GLOSSARY OF TERMS

Bad Debt - Debt that is deemed uncollectible.

Credit - Loan made to a consumer by a creditor under specific repayment terms.

Credit History - History of a consumer's borrowing habits and how they have repaid their debt.

Credit Risk - Risk that a consumer may default on a debt or loan by not repaying the debt in accordance with agreed upon repayment terms.

Debt ConsolidationConsolidate your unsecured debts such as credit card bills, student loans and medicals bills into one loan by taking a second mortgage or home equity line of credit (HELOC) against your home.

DMP - Debt Management Plan.  A consumer deposits money with a credit counseling organization and the organization uses the money to pay the consumer's debts (for example credit cards, student loans, medical bills) on a monthly basis.

Equity - The difference between how much a consumer paid for a house and how much the house could sell for.

FICO - Fair Isaacs Corporation. This company pioneered the "FICO Score".

FICO Score - A number generated by one of the three Credit Report Agencies (Equifax, TransUnion and Experian) based on your credit history, that helps lenders predict how likely you are to pay your loans on time in the future. 

Foreclosure - A number generated by one of the three Credit Report Agencies (Equifax, TransUnion and Experian) based on your credit history, that helps lenders predict how likely you are to pay your loans on time in the future. 

Home Equity Line of Credit (HELOC) - A credit line offered to a home owner by a mortgage lender that borrows against the equity in the home owner's house.  This type of loan requires you to use your home as collateral for the loan.  It may offer certain tax incentives.

Identity Theft -  When your personal information such as your name, Social Security number, credit card number and other identifying information are used without your permission to commit fraud or other crimes.

 National Consumer Reporting Agency - This refers to the three national credit score reporting agencies: Equifax, TransUnion and Experian.

 Reverse Mortgage - A mortgage agreement that allows older homeowners to borrow against the equity in their homes without having to sell their homes or take on additional monthly payments. The homeowner receives money from the mortgage company and does not have to pay it back for as long as they live in the house. There are three types of reverse mortgages: Single Purpose, Home Equity Conversion Mortgages (HECM) and Proprietary reverse mortgages.

Secured Credit Card - A secured card requires you to open and maintain a savings account as security for your line of credit; an unsecured card does not.

Time-Barred Debt - Old debts that are beyond the point at which a creditor or debt collector can sue you to collect.

Unsecured Credit Card - This is traditional credit card. Your creditor gives you a "line of credit" that you can use to make purchases or cash withdraws. You pay back some or all of the amount you charged each month. Any remaining balance is carried over to the next month.