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Glossary

[ A ]

Account condition
This indicates the present state of the account, but does not indicate the payment history of the account that led to the current state.

Account Number
The unique number assigned by a creditor to identify your account with them.

Accounts in good standing
Credit items that have a positive status and should reflect favourably on your creditworthiness.

Activate
To prevent fraud, many card issuers require you to call them when you receive your new card in the post to verify that the correct person has received it - so it can be activated and therefore used.

Activity
Activity is any transaction that appears on your bill, including purchases, cash advances, finance charges and fees. It also includes any payments made.

Additional cardmember/cardholder
Most issuers allow you to sign on an additional cardholder, such as a spouse, to your account. You are liable for any charges that the additional cardholder incurs.

Advance-fee loan
A loan calculated so that all the finance charges and other creditor expenses are deducted before the consumer receives the principal.

Agreement
Your card issuer will send you a cardholder agreement that describes the terms that apply to your card, including the interest rate charged, method of calculating interest and any transaction fees.

Amount due
The minimum monthly payment you must make, not the total amount you owe.

Annual fee
Card issuers may charge you a yearly fee in addition to the interest that accumulates when you make purchases.

Annual percentage rate (APR):
The APR measures the cost of credit expressed as a yearly interest rate.

Authorized user
Person permitted by a credit cardholder to charge goods and services on the cardholder's account but who is not responsible for repayment of the debt. The account displays on the credit reports of the cardholder as well as the authorized user. If you wish to have your name permanently removed as an authorized user on an account, you will need to notify the credit grantor.

Automatic payment
If you have a savings or checking account with the same bank that issues your card, you may be able to automatically transfer money from your bank account to pay a credit card bill. Automatic payment eliminates the risk of paying a bill late and being assessed a late charge.

Available credit
The unused portion of credit that falls within the consumer's applicable credit limit.

Average daily balance (including or excluding new purchases):
The most common method of calculating interest. To figure out your average daily balance, the bank will add up the amount you owe for each day of your billing cycle and divide that number by the number of days in the billing cycle.
New purchases may or may not be added to the balance, depending on the individual card's terms.

[ B ]

Balance
Your balance is the amount of money you owe the card issuer, and includes purchases, fees, interest and transaction charges

Balloon payments
A loan with a balloon payment requires that a single, lump-sum payment be made at the end of the loan.

Bill/monthly statement
Each billing cycle (usually once per month) your card issuer will send you a bill. The bill will detail the activity on your account for that billing cycle. The reverse side of your bill usually describes some of the basic terms of your card agreement, including how the interest is calculated and where to call with questions

Billing cycle
The time between your last bill and your current bill, usually 28 to 31 days.

[ C ]

Capacity
Factor in determining creditworthiness. Capacity is assessed by weighing a borrower's earning ability and the likelihood of continuing income against the amount of debt the borrower carries at the time the application for credit is made. While capacity may be considered in a credit decision, the credit report does not contain information about earning ability or the likelihood of continuing income.

Cash Advance
You can use your card at a bank or an automatic cash machine to get a cash loan. The interest rate for a cash advance is typically higher than it is for purchases, and there is usually no grace period. There can also be a handling fee for withdrawing cash in addition to the interest charges.

Charge card
A charge card requires you to pay your bill in full each month, but charges no interest.

Civil Action
Any court action against a consumer to regain money for someone else. Usually, it will be a wage assignment, child support judgment or small claims judgment.

Closing date
The closing date is the last day that transactions are posted on your account for that month.

Co-sign
To sign a credit agreement with someone and agree to share the debt with that person or assume the debt if the other person defaults, that is, doesn't pay.

Co-signer
A parent or any person over 18 years old who agrees to share credit responsibilities and pay debts.

Collateral
Savings, bonds, insurance policies, property or other items that are used to pay off a loan or other debt if payments are not made according to the agreement.

Collection agency
If you fail to pay a credit or charge card bill, the card issuer may send your overdue bill to a collection agency, a company that will attempt to obtain payment from you. If this happens, your account may be listed as a "collection account" on your credit report. If you do not pay your bill and your card issuer has to go to a collection agency to attempt to obtain payment from you, you may be liable for the cost of the collection agency's services.

Copy charge/document fee/charge
Card issuers are required to provide you with copies of documents relating to your account. They may, however, charge a fee for the copying and handling.

Credit card
A credit card allows you to make partial payments for purchases, but charges interest on the amount owed. You can also pay your balance off in full to avoid interest payments. Banks and other card issuers set interest rates and fees.

Credit counselling
Advice given by professional counsellors to people about how to use credit responsibly and how to get out of serious debt.

Credit limit
Your credit limit is the maximum amount you may charge on a credit card. Some card issuers set a separate limit for purchases and cash advances. Many banks will allow you to spend more than your credit limit, but may charge you a fee for doing so.

Credit record/credit file
A person's up-to-date credit history.

Credit report
A summary of your recent credit history plus additional facts about you, including your age, address, marital status and other details that will help creditors judge your creditworthiness.

A credit report includes a record of any card that you hold now, held in the past, or for which you have applied. It also includes the credit limit and your payment history. You should request a copy of your credit report periodically to check it for accuracy. If you find an error, write to the credit bureau and request that the agency research and correct the error. You cannot have correct information removed from your records for seven years, or 10 years in the case of bankruptcy.

Credit union
A democratically owned and controlled nonprofit financial cooperative that offers a variety of savings and lending services to members.

Creditworthy
The ability of a consumer to receive favourable consideration and approval for the use of credit from an establishment to which they applied.

[ D ]

Daily periodic rate
The daily periodic rate is your annual interest rate expressed on a daily basis. It equals 1/365th of your annual percentage rate.

Date filed
The date that a public record was awarded.

Date of status
On the credit report, date the creditor last reported information about the account.

Date opened
On the credit report, indicates the date an account was opened.

Debit card
Debit Card Purchases are deducted directly from the consumer's personal checking account.

Default
Failure to pay a debt as outlined in the cardholder agreement, bankruptcy, or an inability or unwillingness to pay your debt. If you default on your credit card account, the issuer will cancel your account and demand full payment of the outstanding balance.

Deferred payment
Payment put off to a future date or extended over a period of time.

Delinquency assessment
A fee that is charged for a late payment.

Dismissed
When a consumer files a bankruptcy, the judge may decide to not allow the consumer to continue with the bankruptcy. If the judge rules against the petition, the bankruptcy is known as dismissed.

DSO: Days Sales Outstanding
The number of days worth of sales currently owed a business, calculated by dividing total accounts receivable by average daily sales.

Due date
The day a payment is due to a creditor. After that date, a late fee can be charged and the payment can be recorded as late, or the account can be considered delinquent.

[ E ]

Effective Date
The first day your card is activated and ready for use or when new terms take effect.

End User
The business that receives the report for decision making purposes that meet the permissible purpose requirements of the FCRA.

[ F ]

Finance Charge
The cost of consumer credit expressed as a dollar amount. A finance charge would include the following types of charges imposed by card issuers: interest, transaction fees and service fees.

Finance Company
A business that makes consumer loans, often to consumers who cannot qualify for credit at a credit union or bank. Typically, the interest rates charged by a finance company are higher than those charged by other creditors.

Fixed Rate
An annual percentage rate that does not change

[ G ]

Goods and services dispute
If you have a problem with the quality of property or services that you purchase with a charge or credit card, and you have tried in good faith to correct the problem with the merchant, you may have the right not to pay the remaining amount due on the property or services.

Grace Period
The time period you have to pay a bill in full and avoid interest charges.

Guarantor
Person responsible for paying a bill.

[ H ]

High balance
The highest amount that you have owed on an account to date.

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

[ I ]

Inquiry
Your credit report has an inquiry section that lists anyone who has asked for your credit history.

Instalment credit
A credit agreement that allows you to repay credit in regular payments over a specified time.

Interest
A charge for borrowed money, generally a percentage of the amount owed.

Investigation
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 is contacted and asked to review the information and report back; they will tell the credit reporting agency that the information is accurate as it appears, or they will give us corrected information to update the report.

Investigative consumer reports
These are consumer reports that are usually done for background checks, security clearances and other sensitive jobs. An investigative consumer report might contain information obtained from a credit report, but it is more comprehensive than a credit report. It contains subjective material on an individual's character, habits and mode of living, which is obtained through interviews of associates.

[ J ]

Joint account
Two people can share a card, each individually responsible for the outstanding balance on the card account.

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.

[ L ]

Late payment
Most charge and credit card bills list the date by which payments are due. If you miss the due date, the account is considered past due and you may be charged a fee. Your credit report may reflect late payments, and if you have made a habit of paying late, creditors may be dissuaded from granting additional credit.

Lease
A written document containing the conditions under which the possession and use of real and/or personal property are given by the owner to another for a stated period and for a stated consideration.

Letters of credit
A letter of credit is a guarantee of payment by a bank (issuing institution) to a third party for a specific amount of money, if certain conditions are met.

Liability
Liability refers to the responsibility for charges to an account. Generally, a cardholder agrees to be liable for any charges to his or her account, including purchases, fees and finance charges. If the cardholder allows someone else to make charges to his or her account (through, for example, an additional card), the cardholder is still responsible for paying the bill. Two people who apply for a card together may both be responsible for the entire balance. Your liability is described in the cardholder agreement you receive from the issuer. Be sure to read it carefully.

Line of Credit
In open-end credit, the maximum amount a borrower can draw upon or the maximum that an account can show as outstanding.

[ M ]

Mortgage
A lien or claim against real property given by the buyer to the lender as security for money borrowed.

Most Recent Date
The date of the recent account condition or payment status. This date is also the balance date.

[ O ]

Other charges
Other charges may be listed on your bill and can include the annual membership fee or late payment fees.

Over-the-limit fee
When you charge more than your credit limit allows, you may be charged an over-the-limit, or over-credit-limit, fee. Your card issuer may allow you to exceed your credit limit without telling you in advance, and you may not know you have done so until you receive your bill.

Overdraft agreement
Some issuers allow you to link your credit card to a checking or savings account that you hold with that bank. When you sign an overdraft agreement and you bounce a check, the bank can charge that amount to your credit card account and the check will clear. This way, you avoid a returned-check fee.

[ P ]

Partial payment
Paying less than the full amount due.

Past due
When you do not make at least the minimum payment on time, your account is considered past due.

Payment status
Reflects the previous history of the account, including any delinquencies or derogatory conditions occurring during the previous seven years.

Periodic rate
The interest rate described in relation to a specific amount of time. For example, the monthly periodic rate is the cost of credit per month; the daily periodic rate is the cost of credit per day.

Personal Line of Credit
The maximum amount you can owe at any time, based on your income, debt and your credit history.

Personal Loan
A loan based on your income, debt and credit history.

Principal
The outstanding balance of a loan, exclusive of interest and other charges.

[ R ]

Rebate/enhancement cards
Some cards include rebates on merchandise or cash-back offers depending on how much you charge annually. Others have enhancements that offer special benefits, such as frequent-flier miles or long-distance telephone discounts.

Repossession
A creditor's taking possession of property pledged as collateral on a loan contract on which a borrower has fallen significantly behind in payments.

Revolve
To carry over a debt from month to month, paying interest on the amount owed.

Revolving credit
A credit agreement that allows consumers to pay all or part of the outstanding balance on a loan or credit card. As credit is paid off, it becomes available again to use for another purchase or cash advance.

Risk scoring models
A numerical determination of a consumer's creditworthiness. Tool used by credit grantors to predict future payment behavior of a consumer.

[ S ]

Secured credit card
A credit card secured by a savings account that has been established in advance by the borrower. The amount in the account usually determines the limit on the credit card.

Service credit
Agreements with service providers. You receive goods, such as electricity, and services, such as apartment rental and health club memberships, with the agreement that you will pay for them each month. Your contract may require payments for a specific number of months, even if you stop the service.

Smart Card
An electronic prepaid cash card, usually sold at banks and are exchanged at face value.

Status
On the credit report, this indicates the current status or state of the account.

[ T ]

Terms
This refers to the debt repayment terms of your agreement with a creditor, such as 60 months, 48 months, etc.

Third-party collectors
Collectors who are under contract to collect debts for a credit department or credit company; collection agency.

Tradeline
Entry by a credit grantor to a consumer's credit history maintained by a credit reporting agency. A tradeline describes the consumer's account status and activity. Tradeline information includes names of companies where the applicant has accounts, dates accounts were opened, credit limits, types of accounts, balances owed and payment histories.

Transaction date
The date a purchase is made or cash is withdrawn. Some companies assess interest on charges and cash advances from the transaction date, others from the posting date.

Transaction fee
A fee that is charged each time certain transactions take place, for example, cash advances.

[ U ]

Unsecured loan
A loan based on a consumer's promise to pay, without savings or other collateral as a guarantee. Sometimes called a signature loan.

Unused credit
The amount of credit you have available before you reach your credit limit.

[ V ]

Variable interest rate
A variable interest rate is based on fluctuating rates in the banking system, such as the prime rate.

Victim statement
A statement that can be added to a consumer's credit report to alert credit grantors that a consumer's identification has been used fraudulently to obtain credit. The statement requests the credit grantor to contact the consumer by telephone before issuing credit. It remains on file for 7 years unless the consumer requests that it be removed.

Voluntary Bankruptcy
If a consumer files the bankruptcy of their own accord, it is known as voluntary bankruptcy.

[ W ]

Wage assignment
A signed agreement by a buyer or borrower, permitting a creditor to collect a certain portion of the debtor's wages from an employer in the event of default.

Withdrawn
This means a decision was made not to pursue a bankruptcy, a lien, etc. after court documents have been filed.

[ Z ]

Zero balance
If you have no previous outstanding balances on your card account and no new activity that month, this means that you have a zero balance. You might not get a bill since you do not owe anything.