Glossary of Terms

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The ability to make mortgage payments on time, depending on income and income stability, assets, reserves and the amount of income each month that is available after paying housing costs, debts and other obligations.

Capital

The cash reserves (savings), investments or assets possessed by an individual.

Cash Advance

You can use your card at a bank or an automatic teller machine to get a cash loan. The interest rate for a cash advance is typically higher than it is for purchases, and there is usually no grace period. There can also be a handling fee for withdrawing cash in addition to the interest charges, which can raise the cost significantly.

Cash Back

A cash reward paid for using the card. Issuers pay back a percentage of the amount spent on the card either at the end of the month or at the end of the year.

Cash Back M

This is the arrangement whereby a cash sum of money is repaid to the borrower at the start of the mortgage. The amount of the cash back will vary considerably from lender to lender with the highest amounts being paid where the borrower is willing to forego any fixed or discounted rate offers and pay the normal variable mortgage rate. Cash back deals are also available in conjunction with some fixed or discounted rates but the amount of the cash back will normally be reduced in these circumstances. If a large cash back is being considered then it could, in some circumstances, be liable to Capital Gains Tax (refer to the lender, your accountant or local tax office for clarification). The lender will normally impose early redemption penalties if the mortgage is redeemed within the first few years (see Redemption Penalties).

Charge Card

A card, which requires payment in full upon receipt of the statement.

Charge Off

Accounting term to indicate that the creditor does not expect to collect a balance owing on an account.

Closed End Credit

Generally, any loan or credit sale agreement in which the amounts advanced, plus any finance charges, are expected to be repaid in full over a definite time. Most real estate and automobile loans are closed- end agreements.

Closing Date

The closing date is the last day that transactions are posted on your account for that month.

Collateral

Property that is offered to secure a loan or other credit and that becomes subject to seizure on default.

Collection Account

Refers to the status of an account owed to a creditor when it has been transferred from a routine debt to a Collection Department of the creditor's firm or to a separate professional debt-collecting firm.

Collection Agency

If you fail to pay a credit or charge card bill, the card issuer may send your overdue bill to a collection agency, a company that will attempt to obtain payment from you. If this happens, your account may be listed as a "collection account" on your credit report. If you do not pay your bill and your card issuer has to go to a collection agency to attempt to obtain payment from you, you may be liable for the cost of the collection agency's services. Check your cardholder agreement to see if your card includes this potential fee.

Compensating Factors

The term used by lenders for examining a borrower's credit strengths and weaknesses. If a borrower is exceptionally strong in one area, such as cash reserves, the borrower may be weaker in another area, such as late payments in the credit history. In this case, the cash reserves may compensate or make up for the derogatory credit.

Consolidation Loan

A loan usually obtained for the purpose of reducing the amount of the payments of bills owing by consolidating the bills into one loan payment. The consumer pays off several bills with the proceeds from one loan and is left with one consolidated monthly payment.

Consumer

Person who uses and/or buys goods and services for family or personal use.

Convenience Check

When you open a new account with a credit card issuer, it may send you a blank convenience check or transfer check so you can shift the debt you have with your old card to your new card.

Copy Charge

Card issuers are required to provide you with copies of documents relating to your account. They may, however, charge a fee for the copying and handling. See your cardholder agreement for your issuer's copy charges.

Co Sign

To sign a credit agreement with someone and agree to share the debt with that person or assume the debt if the other person defaults, that is, doesn't pay.

Co Signed Account

A loan or credit account cosigned by an individual who pledges to pay if the primary borrower does not pay.

Co Signer

Another person who signs for a loan and assumes equal liability for it.

Cra

Encourages banks to help meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate incomes, while maintaining safe and sound operations.

Credit Grantor

Person or business furnishing consumer goods and/or services on credit.

Credit Limit

The maximum amount of money you can charge on a particular credit account.

Creditor

The person or entity providing credit or a loan to a borrower at specific terms and conditions. May be used interchangeably with the term lender.

Creditworthiness

A creditor's measure of a consumer's past and future ability and willingness to repay debts.

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Glossary of Terms

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