A-Credit - The best credit rating that a consumer can have. This rating entitles you to the lowest prices that a lender offers. A-Credit is usually considered any FICO score greater than 720.

Accrued Interest - Interest that has been earned but not yet paid on a loan.

Affinity Credit Card - A credit card supported by 2 or more credit card providers.

Amortization - The repayment of a loan through periodic installments over a fixed period of time.

Annual Fee - An annual cost paid by the credit card user for having a credit card. Not all credit card providers charge an annual fee.

Annual Percentage Rate (APR) - The percentage rate that providers charge users for carrying a balance on a loan, which is measured as a yearly rate. Some credit card providers offer 0 APR credit cards.

Application Fee - The fee that some lenders charge in order to accept an application.

Approval Letter - A lender's written acceptance of a loan application.

Asset - Cash or personal property that can be sold.

Available Credit - The amount you have available to charge on your credit card or line of credit loan (Credit Line less your Current Balance).

Average Daily Balance - The most common method that lenders use to calculate Finance Charges. The Average Daily balance is the amount of your daily balance each day within a period of time defined by the lender that is added together and then divided by the number of days within that period.

Bad Credit - A term for a low credit rating. Your credit rating can be damaged by making late payments, missing payments, or declaring bankruptcy.

Balance Transfer - The process of moving balances from one credit card provider to another. This is often done to move a balance from a high interest rate credit card to a low interest credit card.

Balance/Amount Owed - The amount that you owe a lender. This includes: charges, cash advances, fees.

Bankruptcy - A legal process to declare an inability to pay off all debts. Declaring bankruptcy will eliminate all credit card debt, but will also seriously damage your credit rating and will remain on your credit for at least 10 years. Federal student loans, Federal taxes and child support are exempt from Bankruptcy protection. There are two types of Bankruptcy: Chapter 7 and Chapter 13.

Bill Collectors - Agencies that are contracted by lenders to collect on the value of a loan.

Bill Consolidation - When you take out a single loan, possibly at a lower interest rate, to pay off multiple debts.

Billing Cycle - The period of time between your loan payment and your next loan payment.

Borrower - A person who applies and receives a loan from a lender with obligation to repay the loan in full.

Budget - The list of items that you spend money on and the amount of money that you earn. This list is organized in a systematic way in order to ensure that money is properly allocated for a given time period.

Buydown - A payment made to a lender in order to reduce the interest rate of a loan.

Call Option - A provision allowing the lender to require payment of the loan before the end of the loan term.

Cap - A provision of an ARM that limits how much the interest rate or mortgage payments can increase.

Cardmember Agreement - The credit card provider’s Terms and Conditions that apply to your credit card.

Cash Advance - A cash loan drawn against your credit card or pay check. Most credit card providers charge a Finance Charge starting the day you get a cash advance and ending when you pay off all credit card payments. Most cash advance lenders charge a flat fee.

Cash Advance Fee - A cash loan drawn against your credit card or pay check. Most credit card providers charge a Finance Charge starting the day you get a cash advance and ending when you pay off all credit card payments. Most cash advance lenders charge a flat fee.

Cash Out - The cash a borrower receives in addition to the remaining balance of a new loan.

Chapter 13 Bankruptcy - A type of bankruptcy where the filer follows a debt repayment plan and assets are not sold.

Chapter 7 Bankruptcy - A type of bankruptcy where the filer’s assets are sold by a court appointee to pay all debts.

Charge Card - A card that must be fully repaid at the end of each billing cycle.

Co-sign - Where one person signs a loan application, such as a credit card application, with another person and agrees to assume the debt if the other person doesn’t pay.

Collateral - An asset that you put up as a guarantee for loan repayment.

Collection - The process of giving unpaid bills to an organization that specializes in recovering unpaid loans.

Compounding - A type of interest that is applied to both the starting amount and the amount of interest that has been applied. Since compounding interest applies to the amount and the interest, interest payments to unpaid debt will grow over time.

Consolidate Debt - See Debt Consolidation.

Consumer Credit Counseling Service (CCCS) - A not-for-profit organization that provides financial counselors and will help negotiate with creditors.

Consumer Reporting Agency - A company that provides information to credit providers to assist in the decision to extend credit.

Credit - The amount of money a lender, such as a credit card provider, agrees to lend the person applying for a loan.

Credit Bureau - A company that produces a credit score based on your financial information. If a credit card provider denies your credit card application, they must tell you which Credit Bureau provided the credit score. You also have a right to request one free credit score per year from a Credit Bureau.

Credit Card Application - A form that a consumer fills out to request credit from a credit card provider.

Credit Criteria - The information a lender, such as a credit card provider or mortgage company, uses when deciding whether or not to approve a loan application. This information includes: income, debt, number of credit cards, credit score, etc.

Credit History - Information about a person's financial activities over time. Loan providers review this information before deciding whether or not to approve a loan application. This information includes: income, debt, number of credit cards, credit score, etc.

Credit Line - See Line of Credit

Credit Report - A report on a person's credit history based on the information that each credit bureau has assembled on that person's finances over the last 7-10 years.

Credit Score - A score that is based on a person's credit history, debt, type of credit, number of bankruptcies, as well as many other factors. The most commonly used credit score is called the FICO score, which was developed by Fair Isaac Co.

Daily Periodic Rate - The interest rate used to determine daily interest fees. This rate is based on the yearly rate, divided by the number of days in the year.

Debt Consolidation - The process of merging several debts into 1 payment, which generally have lower monthly payments and extend over a longer period of time. For example, you can make a balance transfer between credit cards or get a Home Equity Loan to eliminate credit card debt.

Debt Elimination - See Debt Consolidation.

Debt to Income - Your monthly debt multiplied by 12 months and divided by your annual income. For example, if you earned $100,000 a year and have a monthly debt of $1000, you would have a DTI of 12%. This value is a type of credit criteria used by credit card providers and mortgage lenders when evaluating your application.

Default - When a borrower doesn’t make a loan payment according to the terms defined in the loan agreement.

Deferment - See deferred payment

Deferred Payment - The process of putting off payment of a debt until a later time. For example, deferring payment of a student loan until you’ve graduated.

Delinquency - A debt on which payment is overdue based on the loan terms and conditions.

Demand Clause - A clause allowing the lender to demand repayment at any time for any reason.

Depreciation - The amount that an item, such as a car, or real estate can go down in value over time. Typically causes for real estate depreciation are wear and tear on the property or a change in the neighborhood.

Disclosure Statement - A required statement that lists the actual costs of a loan.

Due Date - The day that your payment must be received by your lender. If a payment is received after that date, a late fee may be charged.

Equal Credit Opportunity Act - A Federal law prohibiting lenders and creditors from discriminating against a loan request based on race, color, religion, national origin, age, sex, marital status or income from public assistance programs.

Fair Credit and Charge Card Disclosure Act - The Federal Act that defines your rights to access your own financial information.

Fair Credit Billing Act - The Federal Act that states that you have a right to find and fix billing errors within 60 days.

Fair Credit Reporting Act (FCRA) - The Federal Act that states that you have a right to check and correct errors on your credit report as well as verify that your credit history isn’t being misused.

Fair Debt Collection Practices Act - The Federal Law that states that you are protected from unfair treatment by debt collectors.

Federal Reserve - The centralized United States bank, which sets interest rates and manages the flow of cash to local and regional banks, and helps to guarantee the security of the U.S. banking system.

FICO Score - The most common credit score model, also known as a Fair Isaac score. A FICO score ranges from 200 to 900 and a higher score makes a person a more reliable borrower.

Finance Charges - The fees charged by a lender related to a credit card or line of credit.

Financing - A way to raise funds or capital for buying a new car, getting a mortgage on a house, or making purchases on a credit card.

Fixed Expenses - Expenses that are paid each month and that remain the same, such as mortgage, school tuition, car insurance, etc.

Float - The process that allows the rate to change with market conditions.

Forbearance - A method of putting off loan payments, such as for a credit card, for 6 month to a year, based on financial hardship. You can renew forbearance on a yearly basis for a maximum of three years.

Free Credit Report - Your right, under Federal law, to request a credit report from each of the three credit bureaus once a year.

Garnished Wages - Where a borrower’s paychecks are held by court order and part of that paycheck goes to another individual or company to repay a debt or financial obligation.

Good Faith Estimate - An estimate of the charges a borrower is likely to pay as a result of a settlement.

Grace Period - The period of time after the due date of a loan payment in which payment can be made without a late penalty.

Household Income - The total income made by all individuals in a household. This includes: salaries, bonuses, child support, social security, unemployment, etc.

Impound - A part of the borrower's monthly payments that is held by the lender to pay for taxes, insurance, lease payments and other housing payments that are due.

Index - An interest rate that is not controlled by the lender and is used in an Adjustable Rate Mortgage (ARM).

Inflation - The increase in prices for goods and services over time.

Installment Loan - A loan that is repaid in a series of payments rather than in one large sum. A home mortgage or home equity loan is an example of an installment loan.

Interest - Price paid for borrowing money.

Interest Rate - The percentage rate that a loan provider, such as a credit card provider, charges against the principal amount of money that the company loaned the borrower.

Interest Rate Cap - A limit on the amount to which an interest rate can change on an Adjustable Rate Mortgage (ARM).

Joint Liability - Liability shared by two or more people. Each person is liable for the full debt.

Late Charge - A penalty that is paid by the borrower when a payment is made after the due date.

Late Fee - The fee charged for the late payment of a bill.

Late Payment - The payment on a bill that is made after the due date.

Late Payment Fee - The fee charged for the late payment of a bill.

Lender - The party that offers a loan.

Liability - A person's legal responsibility to repay a loan

Line of credit - The amount of money you can draw from a credit account, such as a credit card or equity mortgage.

Loan Application - An request containing the information required to apply for a loan.

Maturity - The due date on which the final point of a loan must be paid.

Minimum Payment - The least amount of money that you must pay to your credit card provider by the statement’s due date.

Monthly Payment - The amount of money paid on a lease or loan each month.

Mutual Fund - A type of investment where the investment is spread across a variety of types of securities and is managed by professionals.

National Foundation for Consumer Credit (NFCC) - A not-for-profit organization that provides credit advice to consumers.

Negative Amortization - A loan payment where the outstanding balance of a loan goes up instead of down because the mortgage payments do not cover the amount of interest due.

Non-taxable Income - Income that you cannot be taxed for by any branch of the government.

Note - A document that serves as evidence to a debt and promise to repay.

Notice of Default - A written formal notice to a borrower that a default has occurred and that legal action may be taken.

Outstanding Balance - The amount that you owe on a loan, such as a credit card charge or a mortgage loan.

Over-the-Line Fee - The fee for going over your credit line.

Origination Fee - A fee that is paid to a lender to cover administrative costs of processing a loan application.

Past Due - Your account status when a payment has been received by your credit card provider after the due date.

Per Diem Interest - The interest calculated per day.

Postdated check - A check that is dated after the current date.

Posting Date - The date that a dollar amount is charged against your loan, such as credit card or mortgage.

Power of Attorney - A legal document that grants authority to a person to act on the behalf of another.

Pre-approval - A commitment by a lender to provide a mortgage loan to a specified borrower. This approval is subject to verification at application.

Previous Balance - The amount on your credit card due at the end of your previous billing cycle.

Prime Rate - The interest rates that banks charge to other banks or large corporate borrowers. Banks set their own prime rate and is often used as a basis for determining variable interest rates for loans such as credit cards or mortgages.

Principal - The amount of the actual loan not including the amount of interest.

Processing - The process of preparing the loan application and documentation for consideration by the lender.

Promissory Note - A legal document to get a loan, which defines a person's rights and responsibilities for that loan.

Qualifying Ratio - The ratio of fixed monthly expenses to monthly income. This ratio is used by lenders to determine how much to loan to a homebuyer.

Rate Lock - An agreement that guarantees the interest rate of loan for a set period of time.

Rebate Card - A credit card that provides benefits for credit card use. Benefits can include: airline miles, discounts, products, services, etc.

Revolving Credit - A type of credit agreement where as you pay the amount, the credit becomes available; for example, a credit card or home equity loan.

Second Mortgage - A mortgage that is in addition to the first mortgage. It is secured by the value of the primary home and includes home equity loans, credit lines, and home improvement loans.

Secured Card - A type of credit card whose payment is guaranteed by some type of savings account.

Secured Debt - A debt that is guaranteed by property that is equal to or more than the amount of the loan.

Secured loan - A loan where you pledge collateral that must be given to the lender if you fail to repay the loan.

Security - A financial tool that serves as a pledge to payment of a debt.

Security Deposit - A payment made prior to entering an auto lease that is, usually, equal to one month's payment as security against excess wear and tear on your car.

Term - The time period for which a loan must be repaid.

Transaction Date - The date that you made a purchase or got cash from your credit card. Some credit card providers charge your account from the date you make a purchase and others charge on a periodic cycle.

Transaction Fee - A fee charged for certain types of activities, such as getting a Cash Advance on your credit card, or a fee associated with getting a refinance mortgage.

Truth in Lending Act (TIL) - A law that states that certain information must be provided to the borrower upon receiving an estimate for the costs of a loan.

Underwriting - The process of evaluating a loan application to determine what risks are involved for the lender.

Unsecured Debt - A loan that is not guaranteed.

Variable Expenses - The expenses that change on a monthly basis. These expenses can include: food, utilities, credit card purchase, etc.

Variable Interest Rate - An interest rate that changes periodically based on the Prime Rate.