Fix Your Credit EZ's
Credit Dictionary E-M

Everything From "Finance Charge" To "Mortgagor"

Finance Charge

The total dollar amount paid to get credit.

Fixed Rate

A traditional approach to determining the finance charge payable on an extension of credit. A predetermined and certain rate of interest is applied to the principal.

Foreclosures

A legal action that terminates all ownership rights in a home when the home buyer fails to make the mortgage payments or is otherwise in default under the terms of the mortgage. A Foreclosure is when a creditor (usually a bank or mortgage company) uses the legal system to attempt to force the sale of property in order to liquidate the equity in the property to satisfy a debt. Foreclosures most commonly occur on real estate after a number of payments have been missed.

Garnishment

Legal process whereas a creditor has obtained judgment on a debt may obtain full or partial payment by seizure of a portion of a debtor's assets (wages, bank account, etc...).

Grace Period

The period allowed to avoid any finance charges by paying off the balance in full before the due date.

Hard Inquiries

These are inquiries made by creditors or potential creditors that can damage your score for up to a year, and then are supposed to simply show on the report for another year after that.

Home Equity Loan

A loan based on the difference of the amount you own on your home, and the home's current market value.

Inquiry

Inquiries are requests made to obtain information about your credit report and/or credit score.

Installment Account

A type of credit where a consumer signs a contract to repay a fixed amount in equal payments over a specific period of time. Examples include car loans, furniture loans and personal loans.

Interest

The cost of borrowing or lending money, usually a percentage of the amount borrowed or loaned.

Joint Account

Credit accounts held or owned by two or more persons. In the case of a joint account, all parties are held equally responsible and liable for payment under the terms and conditions of the loan contract.

Judgment

The official court decision of an action or suit. This public record may be listed on your credit report in matters of money and debts owed. When a creditor charges-off debt and sells it to a collection agency, sometimes the collection agency will seek a judgment against you in court. If a collection agency receives a judgment against you they sometimes will look to seize assets of yours to repay the debt owed. Each state has varying limits to what someone with a judgment against you may seize under a court ordered writ of execution.

Late Payment

For creditors when a payment is made past the defined due date it is considered late. For bureaus, a payment is considered late when it is made 30 days or more after the creditor due date. Bureaus track the severity of late payments as to whether they were made more than 30 days after the due date, more than 60 days past the due date, more than 90 days past the due date, etc.

Lien

A legal hold or claim of one person on the property of another as security for a debt or charge. The right given by law to satisfy debt. Sometimes a creditor or collection agency will make a claim against property such as real estate or automobiles as a way of securing equity in that property for money owed them. Loans that are 'secured' involve property, called collateral, that, from the outset, hold liens until the debt is paid. 'Unsecured' loans do not typically involve liens on collateralized property. Collection agencies that receive judgments against you may try to lien property that is not 'judgment-proof' in an effort to collect money when you sell that property.

Line Of Credit

A pre-authorized amount of credit offered to an individual, business or institution that is commonly secured against an asset such as a home (real estate).

Monthly Periodic Rate

The rate of interest per month, calculated by dividing the annual percentage rate (APR) by 12.

Mortgage

A lien or claim against real property given by the buyer to the lender as security for money borrowed. First Mortgage-or "primary" mortgage-has priority over the claims of subsequent lenders for the same property.

Mortgagee

The one receiving the mortgage (usually a financial institution).

Mortgagor

The one granting a mortgage on his or her property. The borrower.