Glossary of Terms
Credit Glossary
It's hard enough trying to stay on top of your credit let alone learn the industry lingo. We've compiled a glossary of industry terms to help you stay ahead of the curve when dealing with your credit, auto loans, home loans, debt, and savings.
- Balance transfer
- Moving an outstanding credit card balance from one issuer to another.
- Balance transfer fee
- A fee charged by a credit card company to transfer a balance from one account to another. This fee can be anywhere from 1-5% of the balance amount.
- Balloon Mortgage
- A mortgage that typically offers low rates for an initial period of time (usually 5, 7, or 10) years. After that time period elapses, the balance is due, or is refinanced by the borrower.
- Balloon Payments
- A loan with a balloon payment requires that a single, lump-sum payment be made at the end of the loan.
- Bankcard
- A payment card issued by a bank.
- Bankruptcy
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1) Federal laws governing the conditions and procedures under which persons claiming inability to repay their debts can seek relief.
2) A proceeding in U.S. Federal District Court that may legally release a person from repaying debts owed. The law contains several chapters which relate to different methods of relief: Chapter 7 – Straight bankruptcy (liquidation of assets to repay creditors) Chapter 11 – Business reorganizations
Chapter 12 – Farm debt bankruptcy
Chapter 13 – Wage earner repayment plan - Bankruptcy discharged
- A court order terminating bankruptcy proceedings on old debts.
- Bankruptcy dismissed
- A court order that denied a bankruptcy petition and made the petitioner (debtor) still liable for all debts.
- Bankruptcy petitioned
- If a consumer has filed bankruptcy, but a judge has not yet ruled that it can proceed.
- Billing cycle
- The length of time between card statements, usually 28-31 days.
- Binder
- A preliminary agreement, secured by an earnest money deposit, through which the buyer offers to purchase a home.
- Bi-weekly Payment Mortgage
- A plan to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one half of the monthly payment required if the loan were a standard 30-year fixed rate mortgage. The result for the borrower is a substantial savings in interest.
- Borrower
- A person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms.
- Bridge loan
- A second trust (or mortgage) that is collateralized (or secured) by the borrower's present home, allowing the proceeds to be used to close on a new house before the present home is sold. Also known as a "swing loan."
- Broker
- An individual in the business of assisting in arranging funding or negotiating contracts for a client, but who does not loan money. Brokers usually charge a fee or receive a commission for their services.
- Budget
- An itemized summary of estimated or intended expenditures for a given period along with proposals for financing them. Guidelines for reaching desired financial goals and objectives.
- Buy-down
- When the lender and/or the home builder subsidize the mortgage by lowering the interest rate during the first few years of the loan. Under this arrangement, the property seller deposits money to an account, and that money is then released each month to reduce the mortgagor's monthly payments during the early years of a mortgage. While this keeps the buyer's payments low at first, they will increase when the subsidy period expires.
