Glossary

Are you a little confused about some of credit and debt terms you've been reading about? Don't worry, you're not alone. One of the primary causes of debt comes from the average consumer's lack of understanding about how credit and debt works. Our credit counseling agency can help you get on the right track, but paying off debt and repairing your credit will take some work on your end too. Learn about these important credit counseling terms here and you'll be better prepared to turn your financial future around.

• Annual Fee - A monetary fee that some credit card companies charge for use of their service.
• Annual Percentage Rate - Also known as APR, annual percentage rate refers to the rate at which interest is applied to an account over a year.
• Available Credit - For credit card accounts, this is the amount of credit or money that a consumer is allowed to borrow.
• Bankruptcy - Legal procedure used by individuals or businesses to absolve or restructure outstanding debts.
• Billing Cycle - The number of days between your last credit card statement date and the current statement date.
• Credit - The ability to borrow money from a lender.
• Credit Report - A report of a consumer's credit, debt, and payment habits as provided by a consumer credit reporting agency.
• Credit Reporting Agency - A company that collects and sells information regarding the creditworthiness of consumers. CRA's often are responsible for determining credit scores, but not whether a person should be approved for a new line of credit or loan.
• Credit Score - A numeric score that helps determine your creditworthiness. The higher your credit score, the more likely you can attain a large line of credit with a low interest rate.
• Debt-to-Available-Credit Ratio - The amount of money a consumer owes in comparison to how much left they can still borrower from the same lender. This ratio is important for determining credit scores.
• Lien - The process of taking the property of a debtor as payment for a debt.
• Liquidation - Sale of a debtor's property, with the proceeds used to pay back creditors.
• Principal - The total amount of debt a borrower owes a lender, not including interest or other charges.
• Secured Debt - A loan or line of credit that is backed up by a borrower's collateral, such as a home or automobile. Typically carries a lower interest rate than unsecured debt.
• Settle - For a borrower to reach an agreement with their lender to only repay a portion of their debt.
• Term - Refers to the debt repayment procedure and length agreement between a borrower and lender.
• Unsecured Debt - A loan or line of credit that is not backed up by a borrower's collateral. Typically carries a higher interest rate than secured debt.

Our frequently asked questions also has information for you to learn more about credit counseling and can answer some questions you still may have up to this point.