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Consumer Debts
Financial obligations or liabilities for personal, not business, needs, including credit cards, personal loans and real estate mortgages. The consumer signs a written agreement upon receiving the loan to repay the amount with interest.
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Credit Bureau
An agency that compiles credit history data on consumers to provide creditors with risk information on potential borrowers. Bureaus are responsible for creating credit reports on individual consumers that interpret spending habits, credit availability and various financial inquires. Below is a list of the three major credit bureaus where you may obtain your credit report and score:
Credit Card Debt Consolidation
A debt-relief method that combines multiple credit card debts into one debt with a lower interest rate. The new debt often carries small monthly payments for an extended term, and the consumer benefits by dealing with one debt instead of multiple debts.
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Credit Card
A plastic card carrying a revolving balance that allows cardholders to use the money for goods and services. A credit card carries a credit limit, the maximum amount of money extended to the cardholder. The interest rate on a credit card is based on the cardholder's credit record and the prime rate.
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Credit Counseling
A debt-relief service provided by an agency who works to lower the interest rate and fees on credit cards. These credit counseling agencies are compensated by creditors to get consumers to repay their debts in full, and the program does not offer any reduction in the principal debt amount, only in fees and interest.
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Credit Debt Consolidation
A debt-relief process that combines different credit debts into one manageable solution to help pay off debt faster and easier. When consolidating credit debt, the debtor obtains a loan and directs the proceeds to paying off all debts, transforming numerous creditors into one lender.
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Credit History
A detailed record of a person's ability to repay debts, along with data on borrowing tendencies. A person's credit history illustrates his or her past performance on financial obligations, such as credit cards, loans and utility bills. Here is some information that might appear on someone's credit history for a specific account:
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Credit Line
The limit or maximum amount of available funds on a credit card. The limit is set based on the cardholder's credit score. Some credit card companies will increase a cardholder's line as a reward for good payment performance.
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Credit Report
A record of financial obligations about a person, including payment histories, outstanding debts and available credit. Every consumer is entitled to a free copy of his or her credit report. The three major credit bureaus - Equifax, Experian and TransUnion - offer personal credit reports.
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Credit Score
A number that reflects a person's credit history used by lenders to assess risk and creditworthiness. One's credit score is affected by spending and repayment habits.
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