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.

Date of last activity

The most recent date of any transaction relating to a particular account – the last charge, the last payment, when an account was placed in collection, when it was charged-off, the last date any communication was received from the account holder in reference to the account, etc. Also called most recent date.

Debit

A charge to a customer's bankcard account. A transaction, such as a check, AMT withdrawal or point-of-sale (POS) debit purchase that debits a demand deposit account.

Debit card

Card issued by a bank or financial institution that directly accesses available funds from a bank account, typically a savings or checking account.

Debt-to-income ratio

A comparison of gross income to housing and non-housing expenses. With the FHA, the monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income. A very important determinant of whether or not a borrower will qualify for a mortgage.

Deed

The document that transfers ownership of a property.

Deed of Trust

In many states, this document is used in place of a mortgage to secure the payment of a note.

Deed-in-lieu

To avoid foreclosure ("in lieu" of foreclosure), a deed is given to the lender to fulfill the obligation to repay the debt. This process doesn't allow the borrower to remain in the house, but helps avoid the costs, time, and effort associated with foreclosure.

Default

1. The inability to pay monthly mortgage payments in a timely manner or to otherwise meet the mortgage terms.
2. When a customer fails to make a required payment to a credit card account, or otherwise violates the terms of the agreement between the credit card company and the customer.

Deferred interest

When a mortgage is written with a monthly payment that is less than required to satisfy the interest rate on the note, the unpaid interest is deferred by adding it to the loan balance. See negative amortization.

Delinquency

Failure of a borrower to make timely mortgage payments under a loan agreement. Can lead to foreclosure.

Delinquent

An account that is past due. Accounts are classified into categories according to how much time they are past due. Common classifications are 30, 60, 90 days, etc.

Disclosure

Providing a consumer with their individual credit history as required by the Fair Credit Reporting Act.

Discount point

Money paid to reduce the interest rate on a loan. Normally paid at closing and generally calculated to be equivalent to 1% of the total loan amount.

Dispute

If a consumer believes an item of information on their credit report is inaccurate or incomplete, they may challenge, or dispute, the item.

Down payment

The portion of a home's purchase price that is paid in cash and is not part of the mortgage loan.

Calculators