A
- Ability to Repay (ATR)
- The way a lender decides if there is a reasonable chance that the borrower will be able to make the loan payments.
- ACH (Automated Clearing House)
- A computer-based banking service used by depositors to deposit money into their accounts and by payers to initiate payments from their accounts.
- Adjustable Rate
- A variable rate interest charged on a loan, which may vary over the life of the loan.
- APR (Annual Percentage Rate)
- The total amount you pay each year on a loan, including interest and most fees.
B
- Balance
- The amount that remains due at the end of the loan period.
- Bank Verification
- Steps taken by a lender to verify the bank account information of a borrower.
- Bankruptcy
- A formal proceeding in court that may permit the reduction or discharge of certain debt obligations.
- Borrower
- A person who receives a loan and is responsible for making the required loan payments (the debtor).
C
- Cash Advance
- A temporary loan or advance that is usually required to be paid back quickly.
- Charge-Off
- A lender's designation of a debt as uncollectible after a borrower has failed to make required payments.
- Closed-End Credit
- A loan with a fixed amount that will be repaid in regular installments.
- Co-Signer
- A person who agrees to repay a loan if the original borrower defaults (is unable) to do so.
- Collections
- Attempts made by creditors to collect money owed to them when a consumer has missed making scheduled payments.
- Collateral
- Property used as collateral by a borrower to obtain a loan.
- Credit Bureau
- A business that collects information about individuals' and businesses' credit history and compiles it into a credit report.
- Credit History
- A collection of all types of an individual's credit borrowing activity and how well they have made their monthly payments.
- Credit Limit
- The highest dollar amount that can be borrowed using a line of credit.
- Credit Report
- A detailed report of an individual's credit accounts, payment history, and selected public documents.
- Credit Score
- A numerical rating of a consumer's perceived level of creditworthiness based upon information in his/her credit file(s).
D
- Debt
- An obligation from one entity to another to pay a sum of money (debt).
- Debt-to-Income Ratio (DTI)
- Debt-to-income is the ratio of total monthly debt payments (e.g., credit cards, student loans, personal loans) to gross (pre-tax) monthly income.
- Default
- When a borrower fails to make the agreed-upon loan payments when due (default).
- Delinquent
- Being behind on a payment that you are supposed to make (delinquent).
- Deposit Account
- The type of bank account typically used to store money for everyday spending needs, e.g., checking and savings accounts.
- Direct Deposit
- When employers deposit employee wages (or retirement disbursements) directly into employees' bank accounts via electronic means (direct deposit).
- Disbursement
- The act of disbursing (releasing) loan funds.
E
- Early Payoff
- When a borrower pays off a loan early (prior to the maturity date).
- Electronic Signature (E-Sign)
- The use of online tools to digitally "sign" loan agreements (electronically sign).
- Escrow
- A sub-account within a primary account, used to store money that has been earmarked for a specific expense (e.g., down payment).
- Extension
- An extension of time to repay a loan (usually at some cost).
F
- Fair Credit Reporting Act (FCRA)
- A U.S. law that outlines regulations for credit reporting and disputes.
- Finance Charge
- All costs involved with using borrowed money (interest, fees, etc.)
- Fixed Rate
- An interest rate that will remain the same throughout the life of a loan.
- Funding
- When a lender provides a loan to a borrower.
G
- Grace Period
- The amount of extra time you have after a payment due date before a late charge can be applied to your account.
- Guarantor
- An individual or business that agrees to pay a loan on behalf of the original borrower if the original borrower cannot make payments on their own.
H
- Hard Inquiry (Hard Pull)
- Credit inquiries which may result in a temporary reduction to an individual's credit score.
I
- Income Verification
- Records of an individual's income, used by lenders (e.g., paystubs).
- Installment Loan
- Loans that are paid back over time using a series of equal, regular payments.
- Interest
- The cost of borrowing money is generally expressed as a percentage of the amount borrowed.
- Interest Rate
- The annualized interest rate associated with the borrowing of money.
J
- Joint Account
- An account maintained jointly by two or more people.
- Judgment
- A court-ordered judgment that an individual owes a debt.
K
- Know Your Customer (KYC)
- Verifying someone's ID and preventing other people from fraudulently using their identity.
L
- Late Fee
- The charge a lender will assess if you don't make your required payment by the due date.
- Lender
- An organization or bank that lends money to you.
- Loan Agreement
- A written document outlining the terms and conditions of a loan you have with a lender.
- Loan Amount (Principal)
- The principal amount borrowed (does not include any accrued interest, late fees, etc.).
- Loan Term
- The length of time you have to repay the loan.
M
- Minimum Payment
- The minimum amount you can pay toward the outstanding balance on your account during a billing cycle.
- Monthly Payment
- The monthly payment you agree to make to repay your loan.
N
- NSF (Non-Sufficient Funds)
- When your account doesn't have enough money in it to meet a required payment.
O
- Origination Fee
- An amount charged by some lenders for originating a new loan.
- Overdraft
- When a bank debits a charge (even when you do not have enough funds) and charges a fee.
P
- Past Due
- The status of a payment that was not received prior to the due date.
- Payment Schedule
- A schedule listing all payments that are due and the corresponding payment amount for each loan.
- Payoff Amount
- Total amount that will be paid at closing, including accrued interest to date.
- Payday Loan
- Short term loan usually due on the borrower's next pay date.
- Prepayment Penalty
- Amount charged by some lenders if a loan is prepaid before it reaches maturity.
- Principal
- Original principal amount borrowed, exclusive of interest and fees.
Q
- Qualified Borrower
- A person meeting the lender's minimum requirements as a borrower.
R
- Refinance
- Process of replacing a current loan with a new loan, typically with different terms.
- Repayment
- Action of returning loaned funds to the lender.
- Returned Payment
- A failed payment, often due to bank problems, insufficient account balance, etc.
S
- Secured Loan
- The type of loan that is backed by collateral from the borrower.
- Soft Inquiry (Soft Pull)
- A credit inquiry generally will have no effect on your credit score.
- State Lending Laws
- State laws that are designed to restrict the types of fees and rates lenders can charge, as well as the terms they can offer in their loans.
T
- Term
- The time period within which the borrower is required to repay the loan.
- Total of Payments
- Total amount of money (including principal and interest) that the borrower will repay throughout the life of the loan.
- Truth in Lending Act (TILA)
- A federal law that requires lenders to provide clear disclosure regarding both costs and Annual Percentage Rates (APRs).
U
- Underwriting
- The determination of the degree of risk that a lender believes the borrower presents when lending funds to them.
- Unsecured Loan
- A loan that has no collateral.
V
- Verification
- Process of confirming who you are, how much money you make, or what your bank account is.
W
- Wage Garnishment
- Court ordered process in which the employer takes a portion of your wages to help with paying back a debt.
X
- X-Dates (Billing Cycle Dates)
- Dates at the beginning and end of a billing cycle to keep track of when you have made payment(s) on an item and to see if you have been charged interest on it.
Y
- Yearly Cost
- Another name for the Annual Percentage Rate (APR) which represents the total cost of borrowing per year.
Z
- Zero Balance
- The state in which a loan has been completely repaid.