A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A
Algorithm
A complex mathematical model that in credit scoring, is used to compare data in millions of credit reports and predict a person's likelihood to repay debts.
Account Condition
It refers to the present status of an account but does not indicate the history of the account, i.e. the previous transactions that led to the current state.
Active Account
An account characterized by many transactions, with transaction activity having been reported in the last 90 days to a Credit Reporting Agency.
Activity
Activity is any transaction that appears on your bill, including purchases, cash advances, finance charges and payments made.
Affinity Card
A card offered in conjunction with an organization and a credit card issuer. A certain percentage of the finance charges generated from cardholders are donated to the charity or organization featured on the card.
Annual Percentage Rate (APR)
The yearly percentage rate of the finance charge. The annual percentage rate will be a fixed or variable rate.
Applicant
A person or firm applying for credit
Asset
Any thing you own that has value or use. Can potentially be used as collateral.
ATM Card
A payment card issued by a bank. Also known as a bank card.
Authentication
Authentication is the act of confirming or establishing authenticity or genuineness of a transaction, to make sure that it is initiated by an authorized user and the information provided by him are valid.
B
Bad Credit
Refers to poor credit rating due to bad credit history. Late payment, exceeding card limit, skipping payment and declaring bankruptcy are some of the common practices that can have negative impact on credit rating.
Balance Transfer
The act of transferring the whole or partial balance of one credit card to another credit card. This is usually done if the balance is being transferred to a card with a lower annual percentage rate.
Balloon Payment
The payment at the end of the loan that is much larger than the regular scheduled payments. Mostly used for mortgages and other loans, not for credit cards.
Bank Identification Number (BIN)
The first six digits of a Visa or MasterCard account number. This number is used to identify the card-issuing institution.
Bankruptcy
A legal proceeding in U.S. Federal Court that may legally release a person from repaying debts owed. The law contains several chapters which relate to different methods of relief
Bankruptcy Dismissed
A court order that dismisses a petition for bankruptcy, in which case the debtor is still liable to repay the debts.
Bill
A statement that describes the list of charges for the services provided, to the person who is responsible for paying their cost.
Billing Cycle
The days between the last statement and the current statement. Billing cycles generally range from 20 to 32 days.
C
Cash Advance Fee
A fee charged for using your card to obtain cash. The fee will be a percentage of the transaction or a flat fee. Higher interest rates generally apply to cash advances.
Charge Card
A short term (usually around 1 month) credit card. There is no "minimum payment" other than the full balance. Since there is no loan, there is no official interest.
Closed Account
An account closed by a creditor or borrower. The particular date on which an account has been closed, either at the request of the creditor or the consumer, is called 'closed date'.
Credit Availability
It is the amount of credit available on your credit account, which can be calculated by subtracting credit balance from the credit limit. Also known as 'credit available' or 'percentage of credit currently available'.
Credit History
A record of a person's use of credit over time.
Credit Limit
It is the maximum amount of credit extended by a lender or the maximum amount that one can charge on a credit card. However, some credit card issuers may allow the cardholders to spend more than credit limit by charging a fee.
Credit Rating
A judgment of someone's ability to repay debts, based on current and projected income and history of payment of past debts. Sometimes expressed as a number called a credit score.
Creditworthiness
Judged to be qualified to have a certain level of credit.
D
Debit Card
A card that allows the holder to withdraw money or deduct the cost of purchases directly from the bank account of the holder.
Debtor
An individual, a firm, government, a company that owes a debt to someone else.
Debt-to-Income Ratio
this is a value that compares your total debt payments to the money you earn. This value can help you determine if you have too much debt.
Dispute or Credit Dispute
Challenging the accuracy of the information on a credit report by requesting an investigation.
Due Date
The day a payment is due to a creditor. After that date, a late fee can be charged and the payment can be recorded as late, or the account can be considered delinquent.
E
Effective Date
The first day your card is activated and ready for use or when new terms take effect.
Encryption
Encryption is the process of encoding credit card information.
Escrow
A written agreement, property or money, that is temporarily deposited with a third, neutral party, until the conditions of the contract are fulfilled.
Expired Card
A card with an encoded or printed expiration date that has passed.
Extended Warranty
Extended warranty is a program with which the life of a purchase, or the warranty period protection, can be prolonged. It can be offered by the manufacturer, retailers, or the warranty administrator.
F
Fair Credit Billing Act
An Act passed by Congress in 1975 to help cardholders resolve billing problems with issuers. The Act gave cardholder certain rights when dealing with credit card issuers.
Fair Debt Collection Practices Act (FDCPA)
A federal law that prohibits certain methods employed for collecting debts. It mainly prohibits abusive, unfair and deceptive debt collection practices.
Finance Charge
The amount of interest charged to an account for the billing cycle.
Fixed Rate (or Fixed APR)
An annual percentage rate that does not change throughout the year, unlike an introductory APR that changes after a specific period of time.
Float
The difference in time between when a transaction occurs and the time it is posted to a credit card account, often one to two days. This is the delay you see when you go online to view your statement and your recent activity is not displayed yet.
G
Gold Card
A type of credit card with some added benefits which may not be available with standard credit cards.
Go-to Rate
The real interest rate charged on a credit card after the introductory, or "teaser," period ends.
Grace Period
The time allowed to pay your balance without being charged a finance charge. Usually 25 to 30 days.
Graduated Payment
A loan repayment scheme, where the payments begins with small installments, and then gradually rises at a predetermined rate over time.
Guarantor
The individual responsible for paying a bill.
H
High Risk
The customers with a history of delinquencies, bankruptcies, charge-offs, are often categorized as high risk customers, which indicates that they are not responsible or trustworthy debtors.
I
Identity Confirmation
Verification of the identity of a consumer.
Inquiry
When a lender looks at your credit report to see whether to loan you money.
Installment Credit
A type of credit in which the monthly payment is the same every month and the loan has a set time period. The most common forms of installment credit are mortgages and auto loans.
Interchange Fee
It is the charge paid by the merchants to the credit card processors for accepting credit cards. It is also known as a 'discount rate'.
Interest Rate
The yearly percentage rate of the finance charge. The interest rate will be a fixed or variable rate. The Interest Rate is also known as the Annual Percentage Rate (APR).
Interest Rate Cap
It is the maximum amount that can be charged as interest, and is generally imposed either by the credit card agreement, or the state and federal laws.
Introductory Rate (aka Teaser Rate)
A temporary, lower annual percentage rate, after which the APR is raised to the fixed rate.
Involuntary Bankruptcy
Sometimes, petition for declaring an individual or business as bankrupt is filed by the credit grantors instead of the borrower. If bankruptcy is granted by the court, it is known as involuntary bankruptcy.
Issuer
A financial institution, bank, credit union or company that issues, or causes to be issued, credit cards to cardholders.
J
Joint Credit Report
A credit report for two individuals. It is normally delivered as two separate reports.
Judgment
As a credit term, it refers to a court decision about an action or lawsuit related to money or debts. It can be listed on the credit report of the individual or business involved in the lawsuit.
L
Late Payment
A payment made toward a credit account that is past the scheduled date the payment is due. Can definitely affect your credit rating/score.
Late Payment Fee
A fee charged to a cardholder's account once a payment is overdue.
Lien
A legal claim or hold of a person’s property as security for a debt. A lien will affect a potential sale of the property, most notably, real estate property.
Loan Type
Loans can be of various types, such as home, personal, home equity and auto loans. The different types of loans vary in fees, interest rates, as well as tax deductibility of interest.
M
Minimum Finance Charge
The minimum charge that has to be paid for using a credit card.
Minimum Monthly Payment
The minimum amount of the balance a cardholder is required to pay to keep the account in good standing.
Monthly Periodic Rate
It’s simply the rate of interest per month, calculated by dividing the annual percentage rate (APR) by 12.
Most Recent Date
The most recent date on which account information have been updated.
N
New Balance
The balance owed on a credit card after the unpaid balance from the previous billing cycle and new purchases, finance charges and other fees are added together.
Nondischargeable Debt
A debt that cannot be discharged or cleared through bankruptcy proceedings. Examples of such debts include debt for child and family support, unpaid taxes, criminal charges, etc.
O
Open Account
An active account.
Origination Fee
The fee charged by a lender to cover the processing costs of a loan, like preparing documents, checking credit reports, etc.
Outstanding Balance
The remaining unpaid portion of a debt or a loan.
Outstanding Debt
The unpaid portion of a debt.
Over Credit Limit Fee
A fee charged if your balance exceeds your credit limit.
Overdraft
Overdraft means that withdrawals from the bank account have exceeded the available credit balance.
Overdue
Past dues, i.e. the dues not paid on the due date.
P
Paid As Agreed
Credit accounts have been paid satisfactorily, as per the terms and conditions of the agreement.
Past Due
A payment that has not been paid at the scheduled time. After 30 days, the account becomes "delinquent."V
Plastic (Card)
A generic, and somewhat slang term used to describe a (plastic) credit card. “Paper” means cash, usually.
Platinum Card
Usually offered to people with higher incomes and a good credit history. This card has a minimum credit limit of $5,000 and may include member benefits.
Prime Borrower
A term used to refer to borrowers with good credit history.
Principle
The outstanding balance owned on a loan not including interest or other fees.
Processing Date
The date on which the transaction is processed by the acquiring bank. Receipt.
Public Record
Information on your credit report that has been obtained from court records, such as bankruptcies, judgments and liens. These are never good.
R
Rate Cap
It is the maximum amount to which interest rate on an adjustable rate mortgage can rise annually over the life of the mortgage loan.
Rebate Card
Allows a cardholder to earn points or money to get cash, merchandise, or services for using the card.
Recent Balance
It is the most recent balance on an account. The most recent payment made on an account is, on the other hand known as recent payment.
Recurring
A term for transactions for which a consumer grants permission for someone to periodically charge his account number for recurring goods or services, e.g., monthly subscriptions.
Regular APR
It is the regular or ongoing annual percentage rate that becomes applicable on all purchases and balance transfers, once the introductory period ends.
Revolving Credit
An account that requires a minimum payment each month plus service charges on the remaining balance. As the balance declines, so does the service charge.
Risk Scoring Models
Statistical models with complicated formulas, that are used for measuring the risk involved with loans or debt. In other words, they evaluate the creditworthiness of the individuals or businesses, on the basis of their credit history.
S
Scheduled Payment
Payment that are due at a scheduled time.
Score Factors
The factors like total debt, late payments, account types, and age, that determine the credit score of an individual or business.
Scoring Model
A statistical formula used to calculate scores based on data such as information from a consumer's credit report.
Secured Card
A card that is secured by a savings account opened with the issuer. The card is designed for people who are looking to rebuild their credit, but are having trouble getting an unsecured card.
Security Code
The numbers printed on the back or front of a credit card, which help to verify its authenticity.
Setup Fee
A one-time fee charged by a credit card company when a new credit card account is opened. Only high-interest accounts usually get charged this fee. If you have good credit, you shouldn’t ever pay "setup fees."
Simple Interest
It is the rate of interest calculated on the principal amount only, and not on the earned interest or the compound interest.
Soft Inquiry
When a potential creditor runs a credit check on a consumer that does not impact the borrower's credit score.
Spoilage
Refers to lost or unused gift cards, and the amount left on partially used gift cards. It is also known as 'breakage'.
T
Teaser Rate
Also called the introductory rate, this is the low interest rate the credit card issuer charges during an initial period to entice customers, and it usually only lasts a few months up to a year. It is followed by a higher, "go-to" rate.
Term
The time period of a loan within which it has to be repaid. 'Term in months' is the number of months within which a loan has to be paid back, while 'term in years' refers to the number of of years over which one has to repay a loan.
Third-Party Collectors
Third party collectors are collection agencies that are bound by a contract to collect debts for a credit department or credit company.
Titanium Card - Usually offered to people with higher incomes and a good credit history. This card has a credit limit above the Platinum level and may include member benefits.
Total Finance Charge
It is the total of finance charges, which is generally calculated by multiplying the average daily balance, by the daily periodic rate, and the number of days in the billing cycle.
Trade Line
An account listed on a credit report. Each separate account is a different trade line.
Transaction Date
The date that account activity takes place on. Some companies assess interest on charges and cash advances from the transaction date, others from the processing date.
Truth in Lending Act
A law requiring lenders to provide information giving borrowers the ability to compare one loan to another.
U
Universal Default
It is the practice of increasing the interest rate on the credit provided to a particular customer, on receiving information that he or she has defaulted with other lenders.
Unsecured Card
A credit card that is not secured by collateral. Unsecured cards are the majority of cards issued.
V
Variable Interest Rate
An interest rate based on fluctuating rates in the banking system, such as the prime rate.
Verification
Verifying or confirming the information on a credit report. Verification is initiated by the credit bureaus when a customer challenges the authenticity of the information on his or her credit report.
Voluntary Bankruptcy
Bankruptcy petition filed by the debtor.
W
Wage Garnishment
A technique of debt recovery ordered by the court, where the lender can obtain a part of the monetary compensation, including salary, directly from the employer of the borrower, until the debt is repaid completely.
Withdrawn
A decision to not pursue a bankruptcy, a lien, etc.
Writ of Replevin
A legal document authorizing the repossession of debtor's property, which has been pledged as security to obtain a loan.
Z
Zero Balance
Refers to no outstanding balance and no activity in the current month, i.e. no debt on the credit card account.