| Bankruptcy - Having been legally declared | | | | Down Payment - A cash payment made by a |
| financially insolvent. There are two types of | | | | buyer when they purchase a property. |
| bankruptcy - liquidation, in which your debts are | | | | Equity - An increase in the value of your home or |
| cleared (discharged) and reorganization, in which | | | | decrease in the loan amount on your home |
| you provide the court with a plan for how you | | | | creates equity. Equity is the difference between |
| intend to repay your debts. | | | | what is owed on your home and the sale value. |
| Collateral - Property acceptable as security for a | | | | Most home equity lenders will allow you to borrow |
| loan or other obligation. | | | | up to 80% of that value. |
| Collection Agency - A company hired by a | | | | Fair Isaac and Company - Fair Isaac is the |
| creditor to collect a debt that it is owed. | | | | company responsible for creating the popular |
| Contract - An agreement between two or more | | | | FICO score. This three digit score is created using |
| parties, usually written down and enforceable by | | | | information from your credit report and ranges |
| law . | | | | from 300-850. |
| Cosigner - To endorse (another's signature), as a | | | | Foreclosure - The forced sale of property to pay |
| loan agreement, lease or credit application. If the | | | | off a loan on which the owner of the property |
| primary debtor does not pay, the cosigner is fully | | | | has defaulted. |
| responsible for the loan or debt. | | | | Garnishment - A court order directing a third |
| Credit Bureau - An organization to which business | | | | party who holds money or property belonging to |
| firms apply for credit information on prospective | | | | a defendant to withhold it and appear in court to |
| customers. | | | | answer inquiries. |
| Credit Report -An account of your credit history, | | | | Grace Period - A period of time during which you |
| prepared by a credit bureau. A credit report will | | | | are not required to make payments on a debt. |
| contain credit history, such as what you owe to | | | | Guarantor - A person who makes a legally binding |
| whom and whether you make the payments on | | | | promise to either pay another person's debt or |
| time, as well as personal history, such as your | | | | perform another person's duty if that person |
| former addresses, employment record and any | | | | defaults or fails to perform. |
| lawsuits in which you have been involved. | | | | Interest - A commission you pay a bank or other |
| Creditor - A person or entity (such as a bank) to | | | | creditor for lending you money or extending you |
| whom a debt is owed. | | | | credit. Usually calculated as a percentage of the |
| Debtor - A person or entity (such as a bank) who | | | | mortgage or loan. |
| owes money. | | | | Lien - The right to take and hold or sell the |
| Debt to Income Ratio - Most mortgage lenders | | | | property of a debtor as security or payment for |
| use this ratio to analyze your financial well-being. It | | | | a debt or duty. |
| is figured by using your monthly debt divided by | | | | Loan Consolidation - The combining of a number |
| your monthly income. The lower the percentage | | | | of loans into a single new loan. Usually done to |
| the better your financial picture. This is often | | | | gain more favourable terms e.g. lower cost |
| referred to as credit worthiness. | | | | repayments or longer time to pay. |
| Default - To fail to pay money when it is due. A | | | | Principal - A sum of money owed as a debt, upon |
| default on a mortgage or loan takes place when | | | | which interest is calculated. If you purchased an |
| you fail to make the loan payments on time, fail | | | | item for $100 on your credit card that would be |
| to maintain adequate insurance or violate some | | | | the principal balance. |
| other provision of your agreement with the | | | | Repossession - A creditor's taking of property |
| mortgage / loan company. | | | | that has been pledged as collateral for a loan. |
| Discharge (of debts) - A court's writing of off the | | | | Secured Debt - A debt on which a creditor has a |
| debts of a person or business that has filed for | | | | lien. A car loan would be an example of secured |
| bankruptcy. | | | | debt. |
| Dischargeable Debts - Debts that can be erased | | | | Term - The time required to repay a loan. |
| by going through bankruptcy. | | | | |