Glossary of Terms

The yearly cost of borrowing money, shown as a percentage of the amount borrowed.

Property owned by an individual which holds value and is available to meet debts.

Legal proceedings where a person's assets are dissolved by the court to pay for their debts.

Describes an account that has been past due for at least 180 days with the creditor not having received payment.

Assets that a borrower pledges to secure repayment of a loan.

Combining several monthly payments into one single monthly payment.

Process by which a certified credit counselor assesses your financial situation and creates an action plan to get your finances back on track.

A detailed report of your entire credit history involving mortgages, auto loans, student loans, and credit cards, among other items.

A numerical score ranging from 300-850 which conveys to lenders your creditworthiness.

A loan which is used to combine several smaller loans in order to have one single monthly payment.

Process of negotiating with creditors to settle a debt for less than the original amount owed.

An account status when a borrower misses their scheduled payments.

One of the three major credit bureaus.

One of the three major credit bureaus.

Credit scoring model created by the Fair Isaac Corporation, which ranges from 300-850.

An interest rate that cannot fluctuate for the borrower.

Temporary postponement granted by the lender (typically relating to student loans) when the borrower cannot make payments.

When a lender legally seizes a property due to the borrower being unable to make payments.

The act of an employer withholding an employee's compensation to pay off a creditor.

A type of credit check done by lenders when applying for credit which can lower the borrower's score.

A debt in which the borrower pays a set amount, usually once a month, until the debt is paid off.

The cost of borrowing money, usually expressed as a percentage.

A legal decision from a judge on a civil action or lawsuit, usually to satisfy a debt or penalty.

A legal contact binding two parties for the rental of property or goods.

Firm or institution that makes money available for borrowing.

An obligation to pay money back to a lender.

The right of a creditor to secure a debt against the property of a borrower.

Converting assets into cash.

The writing off of debts by a lender (typically student loans).

Loan used to purchase a commercial or residential property.

A loan for personal use which has no collateral.

Legal document allowing a person to make financial decisions on behalf of someone else.

Describes a low interest rate, usually offered to the most creditworthy borrowers.

The amount of money financed or borrowed, excluding interest.

Replacing an old loan with a new loan at a different (typically lower) interest rate.

The process by which a creditor legally seizes one's property as a response to a borrower not paying on their debt.

A loan backed by a borrower's asset (home, car, etc.).

Represents the period of time over which a loan will be repaid.

One of the three major credit bureaus.

A loan that is not backed by collateral.

An interest rate that can fluctuate with the market.