kept in their database for up to five years. If there are errors on your ChexSystems record, you can contact the company to submit a dispute. |
| Closing Costs | The amounts charged to a consumer when they are transferring ownership or borrowing against a property. Closing costs include lender, title and escrow fees and usually range from 3-6% of the purchase price. |
| Co-Signer | An additional person who signs a loan document and takes equal responsibility for the debt. A borrower may want to use a co-signer if their credit or financial situation is not good enough to qualify for a loan on their own. A co-signer is legally responsible for the loan and the shared account will appear on their credit report. Having a co-signer is only helpful if the co-signer's credit or financial standing is better than the primary lender. |
| Collateral | An asset or property used as security against a loan. |
| Collections | When a business sells your debt for a reduced amount to an agency in order to recover the amounts owed. Credit card debts, medical bills, cell phone bills, utility charges, library fees and video store fees are often sold to collections. Collection agencies attempt to recover past-due debts by contacting the borrower via phone and mail. Collection records can remain on your redit report for 7 years from the last 180 day late payment on the original debt. |
| Commodity | A crop, metal or other substance that is traded. |
| Compound Interest | Interest paid on your interest plus the value of your initial investment (principle). |
| Credit Bureaus | Also known as credit reporting agencies, these companies collect information from creditors and lenders about consumer financial behavior. This data is then provided to businesses that want to evaluate how risky it would be to lend money to a potential borrower. Once a low-tech system of regional credit reporting agencies, the industry is now consolidated into the three national credit bureaus - Equifax, Experian and TransUnion. FICO is not a credit bureau; instead they are company that develops credit scoring formulas. |
| Credit Counseling | A service that helps consumers repay their debts and improve their credit. Usually non-profit companies, most of these agencies offer helpful and affordable services. Consumers should be aware that there are also credit counseling agencies that are expensive, ineffective and even damaging to the client's credit (see Credit Repair). Consumers should carefully review the company's reputation and services before signing up. |
| Credit History | Another term for the information on your credit report. Your credit history is a record of how you have has repaid your credit obligations in the past. |
| Credit Limit | The total amount that a company will allow you to charge to a credit card or credit line. It's best for your credit score to keep your credit card balances below 35% of your credit limit. If you spend more than your credit limit, you will be charged an "overage fee" of about $10-50. |
| Credit Report | The individual records of consumer financial behavior kept by credit bureaus and provided to businesses when they want to evaluate potential borrowers. Credit reports include records on: consumer name, current and former addresses, employment, credit and loan histories, inquiries, collection records, and public records such as bankruptcy filings and tax liens. |
| Credit Score | A numerical evaluation of your credit history used by businesses to quickly understand how risky a borrower you are. Credit scores are calculated using complex mathematical formulas that look at your most current payment history, debts, credit history, inquiries and other factors from your credit report. Credit scores usually range from 300-850, with 680 or higher considered to be "good" credit scores. There are thousands of slightly different credit scoring formulas (including FICO, Beacon and Empirca scores) usd by bankers, lenders, creditors, insurers and retailers. Each score can vary somewhat in how it evaluates your credit data. |
| Glossary V2.0 | |
