Credit Glossary

Common credit terms



Account holder
The person who is responsible for repaying a credit account. The term usually refers specifically to a credit card account. Also known as cardholder.

Account number
The number identifying every account in a credit report. This is the same account number as the one that appears on billing statements. Account numbers in credit reports may be partially masked or missing digits for security purposes.

Account type
The type of credit account, such as auto loan, credit card, mortgage, student loan, revolving and installment accounts, etc. Also known as loan type.

The transactions that appear on a bill, such as purchases, cash advances, finance charges and fees. It also includes any payments or credits made on the account since the last bill.

Adverse action notice
A lender's notice to refuse credit on the terms requested in a credit application, such as APR or credit limit. Under the National Credit Act, creditors must disclose with a notice the reason why credit was denied. The adverse action notice can also refer to a lender's decision to reduce a credit limit or end a credit agreement.

Affinity (credit) card
A credit card offered jointly by two organizations, one being a lending institution and the other being a non-financial institution (e.g. universities, non-profit organizations and special-interest groups). Cardholders may receive special discounts or offers from the non-financial group while the group receives from the financial institution a percentage of the sales or profits generated by the card. The terms and benefits may make these cards more expensive to use than similar, non-affiliated cards. People who use them generally do so to help support a cause they care about. Also see co-branded cards.

Amount due
The minimum payment a borrower must make for a particular billing statement. This is not the total amount owed but rather a percentage of it, such as two percent. Paying this amount on time keeps the account current. Paying only the amount due may not decrease the balance by much, because interest is added to the account every month and may represent a large portion of the payment.

Annual fee
The fee charged by the lender every year to keep the account open; charged to the card usually once a year and appears on the billing statement. A high fee may be broken into several payments billed throughout the year. Annual fees vary from R0 (typically for people with a high credit score and non-branded cards) to R1000 (typically for people with a very low credit score). The annual fee is in addition to other fees, such as late payment, over-limit, and interest. Also known as membership fee.

Annual percentage rate or APR
The rate of interest charged by a creditor on an annual basis. It is expressed as a percentage of the money owed. The Annual percentage rate indicates what it costs to revolve a balance on the account. Interest is not added during a grace period. Also known as interest rate, or rate.

The person applying for credit. Also known as credit applicant.

A person's request for credit. Applicants typically fill out a form and provide any information that the creditor requires for evaluation. This information may vary based on the type and amount of credit requested. Also see application data for a list of typical information requested on applications. Also known as credit application.

Application data
The information required on a loan application; usually consisting of identification information (used to obtain the applicant's credit record), employment information, income and account information. Sometimes it also involves any approvals or reports by governmental agencies or other persons that are necessary to guarantee, insure, or provide security for the credit or collateral. Also see application.

Application fee
The fee charged by lenders to process an application for credit and make a credit decision. This is usually non-refundable and paid whether the consumer is approved or denied credit. Many lenders do not charge an application fee; they are typical of lenders who extend credit to people with no or a troubled credit history.

Credit Bureaus Association.
The organization that represents all the credit bureaus. It deals with governmental and legislative issues that relate to consumers, credit bureaus and credit grantors in relation to credit reporting.

Auto loan
A type of installment loan specifically designed for the purchase of a vehicle, new or used. Also known as car loan.

Available credit
The amount of credit available before the credit limit is reached. It is a Rand amount; for revolving credit it is the difference between the credit limit or original loan amount for installment loans and the current balance. Also known as open to buy or unused credit.

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Bad credit
See high risk.

Bad debt
See charge-off.

The total amount of money owed on a loan. It includes unpaid balances from previous months, purchases, cash advances, fees, interest, transaction charges, and credits. Also known as outstanding balance. Also see debt.

Balance transfer
The process of moving part or all of a balance from one credit account to another. This is often proposed as an option on credit card applications. Consumers usually transfer balances to accounts that have a lower APR.

Balance transfer fee
The fee charged to a consumer for transferring part or all of a balance from one account to another. Sometimes the fee is waived for transfers requested at the time of a credit card application.

Balance-to-limit ratio
The proportion (percentage) of the credit limit or loan amount that is being used. This is a percentage calculated by dividing the balance by the credit limit (or original loan amount for installment accounts). Also known as BTL, usage ratio, utilization ratio.

An institution that is registered as a bank. Banks usually provide checking and savings accounts. Note: we considers national banking associations (such as credit card companies), as well as savings and loans, as banks.

Bank credit account
A credit account offered by a bank. This can be a revolving or installment account, or a charge card. Also known as bank trade.

Bank trade
See bank credit account.

Bankcard or Bank card
A charge card or credit card issued by a bank, for example: American Express�, Discover�, MasterCard�, or Visa�. Debit cards are not bankcards. Also known as national card. Also see charge card, credit card.

A person that has been legally declared by a court as unable to repay his/her debts. Typically the person is freed from having to pay some of the debt, but some of the person's assets may be liquidated to repay creditors.

The process by which a person becomes bankrupt. There are two common types of personal bankruptcy: Sequestration which is a "straight bankruptcy" and gets rid of all debts (except some taxes and maybe alimony payments) at the price of a total liquidation of assets. Administration Order is a "wage earner repayment plan" and allows a borrower with a reliable income to pay off bills over a 36 to 60 month period. When a person files for bankruptcy, a record of the filing appears on the borrower's credit report for up to 10 years. A bankruptcy record on a credit file severely damages the person's credit rating�the more recent the filing, the worst.

See billing statement.

Bill collector
See collection agency.

Billing cycle
The number of days between two consecutive statements. This is generally between 25 and 31 days.

Billing statement
The monthly bill sent by a lender to the borrower, summarizing the status of their credit account. For revolving accounts (such as credit cards), the statement lists all activity on the account (balance, purchases, payments, finance charges, credits, etc.), states a minimum payment amount, provides a payment form, and explains the terms and conditions of the account. A separate notice for any important changes to the account may also be enclosed with the bill. Also known as bill or monthly statement.

The person who owes money to a lender. The borrower is legally responsible for paying the loan (installment or revolving). Once a credit application is approved, the applicant becomes a borrower. Also known as debtor.

See credit bureau.

Business credit
Credit extended to a business (as opposed to a consumer). Also known as business loan.

Business loan
See business credit.

Business pull
See hard inquiry.

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Car loan
See auto loan.

See account holder.

Cash advance
The act of obtaining cash from a revolving account (such as a credit card), usually at an ATM. Cash advances are recorded on billing statements separately from purchases of goods or services. There is usually a limit on the total cash advance per month, a special fee associated with the transaction, and a higher APR on the cash amount borrowed.

Cash advance fee
The fee charged by a lender for a cash advance. This is usually computed as the greater between a percentage (such as three percent) of the amount of cash and a minimum amount.

Charge card
A card that requires the cardholder to pay the balance in full each month, but charges no interest. These cards are not revolving accounts because no amount is supposed to be carried from one bill to the next. There are penalties (higher APR and late fees) for people who fail to pay the full balance upon receipt of the monthly bill. Some examples of charge cards are American Express and Diner's Club.

The reversal of a credit card transaction, in which the merchant is required to repay the cardholder.

Charged-off account
See charge-off.

Charged-off balance
See charge-off.

A debt that is declared by the creditor as being uncollectible. This means the lender considers the money it loaned to the borrower is lost. Lenders use this as a last resort, once all collection efforts have failed. A bankruptcy filing often results in several accounts becoming charged-off. Charge-off usually lower credit ratings. Also known as bad debt, charged-off account, charged-off balance, charged to loss, charged to profit and loss.

Charged to loss
See charge-off.

Charged to profit and loss
See charge-off.

An account that no longer is open or available to make transactions.

Closing Date
The date on which a statement is generated, and the month's finance charges (interest) are added to the balance. This is the last day that transactions are recorded (or "posted") to an account for that billing statement. Also known as statement date.

One of several people responsible for repaying a loan. Once the loan application is approved, co-applicants become co-borrowers.

Co-branded card
A type of credit card offered through a partnership between a lending institution and a for-profit (retail) organization, such as a phone company, a gasoline company, an airline or a department store. The card has both the bank name and the retail company name on it. Usually, people are attracted by the card because of the special deals (such as extra services, cash or merchandise) they get with the retail partner every time the card is used.

Assets (cash or property) used to guarantee a loan. The collateral can be cash or property (such as a vehicle, a house, bonds, an insurance policy, jewelry, etc.). The lender can seize the assets if payments are not made according to the agreement (i.e. if the account becomes delinquent). Also known as security.

Status that indicates that an account has been sent to a special department or an agency in order to try to collect some of the past-due money owed to a lender. Accounts are typically sent to collection when they become delinquent by 120 days (sometimes 90 days) or more. Accounts in collection have a special mention on the borrower's credit report (as a collection status, special comment, narrative, remarks, or collection segment ID). A collection record on a credit file typically lowers the person's credit rating.

Collection account
A record placed on a credit report by a collection agency. The presence of a collection account lowers credit scores. Also see collection agency, tradeline.

Collection agency
A company that specializes in collecting debt on collection accounts. They either service (for a fee) or buy (at a discount) delinquent accounts from lenders. A collection agency cannot legally use or threaten to use violence or other criminal means to harm consumers, their property or reputation; use obscene or profane language; publish their name; list debt for sale to the public; or place telephone calls to any person without identifying themselves as a bill collector. Also known as bill collector, debt collector.

Consolidation loan
A loan usually obtained for the purpose of reducing the number of bills to pay by consolidating all of a consumer's revolving debt into a single account.

A person who uses credit for personal, family, or household purposes.

Consumer credit
Credit extended to a consumer.

Consumer Debt Counseling .
An organization offering counseling services in order to help consumers better manage their credit and reduce/repay serious debt. Their services are usually provided to consumers at low cost. Typically, they will work out a repayment plan with lenders on behalf of the consumer and prevent them from accumulating more debt.

Consumer pull
See soft inquiry.

Convenience check
A form used by consumers to transfer balances from one credit account to another. It looks similar to a regular check, but the significant difference is that the borrower is not paying off his/her debt, merely transferring it to another lender. Blank convenience checks are often sent with credit card offers. Also known as transfer check.

An additional applicant who enters into a loan agreement, guaranteeing to make the payments if the primary borrower defaults. Cosigners are responsible for repaying a debt if the primary borrower cannot make the payments. A parent or any person over 18 years old can be a co-signer. Cosigners are often used by people who have not established credit or by people with poor credit ratings. The credit account appears on the credit report for the co-signer as well as the primary applicant.

The right, granted by a lender to an applicant, to purchase goods and services (or access cash) now and pay later, typically over time. The term also refers to the loan itself.

Credit account
A credit agreement between a consumer and a lending organization. An account may have a closed-ended agreement (such as an installment loan) or an open-ended agreement (such as a revolving loan). Also known as trade. See tradeline.

Credit agreement
The contract that specifies the terms associated with a credit account.

Credit applicant
See applicant.

Credit application
See application.

Credit bureau
A company that records a consumer's credit history and sells it to prospective lenders to help them evaluate the consumer's creditworthiness. Credit bureaus provide critical information used by lenders to review credit applications. Credit information is also sometimes used to make hiring and renting decisions. The three major credit reporting agencies in the United States are Equifax, Experian, and TransUnion. In addition to the three national credit bureaus, there are numerous local or regional bureaus that are affiliated with the national bureaus. The role of these "affiliated bureaus" is to represent the bureau in a particular territory or state. Also known as credit reporting agency, credit repository, repository. See Equifax, Experian, TransUnion.

Credit card
A type of revolving account that can be used to make purchases of goods and services and repay over time. The lender charges interest on the amount owed (borrowed), unless the cardholder pays the balance in full at the end of each month. The lender also may charge fees such as a late payment and/or over-limit fee. APR and fees are set by the lender.

Credit counseling
Advice given to consumers to help them use credit responsibly and reduce/repay their debt.

Credit file
See credit history

Credit history
Information present in a credit report that pertains to the past usage and payment of credit on credit accounts. Sometimes refers to the credit report itself.

Credit limit
This is the maximum dollar amount a borrower may charge on his/her revolving credit account. Some lenders set separate limits for purchases and cash advances. Spending more than the credit limit will make the account over-limit, which may cause the lender to charge an over-limit fee and/or cancel account privileges. Also known as credit line, line size.

Credit line
See credit limit.

Credit profile
See credit report.

Credit rating
See credit score.

Credit record
See credit report.

Credit report
A report obtained from a credit bureau, containing a consumer's up-to-date credit history plus additional information such as age, address, marital status, employment history and other details that may help creditors judge creditworthiness. The credit history includes balance, credit limit and payment information for all accounts (past and present, joint and individual), credit applications made in the past, and public records such as judgment liens, bankruptcy filings, and tax liens. Credit bureau reports are usually requested either by prospective lenders or by consumers themselves. Apartment rental agencies, insurance companies and hiring employers may also request credit reports. Since credit reports are a critical element in credit scoring systems that lenders use to make credit decisions, it is a good idea to check one's credit reports regularly to ensure that the information is accurate. By law, consumers are allowed to inspect their credit reports and submit disagreements in writing to the credit bureaus as well as financial institutions. Also known as credit file, credit profile, credit record, individual report

Credit reporting agency
See credit bureau.

Credit repository
See credit bureau.

Credit score
A number used by lenders as an indication of how likely a consumer is to repay his/her loans. Credit scores are generated by a credit scoring model utilizing the data from a credit report. Lenders have been using credit scores for more than 30 years, and there is a multitude of credit scores used in the credit industry. Also known as credit rating.

Credit scoring system
A complex mathematical formula used to assess a consumer's creditworthiness from his/her credit report. The formula is developed using statistical techniques and millions of credit profiles. The model generates a credit score used by lenders to make consistent and objective credit decisions. While the credit bureaus all have several credit scoring models in their systems, many large lenders develop their own proprietary models.

Credit terms
The terms associated with a credit account. They include APR, credit limit, payment schedule, and fees (such as late payment, over-limit, cash advance, etc.). These terms are set by the lender and are a function of a consumer's credit rating, such that a consumer with a better credit score usually has lower APRs and fees.

Credit union
A cooperative association that offers a variety of savings and lending services to its members, usually at low interest rates. A credit union is a non-profit organization and is democratically owned and controlled.

See lender.

A measure of a consumer's past and future ability and willingness to repay his/her debt. It is usually determined by a credit scoring system based on credit history.

The payment status of accounts with no past due amount. Making all required monthly payments on time maintains a current payment status on the account. This is the opposite of delinquent. Do not confuse current with present (now) or open (available for transactions). Also known as in good standing, on time, paid, paid as agreed, paid on time.

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Daily periodic rate
The rate of interest per day, calculated by dividing the APR by 365.

Date opened
The date when a loan was originally initiated by a lender.

Date reported
The date when account information (including payment status) is reported by the lender to the credit bureau(s).

Debit card
A card for electronic transactions that has direct access to a personal checking (or savings) account. Purchases are deducted directly from the available funds in the account, just as if writing a check. The withdrawal of funds is immediate with online debit cards, delayed a day or two with offline debit cards. Note: Although these cards may look like credit cards (they have the Visa or MasterCard logo on them), they are not a form of credit. With a debit card, consumers cannot spend money they do not have, and using the card does not create debt that has to be paid back at a later time. Also known as EFT or electronic funds transfer card. See delinquency.

Money the borrower owes to a lender. Also see balance.

Debt collector
See collection agency.

See borrower.

Failing to comply with the terms of a loan contract by missing one or more monthly payments. Defaulting on an account makes it become delinquent.

Deferred payment
Payment that can be made at a later date, without the account becoming delinquent. Note: Interest still accumulates when deferring payment.

Failure to make a loan payment on time. Delinquent loans may be subject to late fees, a higher APR, and repossession or foreclosure.

Delinquency assesment
See late fee..

Delinquency status
See payment status..

The payment status of accounts with a past due amount. Paying late or missing payments makes the account become delinquent. A special payment status is assigned to the account to indicate how many payments are late: an account that is 30 days delinquent has missed one month of payment; an account that is 60 days delinquent has missed two consecutive months of payment, etc. The lender may charge a higher APR to delinquent accounts, particularly for serious delinquencies such as 90 days or more. Delinquent is the opposite of current. Also known as in default, late, past due. Also see default.

A negative reference appearing on credit reports, such as public records and severe delinquencies. An account gets a derogatory status when the consumer repeatedly fails to make the required payments and the account is turned over for special handling, such as collections, charge-off, repossession, etc.

I. To question the accuracy of information on a credit profile. Disputes are usually initiated by consumers in writing, and have to be investigated with the lender and maybe the credit bureau(s).

II. To question the accuracy of a specific charge on a billing statement. Disputes have to be investigated jointly with the lender and the merchant associated with the charge and the lender. The account holder does not have to pay the disputed items until the dispute is resolved; however, he/she still has to pay the minimum payment on the rest of the bill.

Due date
The day a monthly payment must be received by the lender. If the payment is received after the due date (or not received at all), the account may become delinquent and the account may incur late fees and higher APR.

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EFT or electronic funds transfer card
See debit card.

Equifax or EFX
An international credit bureau. Equifax Credit Information Services Inc., commonly known as Equifax, is headquartered in Atlanta, Georgia, and was formerly known as CBI.

Experian or EXP
One of the three national credit bureaus. Experian Information Solutions Inc., commonly known as Experian, is headquartered in Orange, California, and was formerly known as TRW.

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Finance charge
The cost of credit, appearing on a billing statement. It reflects the amount of interest being charged to the account. Depending on the lender, fees may be included in this amount or described in a separate section in the billing statement.

Finance loan or trade
See personal finance account.

Fixed APR
An APR that remains the same over time. Also known as regular APR.

Flat fee
A fee with a fixed amount, not a variable amount (such as a percentage).

A legal procedure, initiated by a creditor, that has the purpose of having the property sold to collect on a loan in serious delinquency. Foreclosure can only happen in secured loans since it is the collateral that is used to repay the creditor. This typically happens for mortgages when three or more payments have been missed. Foreclosure is one of the types of derogatory information that appears on credit files (and lowers credit ratings).

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A court-ordered procedure by which a creditor receives funds from a borrower's paycheck to assure repayment of debt. See workout plan.

Gold card
A credit card that offers a bigger line of credit (usually at least $5,000) than a standard card. It is more difficult to get approved for this type of card than for a standard card; for example a higher salary and credit rating may be required. The account often has extra benefits (such as travel insurance).

Grace period
A period during which a borrower can make new purchases on a revolving account without paying interest, provided he/she pays the balance in full by the due date of the next billing statement. This is the number of days (usually 20 to 25) from the billing date of the last statement to the due date of the new statement. Some credit cards do not offer a grace period. Often, the grace period applies only if there is no balance at the start of the billing cycle, either because there was no balance last month or the borrower paid it in full. If there is no grace period, finance charges will accrue the moment a purchase is made. Generally, there is no grace period for cash advances.

See payment pattern.

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Hard hit
See hard inquiry.

Hard inquiry
A request for a credit report that generates an inquiry in the person's credit data. This type of request must be authorized by the consumer. Hard inquiries are typical of lenders who use the information for making a credit decision, but insurance companies and rental agencies also may make a hard inquiry. Since hard inquiries result in a new inquiry being added to the credit report, they may lower credit ratings. Also known as business pull, hard hit, hard pull. Also see inquiry, soft inquiry.

Hard pull
See hard inquiry.

High balance
The highest balance (in dollars) ever attained on an account. This is more meaningful for revolving loans (such as credit cards) rather than for installment loans (because the high balance is always the same as the original loan amount). Also known as high credit.

High balance charge
See over limit fee.

High credit
See high balance.

High risk
A person with a low credit rating, typically someone with either limited credit history or a troubled one. Many lenders will hesitate to lend to such people, and lenders who do typically charge a hefty price for it (through APR and fees). Also known as bad credit.

History pattern
See payment pattern.

Home equity line of credit
A revolving loan secured by the borrower's house.

Home improvement loan
A loan specifically intended to be used to upgrade a property.

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In default
See delinquent.

In good standing
See current.

Individual account
A credit account for which only one person is responsible for repaying the debt. Additional cards may be issued to other people (generally family members), but only the person who has applied for credit is legally responsible for it. This is the opposite of a joint account.

Individual report
See credit report.

The party who is requesting a credit report, such as banks, credit card companies, credit unions, employers, insurance companies, mortgage companies, rental agencies, vehicle dealerships, or the consumer.

The record of a request for a credit report. Most inquiries are made by prospective lenders for the explicit purpose of making a credit decision. However, insurance companies, potential employers, or rental housing agencies may also request credit reports as long as the consumer authorizes them. By filling out an application, consumers typically authorize the company to pull their credit report from one or more credit bureaus. In some cases, consumers can access their credit file for personal purposes without generating an inquiry (see personal pull).

Inquiries are recorded in a special section of a credit report, with the name of the inquirer. Some consumers like to review this information regularly to ensure that they do not accumulate too many inquiries, since inquiries may lower credit ratings. Also see hard inquiry, soft inquiry, tradeline.

A scheduled payment on an installment loan.

Installment loan
Installment loans have a fixed payment schedule that borrowers agree to when obtaining the loan. Often, monthly payments (called "installments") are constant for the whole duration (or "term") of the loan. Examples of installment loans are car loans, mortgages, student loans, and personal loans. The opposite of an installment loan is a revolving loan.

Interchange fee
A fee paid by a merchant to a card issuer for clearing electronic transactions. It is set by American Express, Discover, MasterCard, or Visa regulations as a percentage of the dollar value of each transaction. Interchange fees are typically between two and four percent and vary across different types of merchandise.

The cost of borrowing money, usually expressed as a percentage of the amount owed to the lender.

Interest rate
See Annual Percentage Rate.

Introductory rate
A special lower APR that applies for a limited amount of time (typically three to six months). Lenders offer introductory rates to attract new customers and entice them to accept the credit terms. When the introductory period ends, the rate applied to the balance increases to the regular APR, which is usually much higher. There may be limitations to an introductory APR, such as provisions for early APR switching if the account becomes delinquent. Also known as teaser rate, promotional rate.

See lender.

Issuing bank
See lender.

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Joint account
A credit account for which two or more people are responsible. All account holders can use the account and all assume legal responsibility to repay any debt accumulated on the account. The credit limit might be higher for joint accounts.

An official court decision. Judgments may be listed as public records on a consumer's credit reports, particularly if they relate to debt owed to lenders. Such records lower credit ratings.

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no entries.

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See delinquent.

Late charge
See late fee.

Late fee
The additional penalty fee charged by the lender when the monthly payment has not been received as of the due date stated in the billing statement. Late fees may be charged if the payment is received either late or not at all. Many lenders advise consumers to let them know when a payment may be late. Failing to pay the account on time also may make the account delinquent. Also known as delinquency assessment, late charge, late payment fee.

Late payment
A payment received by the lender after the due date. This violates the credit contract and may result in late fees and a higher APR. Also see delinquency.

Late payment fee
See late fee.

The person or company a borrower owes money to. The name of the creditor for each account appears in credit reports and billing statements. The term issuer often specifically refers to credit card lenders. Also known as creditor, issuer, issuing bank.

Line size
See credit limit.

A sum of money borrowed from a creditor, to be repaid with interest. See credit.

Loan amount
This is the total loan amount on an installment account. The loan amount is usually proportional to the value of the collateral securing the loan (e.g., a house or vehicle). The account balance is equal to the loan amount when the loan is originated, and it decreases as the loan is repaid. Also known as loan value, original loan amount.

Line size
See credit limit.

A sum of money borrowed from a creditor, to be repaid with interest. Also see credit.

Loan amount
This is the total loan amount on an installment account. The loan amount is usually proportional to the value of the collateral securing the loan (e.g., a house or vehicle). The account balance is equal to the loan amount when the loan is originated, and it decreases as the loan is repaid. Also known as loan value, original loan amount.

Loan type
See account type.

Loan value
See loan amount.

Loan-to-value ratio
The ratio between the amount of an installment loan and the value of the property (often the collateral securing the loan). If this ratio is greater than 100 percent, the amount of the loan is more than the value of the property.

Lost or stolen indicator
A code appended to an account's record in the credit report that indicates the account (usually a credit card) has been reported as lost or stolen.

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Membership fee
See annual fee.

Merged bureau report
Designates a credit report that contains compiled information from the three major credit bureaus.

Minimum payment
The minimum amount a borrower is required to pay to the lender each month. This is the smallest payment that will keep the account current. For a revolving account, it usually is a small percentage (such as two percent) of the balance, and therefore it is a function of how much the account is used. For an installment account, it is calculated as the original amount divided by the terms, and it will often be the same from month to month. The borrower can usually pay more than the minimum without incurring extra charges, unless the account has prepayment fees. Also known as monthly payment.

Monthly payment
See minimum payment.

Monthly periodic rate
The rate of interest per month, calculated by dividing the APR by 12.

Monthly statement
See billing statement.

A loan obtained for the purpose of buying property or secured by equity in property. This is a secured installment loan where the property acts as collateral. The term of a fixed-rate mortgage generally runs from 10 to 30 years, after which the loan is paid. Adjustable rate mortgages may be as short as one year. CreditXpert considers first mortgages, second mortgages, home equity loans, and home improvement loans as mortgages.

Mortgage payment
The monthly payment for a mortgage loan. It may include escrow amounts covering taxes, hazard insurance, water charges, and special assessments. Also see minimum payment.

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National card
Originally, a credit card other than MasterCard or Visa, such as Discover and revolving American Express. Today, many large issuers of MasterCard or Visa cards also refer to themselves as national card companies.

Negative public record
A public record that lowers credit scores, such as a bankruptcy or court judgment. Also see public record.

New account
An account that has just been opened. It may take several months for a new account to appear on credit reports, since lenders may not report it to the bureaus immediately.

Ninety (90) days
A payment status indicating that a person has missed three consecutive payments on an account.

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One hundred eighty (180) days
A payment status indicating that a person has missed six consecutive payments on an account.

One hundred fifty (150) days
A payment status indicating that a person has missed five consecutive payments on an account.

One hundred twenty (120) days
A payment status indicating that a person has missed four consecutive payments on an account.

Ongoing APR
See fixed APR.

On time
See current.

An account that is available for debit (such as purchase) and credit (such as payment) activity.

Open date
The date that an account was opened.

Open to buy
See available credit.

Open-end credit
See revolving account.

Original loan amount
See loan amount.

Origination fee
The fee that may be charged to a consumer by a lender for setting up a loan. It may cover costs of preparing loan documents, making credit checks, inspecting and sometimes appraising a property. It is usually calculated as a percentage of the loan amount. Also known as processing fee.

Outstanding balance
See balance.

Over limit fee
A fee charged by the lender when the balance exceeds the credit limit on the account. A lender may allow the borrower to exceed the credit limit without any special warning, and therefore he/she may not know it until receiving the monthly statement. Also known as high balance charge

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Paid, Paid as agreed, or Paid on time
See current.

Past due
See delinquent.

Past due amount or Past due balance
The amount an account holder must pay to bring a delinquent account to current payment status. It can be computed as the sum of consecutive missed payments, interest, and late fees.

A credit made to an account.

Payment history
The period of time since the first reported payment status on an account. The length of this period may be much shorter than the length of time since the account was opened, and lenders occasionally do not report any payment history for an account at all. Payment history usually does not exceed 48 months on Trans Union data, 25 months on Experian, and 24 months on Equifax, because these are the maximum lengths of the payment patterns for each bureau.

Payment pattern
A series of numbers displaying month-by-month information for the past 24 months for each account present in the credit report. This information includes payment status, and therefore any delinquencies (both past and present) within that timeframe. This is one of the most important pieces of information used for credit scoring. Also known as grid, history pattern.

Payment plan
See wage earner plan

Payment status
Account information in the credit report that indicates whether the borrower has missed payments on the account. Also known as delinquency status, rating.

Penalty rate
A higher APR that takes effect if the account becomes delinquent (usually after two missed payments). The penalty rate is one of the terms of the account and can be found in the billing statement; there is a maximum allowed by (state) law. Even once the entire past due amount is paid, the APR may stay at the penalty rate for several months or even indefinitely. A penalty rate also may be applied to an account that is over-limit. Also known as punitive rate.

Personal finance account
A credit account obtained from a personal finance company specializing in lending to consumers with previous credit problems. This type of account has a special status in a credit report. Finance trades often indicate that the consumer has had trouble getting loans approved by regular banks. Also known as finance loan, finance trade. Also see personal finance company.

Personal finance company
Usually, a lender that specializes in lending money to consumers who have difficulty getting approved by banks or credit unions (often because of low credit ratings). Personal finance companies typically charge higher interest and fees than other creditors. Also see personal finance account.

Platinum card
A credit card with a higher credit limit and more benefits than a gold card.

Posting date
The date that a credit transaction is recorded on an account.

Pre-approved offer
A credit card or loan offer sent to a consumer indicating his/her credit information has passed preliminary screenings. This does not mean that if the consumer applies, he/she will be approved automatically by the lender. Before making a final decision, the lender will request the consumer's credit report and take a closer look at the credit rating as well as the information included in the credit application.

Repaying debt faster than required by the lender. A borrower prepays when paying more than the monthly minimum payment. Some lenders may charge a penalty fee for prepaying. Also see prepayment penalty.

Prepayment penalty or Prepayment fee
The fee charged by some lenders for early payment of a loan balance. This compensates the lender for the loss of interest income. Also see prepay.

Present or presently
As of the last reported date. This is not to be confused with current, which means "not delinquent."

Present status
A payment status that indicates the most recent payment status on an account, as of the date it was last reported by the lender to the bureau. This status may be a few months old if the lender does not report the information monthly.

Previous balance
The amount owed last month on the account, after that month's payments and charges.

Prime rate
The interest rate banks charge for loans to their biggest and highest-rated commercial customers, usually for overnight loans (i.e., short-term loans). This is generally the lowest cost of credit available, and consumers and small businesses pay more than the prime rate. It often serves as a basis to set the APR for all loans (revolving and installment): lenders will add a certain percentage to the prime rate, a combination of profit margin (or spread) and risk element. The prime rate changes based on the demand for money and the rate the U.S. Federal Reserve Bank charges to its member banks. It is used as a major economic indicator.

Private label card
A type of credit card that is not part of the MasterCard/Visa network and that can be used only at certain stores. These stores usually are owned by the same holding company, and include some large department stores. These cards may be serviced by a financial institution.

Processing fee
See origination fee.

Profile date
The date a credit report was accessed from the credit bureau system.

Promotional rate
See introductory rate.

Public record
Information obtained by the credit bureaus from federal, state, and local court records, such as bankruptcies, foreclosures, judgments, and tax liens. Public records are included in a special section of a credit report, and they typically lower credit ratings. Public records stay on credit reports for seven years or longer (Chapter 7 bankruptcy remains for 10 years, while tax liens vary by state). Also see negative public record, tradeline.

Punitive account
A credit account with a low credit limit and very high APR and fees. Typically only people with limited credit history or a troubled one pay such a high price for credit.

Punitive rate
See penalty rate.

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See Annual Percentage Rate (APR).

See payment status.

Regular APR
See fixed APR.

See wage earner plan.

See credit bureau.

A legal procedure by which the lender reclaims the collateral property on a loan in serious delinquency. It can be initiated by the creditor or the borrower. Other legal actions may follow a repossession, and a balance may be charged-off as uncollectible. This information is recorded on credit reports and typically lowers credit ratings.

To carry part (or all) of a balance from one month to the next on a credit account. Typically the lender charges interest on the amount owed.

A person who revolves; that is, one who rolls over part (or all) of the balance to the next month, instead of paying the balance in full. About 70 percent of U.S. cardholders are revolvers.

Revolving Account
A credit account that allows the borrower to pay only a portion of the balance each month, while continuing to use the account for further purchases. The balance on the account will fluctuate depending on usage, and minimum monthly payments on the account will be calculated as a small percentage (usually two percent) of the balance. Revolving accounts typically have credit limits that may not be exceeded, and interest on the balance is charged if it is not paid in full every month. Examples of revolving accounts include credit cards and department store cards. Note: The balance on the account will be zero until a purchase or cash advance is made. Also see open-end credit, revolving credit, revolving line of credit, revolving loan.

Revolving credit
See revolving account.

Revolving line of credit
See revolving account.

Revolving loan
See revolving account.

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Secured credit
See secured loan.

Secured credit card
A credit card secured with a cash deposit. The deposit is paid by the cardholder and may be lost if the account becomes delinquent. The credit limit is based on the amount of the deposit and usually is similar to the deposit amount. As a result, this type of account presents very little risk for the lender and is therefore much easier to obtain. It is often used by people who are either new to credit or trying to improve their poor credit rating. APR on a secured credit card is usually higher than on an unsecured credit card, and many fees may apply (application fee, processing fee, annual fee, late fee, over-limit fee, etc.).

Secured debt
See secured loan.

Secured loan
A loan that is guaranteed by assets. The lender may take possession of these assets collateral) if the borrower defaults on the loan. The assets can be cash or property (such as a car or a house). Also see secured credit, secured debt.

See collateral.

A portion of the credit record that contains a specific type of information. There are segments for different types of accounts, inquiries, public records, etc.

Signature loan
See unsecured loan.

Signature Visa
A Visa account with more benefits than a Platinum or Titanium Visa that usually does not have a pre-set spending limit.

Sixty (60) days
A payment status indicating that a person has missed two consecutive payments on an account.

See deferred payment.

Soft hit
See soft inquiry.

Soft inquiry
A request for a credit report that does not generate an inquiry in the person's credit data. This is typical of consumers requesting their own report for information purposes. Such requests cannot be used by lenders for making credit decisions. Note: Some companies that provide reports directly to consumers use a hard inquiry process (also referred to as a business pull). Also see consumer pull, soft hit, soft pull, hard inquiry, inquiry.

Soft pull
See soft inquiry.

Statement date
See closing date.

Subscriber code
A unique seven-digit number used by each credit bureau to identify a lender that reports account information or requests credit reports. Subscriber codes for the same organization may vary across credit bureaus.

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T (Tiered)
A code that may appear after the annual percentage rate to indicate the account has a tiered APR. This means that different levels (tiers) of the balance have a different APR applied to them. Usually the APR displayed is the lowest of all.

T&E card
See Travel and Entertainment card.

Teaser rate
See introductory rate.

The period of time over which the borrower has to pay back the loan. This applies to installment loans only, since revolving loans are open-ended.

The set of conditions associated with a credit account, such as APR, fees, payment schedule, etc.

Thin file
A credit report that contains very little account information, usually because there are no or few accounts with no or limited history. Individuals with thin files tend to have a low credit rating.

Thirty (30) days
A payment status indicating that a person has missed one payment on an account.

Titanium card
A card with an higher credit limit than a platinum card.

See credit account.

A record in a credit report that provides information on a credit account, a public record, or an inquiry. Each credit account has its own corresponding trade line in the report, and the information provided includes payment and credit usage. Also see credit account, collection account, inquiry, public record.

TransUnion (TUC)
One of the three national credit bureaus, TransUnion Credit Information Company (commonly known as Trans Union), is headquartered in Chicago, Illinois.

To pay off the balance in full each month. People who transact only generate interchange income for the lender.

Transaction date
The date that goods or services were purchased or the date a cash advance was made.

Transaction fee
A fee that is charged by the lender each time a credit transaction is made. There are different types of transaction fees, so the fee may apply to purchases of goods and services, cash advances, or both.

A person who pays off the balance in full each month. This is the opposite of a revolver.

Transfer check
See convenience check.

Travel and Entertainment card
A card that is traditionally only accepted by hotels, airlines and restaurants. Examples are Carte Blanche, Diner's Club, and (originally) American Express and Discover. Also known as T&E card.

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The process of extending credit under terms (such as APR and fees) that match the risk profile of the borrower.

Unpaid derogatory
A broad term for derogatory payment statuses other than bankruptcies, charge-offs, collections, foreclosures, payment plans, and repossessions. An unpaid derogatory may be an account settled for less than the full balance, a workout plan offered by a lender rather than arranged through a court, or an account holder who defaulted without giving the lender a new address.

Unsecured credit
See unsecured loan.

Unsecured debt
See unsecured loan.

Unsecured loan
A loan solely based on a consumer's promise to repay, without a cash deposit or other collateral as a guarantee. Most credit cards are unsecured debt, which explains why the APR on credit cards tends to be higher than the APR on secured loans such as auto loans and mortgages. Also known as signature loan, unsecured credit, unsecured debt.

Utility account
A billing account from a utility company, such as a power or telephone company. Normally, these accounts must be paid in full each month. Also known as a Utility trade.

Unused credit
See available credit.

Usage ratio
See balance-to-limit ratio.

Utility trade
See utility account.

Utilization ratio
See balance-to-limit ratio.

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V (Variable)
A code that may appear after the annual percentage rate to indicate the account has a variable APR. This means the APR may change and fluctuate based on some index (for example the Prime Rate).

Variable APR
An APR that may fluctuate (up or down) over the life of the loan. A variable APR is often indexed to the Prime Rate, and therefore fluctuates with market conditions. A change in the APR will change either the amount of the payments or the duration of the loan, based on the credit agreement.

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Wage earner plan
A debt repayment plan determined by Chapter 13 bankruptcy and supervised by the court for debtors earning regular incomes. Through wage earner plans, creditors agree to end all other collection efforts. Note: CreditXpert considers court-ordered workout plans and wage garnishments as wage earner plans. Also see rehabilitation, payment plan, garnishment, workout plan.

Well-established credit history
A credit report that contains a long history of credit activity; for example, a report for a consumer who has used credit cards or has had loans for 20 years or more.

Workout agreement
See workout plan.

Workout plan
Rescheduled and modified payment terms, agreed upon between a creditor and a borrower which allows a borrower to repay debt over a longer period of time than originally agreed, usually with a reduced interest rate, and allows creditors to collect more than would be probable from legal courses of action such as bankruptcy or foreclosure. Also known as workout agreement. Also see garnishment.

World MasterCard
A MasterCard account with more benefits than a Platinum or Titanium MasterCard that usually does not have a pre-set spending limit.

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Zero balance
The balance status of owing no money to the lender. On revolving loans, this means the previous balance was paid in full and nothing was charged to the account since the last billing statement. On installment loans, this means the borrower has finished paying back the loan. Note: Some lenders do not send billing statements when accounts have zero balances.

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