Confused By The Credit Terms?
Our glossary of credit terms will help you learn the most common financial terms, words and phrases, as well as the meaning for dozens of legal and credit terminology terms alphabetically.
Capitalized Cost – Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives greater than one year.
Cash Advances – The withdrawal of funds from your credit card at a bank office or ATM, up to the credit limit allowed. The amount you withdraw may be subject to daily limits. There is no interest-free period, so interest is charged from the day you withdraw the funds. Cash advances usually carry fees and a higher APR than other charges.
Cash Down – Total amount of cash used in a purchase.
Cash on Hand – Cash you have for the down payment and all closing costs.
Chapter – In bankruptcy, this term refers to a section of the Bankruptcy Code.
Charge Card – A card which requires payment in full upon receipt of the statement.
Charge Off – Briefly stated its an accounting term to indicate that the creditor does not expect to collect a balance owing on an account. Action of transferring accounts deemed uncollectible to a category such as “bad debt” or “loss.” Such accounts will usually continue to be pursued by collectors, but are no longer considered part of a company’s receivable or profit picture because they are unlikely to be repaid in full.
Civil Action – In the credit world, this is any court action against a consumer to regain money for someone else. If successful, the civil action will usually result in a wage assignment, child support judgment, small claims judgment or civil judgment of money to be paid.
Closed Date – The date the account was closed either at the request of the consumer or by the creditor.
Co-Maker – A creditworthy co-maker is sometimes required in situations where an applicant’s qualifications have not been established or are marginal. A co-maker is legally responsible to repay the charges in the joint account agreement if the other person defaults.
Cosigners – Person who pledges in writing as part of a credit contract to repay the debt if the borrower fails to do so.
Collateral – Property acceptable as security for a loan or other obligation.
Collection Account – Refers to the status of an account owed to a creditor when it has been transferred from a routine debt to a Collection Department of the creditor’s firm or to a separate professional debt collecting firm.
Collection Agency – A business service employed to collect creditors’ unpaid or past due accounts. A collection agency is often compensated by receiving an agreed upon percentage of any amount collected.
Consolidation Loans – A loan that pays off all of your existing debt, preferably at a lower average interest rate.
Consumer – A buyer of goods and services.
Consumer Credit Counseling Service – A nonprofit organization that helps consumers manage, and plan their use of debt.
Consumer Credit Information – Also known as a credit report. This includes the account/payment history of your credit relationships for seven years and public record history for ten years. Name and address history is also included.
Convenience Cheque – A cheque provided by the credit card issuer and drawn on your credit card account. You can use a convenience cheque the same way you would a personal cheque. When you use a convenience cheque, the transaction is treated as a cash advance for the purposes of calculating interest charges, there is no interest-free period and you are charged interest until you payback the amount of the cheque in full.
Credit – The provision of funds by a lender for a promise of future payment.
Credit Accounts – Any loan or debt listed on your credit report is considered a credit account.
Credit Application – A form used by a lender to obtain personal, financial, and credit information to appraise an applicant’s credit worthiness.
Credit Availability – The amount of credit you have remaining on your credit account. It equals your credit limit minus your credit balance. This is also referred to as credit available and percentage of credit currently available.
Credit Bureau – An agency that gathers information about consumers’ credit relationships and provides creditors with credit reports and scores on consumers. Three major credit reporting bureaus namely Experian, Equifax and TransUnion.
Credit Card – A rectangular piece of plastic payment card used instead of cash or checks authorizing payment for goods and services.
Credit Card Rate – Annual interest rate you pay on outstanding credit card balances.
Credit File – A file containing customer correspondence and statements, credit ratings, credit history, and payment patterns.
Credit Grantor – Person or business furnishing consumer goods and/or services on credit.
Credit History – A record of how a consumer has paid credit accounts in the past, used as a guide to determine whether the consumer is likely to pay accounts on time in the future.
Credit Insurance – insurance offered in conjunction with credit, which makes the person’s payments if death or injury occurs.
Credit Investigation – In terms of your credit report, an investigation is the process a consumer credit reporting agency goes through in order to verify credit report information disputed by a consumer. The credit grantor who supplied the information will be contacted to verify the disputed information. If the information is verified, it remains on the report; if it is not, the information is deleted or corrected.
Credit Limit – The maximum amount an individual or business can borrow in connection with a specific loan.
Credit Line – The maximum dollar amount that can be charged on a specific card account.
Credit Rating – an evaluation of the credit history of an individual or firm to determine if worthy of the extension of additional credit.
Credit Repair Companies – Individuals or Companies that promise to “clean-up” or “erase” your bad credit and give you a fresh start. Also know as Credit Clinics.
Credit Report – A report containing information about a consumer’s identity, credit relationships, some court actions, consumers statements, and previous inquiries into that file.
Credit Reporting Agency – Also known as a credit bureau. An agency that checks credit information and keeps files on people who apply for and use credit.
Credit Scores – A credit score summarizes your credit history into a number that lets lenders and others quickly know how responsible you have been with your past credit accounts and loans. Lenders use formulas to calculate your score based on information from your credit report. These scores help predict how likely you are to pay your loans or credit cards. While lenders each may use their own scoring models to determine how you rate, personal details such as race, gender, or religion are not considered when determining your score. Your credit score can change daily as your credit file is updated, so it is calculated at the time a lender requests your credit report and reflects your current credit standing. The information in your credit files at the different credit bureaus may vary, which means that your scores may be different for each bureau.
Credit Union – A mutual association formed by persons with a common affiliation such as employees, a union or a religious group in which pooled savings are made. The funds are invested for appreciation and members may borrow at competitive rates.
Creditor – One who extends credit to borrowers.