Know your terms

There's a lot of terminology that you will hear during your consultation. These are not even half of the words that could be used, but we felt it was necessary to give you some free knowledge on some of these words. 

Education is key!



CREDIT TERMS

Consultation:

When you have a discussion with someone about a particular situation or service sometimes resulting in you purchasing the services offered.

Credit Report: 

A document that tells a lender your worthiness on paying back a loan. If you have any previous derogatory or unpaid bills, liens, judgments, etc. or if you pay your bills on time.

Bankruptcy:

A proceeding in U.S. Bankruptcy Court that may legally release a person from repaying debts owed. Credit reports normally include bankruptcies for up to 10 years.

Charge-Off:

Balance on a credit obligation that a lender no longer expects to be repaid and writes off as a bad debt.

Collection Account:

Attempted recovery of a past-due credit obligation by a collection department or agency.

Creditor:

Lender, or someone to which you are financially indebted. It can be either an institution or individual. Institutional creditors include banks, credit card companies, and bond investors.

Emergency Fund:

Also called a rainy-day fund. It is your pool of savings that is parked in a safe and liquid savings instrument (perhaps even under the mattress) so that you can access the funds in an emergency. Financial planners recommend that you have an emergency fund that is equal to between three and six months of your salary. Major reasons for tapping your emergency fund include losing a job or incurring large and unexpected medical expenses.

FICO Scores: 

Credit bureau risk scores produced from models developed by Fair Isaac Corporation are commonly known as FICO Scores. FICO Scores are used by lenders and others to assess the credit risk of prospective borrowers or existing customers, in order to help make credit and marketing decisions. These scores are derived solely from the information available on credit bureau reports.


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