Credit Card
A card issued by a financial company giving the holder an option to
borrow funds, usually at point of sale. Credit cards charge interest and
are primarily used for short-term financing. Interest usually begins
one month after a purchase is made and borrowing limits are pre-set
according to the individual's credit rating.
Credit Card Balance
The amount of charges, or lack thereof, owed to the credit card company.
A new credit card balance can take up to 24 hours to update, once a
payment has been made, depending on the credit card company and method
of payment involved. The balance can be zero, positive or negative,
depending on if nothing is owed, if something is owed or if a payment is
made over what is owed respectively.
Credit Card Debt
A type of unsecured liability which is incurred through a short-term
revolving loan facility. While, technically, all purchases made by
credit card create a debt to the user, these debts typically do not
incur interest until the grace period has expired. Thus, credit card
users who pay off their balance each month are generally not considered
to have credit card debt. Rather, the term applies to users who continue
to carry a balance on their credit cards after the grace period has
expired and the debt begins to bear interest.
Credit Cliff
A slang term referring to the compounding of a company's credit
deterioration caused by provisions such as financial covenants,
or events that trigger a change in the company's credit rating. These
can put pressure on the company's liquidity or its business to a
material extent.
Credit History
A record of a consumer's ability to repay debts and demonstrated
responsibility in repaying debts. A consumer's credit history consists
of information such as: number and types of credit accounts, how long
each account has been open, amounts owed, amount of available credit
used, whether bills are paid on time, and number of recent credit
inquiries. It also contains information regarding whether the consumer
has any bankruptcies, liens, judgments or collections. This information
is all contained on a consumer's credit report.
Credit Inquiry
A transaction whereby a bank or other credit-issuing institution
views an individual’s credit report in connection with a loan or credit
card application. The purpose of a credit inquiry is to evaluate an
individual’s likelihood to repay money that is lent to them (known as
creditworthiness).
There are two main types of credit inquiries - a “soft” inquiry and a
“hard” inquiry. A soft inquiry is normally initiated by the individual
(such as checking one’s own credit report for errors) and is not
recorded on the individual’s credit report. A hard inquiry is recorded
on an individual’s credit report when a third party views the credit
report in response to an application for credit.
Credit Repair
Credit repair is the process of fixing a bad credit report, for whatever
reason it deteriorated in the first place. It may be as simple as
fixing mistakes with the credit agencies. Identity theft may require
extensive credit repair work. The second form of credit repair is to
deal with fundamental financial issues, such as budgeting, and begin to
address legitimate concerns on the part of lenders.
Credit Score
A statistically derived numeric expression of a person's
creditworthiness that is used by lenders to access the likelihood that a
person will repay his or her debts. A credit score is based on, among
other things, a person's past credit history. It is a number between 300
and 850 - the higher the number, the more creditworthy the person is
deemed to be.
Charge Card
A card that charges no interest but requires the user to pay his/her
balance in full upon receipt of the statement, usually on a monthly
basis. While it is similar to a credit card, the major benefit offered
by a charge card is that it has much higher, often unlimited, spending
limits.
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