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Glossary

3

3-in-1 Credit Report
A comprehensive credit report containing credit information from all three major credit reporting agencies.

A

Adjustable Rate Mortgage (ARM)
A mortgage where the interest rate fluctuates over the life of the loan.
Annual Fees
The yearly fee charged by a lender to maintain an account.
Annual Percentage Rate
The cost of credit at a yearly rate. Knowing the APR allows you to effectively compare loans, even when they are structured differently.

B

Balance Transfers
Moving your balance from one credit card to another to take advantage of features the new card offers.
Balance
The amount of money that you owe to a particular lender.
Balloon Mortgage
A mortgage where the monthly payments are based on a 30-year schedule, but the entire mortgage becomes due at the end of a set term, normally five to seven years.
Bankruptcy
A legal declaration that a person is unable to pay his or her debts.

C

Community Property
Applicable in certain U.S. states, property and obligations acquired by a husband or wife or both, during a marriage, is consequently owned by, and the responsibility of, both.
Credit
A trust or promise to buy now and pay later under designated terms for goods or services.
Credit Assistance
Better Business Bureau ( www.bbb.org )National Federation for Credit Counseling (Consumer Credit Counseling Service) (www.nfcc.org)
Credit Counseling Services
Organizations that help consumers find a way to repay debts through careful budgeting and fund management. Credit counseling services are usually non-profit organizations funded by lenders. By requesting a longer pay-off period from lenders one-by-one, a credit counseling service can often design a workable repayment plan on behalf of the consumer.
Credit File
The collection of information each of the credit reporting agencies maintains in their databases.
Credit Limit
The maximum amount you are allowed to borrow from a lender under the terms of your agreement for an account.
Credit Monitoring Service
Services that monitor activity in your credit file and alert you to key changes in your file. You can then investigate the change to make sure it is not the result of identity theft or fraud.
Credit Repair Agencies / Credit Clinics
Companies that claim they can "clean up" or "erase" a consumer's bad credit, often with tactics that are illegal under the Credit Repair Organizations Act.
Credit Repair Organizations Act
A federal law that provides consumer protections from fraudulent or disreputable credit repair services as part of the Consumer Credit Protection Act.
Credit Report
A record of the information in your credit file that is used by a prospective lender, employer, or others to help evaluate you when you apply for a loan, job or in certain other circumstances. The report chronicles the credit payment history of a prospective borrower.
Credit Reporting Agency
An agency that is a clearinghouse for information on the credit payment history of individuals or firms.
Credit Score
A number calculated and used by a lender to help determine whether you qualify for a particular credit card, loan or service. It is calculated by applying a mathematical equation to the information in your credit report.
Creditworthiness
An assessment of a consumer's past credit behavior that allows a potential lender to decide whether or not to extend credit.

D

Debit card
A card that allows purchase amounts to be deducted directly from a consumer's personal checking account.
Debt-to-Income Ratio
Your income compared to the debt you owe.
Deductible
The portion of a loss that the insured party must pay before the insurer payment coverage begins.
Default
Failure to fulfill an agreed-upon financial obligation, such as making a loan payment.
Delinquency
Past-due payment on a loan.
Discretionary Income
The money you have left over when all expenses and other financial obligations are paid.
Disposable Income
Money left over after taxes are deducted.
Dispute
To request an investigation of the accuracy of information on a credit report. Disputes may now be effectively initiated online by notifying Equifax.

E

Equal Credit Opportunity Act (ECOA)
A federal law that requires lenders and other lenders 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.
Equifax 3-in-1 Credit Report with Score Power®
A comprehensive credit report containing credit information from all three major credit reporting agencies.

F

Fair and Accurate Credit Transactions Act of 2003 (FACT Act)
A federal law that amended the federal Fair Credit Reporting Act in many areas. The law provided, among other things, additional protections for consumers in connection with the prevention and remediation of identity theft and the accuracy of credit reports. It includes your right to a free copy of your credit report form each of the three major credit reporting agencies every 12 months, which must be requested through the centralized source established under the FACT Act.
Fair Credit Billing Act (FCBA)
A federal law that offers protection against billing errors (including limiting your liability for unauthorized purchases), and may help you to reverse the purchase of inferior goods or services charged to your credit card.
Fair Credit Reporting Act (FCRA)
A federal law that protects your right to know what's in your credit report, sets up procedures to ensure that credit reporting agencies follow reasonable procedures to furnish correct information about you, and ensures only entities with permissible purpose have access to your file.
Fair Debt Collection Practices Act (FDCPA)
A federal law that spells out what practices collection agents may and may not use to collect a debt.
Federal Trade Commission
A federal agency whose duty is to investigate unfair methods of competition in business, fraudulent advertising, etc., and to restrain or prosecute those charged with such practices. The Commission's primary purpose is to protect consumers.
Finance Charges
The amount you are charged to use credit.
Fixed Rate Mortgage
A mortgage where the interest rate of the loan remains the same over the life of the loan.
Foreclosure
The legal procedure for satisfying claims against a mortgage borrower that is in default.

G

Garnishment
A legal process whereby a lender who has obtained a judgment on a debt can receive full or partial payment by seizure of a portion of the debtor's assets (wages, bank account, etc.).
Grace Period
The number of days between a statement due date and the payment due date during which you do not incur finance charges.
Gross Monthly Income
What you earn before taxes are deducted.

I

Identity Theft / Identity Fraud
A crime that involves using another's name, Social Security Number or other personal information to acquire credit, make purchases or commit a crime in that name.
Inquiry
When your credit report is made available to another party, such as a lender, landlord or insurer.
Installment Loan
A credit account in which the amount of the payment and the number of payments are predeterminedor fixed.
Interest
The cost of borrowing or lending money, usually a percentage of the amount borrowed or loaned.
Interest Rate
The amount charged by a lender for borrowing money.

L

Late Fee
A fee attached to a delinquent account.
Lien
A legal claim upon real estate or personal property for the satisfaction of a debt.

M

Mortgage
The use of property as security for a promise to pay a debt to a lender.

O

Open Account
An account that is active or still being paid.

P

Permissible Purpose
As defined in Section 604 of the Fair Credit Reporting Act, only specific reasons for requesting a credit report are deemed "permissible." Requests not meeting this criteria must be denied.
Principal
The outstanding balance of a loan, exclusive of interest and other charges.
Points
Fees paid to a lender for a loan. They are often linked to the interest rate and are generally used to lower the interest rate of the loan.
Preapproval
When a mortgage lender reviews your credit and commits to a specific loan amount.
Prequalification
When a mortgage lender reviews your credit history, income, assets and liabilities in order to determine an appropriate loan amount.
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. Public records are open to any person who requests them.

R

Repossession
The act of a lender, due to non-payment, regaining possession of an item sold to you.
Revolving Balance
The total balance of all revolving credit accounts.
Revolving Credit
An account that requires at least a specified minimum payment each month plus a service charge on the balance, which can fluctuate up to the credit limit. As the balance declines, the amount of the service charge, or interest, also declines.

S

Secured Credit Card
A credit card secured by a savings account.

T

Tax Lien
A charge upon real or personal property for the satisfaction of debts related to taxes.
Term
The amount of time in which a loan must be repaid in full.