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.

Tax-deferred

An investment whose accumulated earnings are free from taxation until the investor takes possession of them.

Term

1. The lifespan of the contract to repay a loan.
2. Time period that the customer agrees to keep funds in an account without making any withdrawals.

Terms

Refers to the debt repayment terms of your agreement with a creditor, such as 60 months, 30 years, etc.

Title

A document that gives evidence of an individual's ownership of property.

Title 1

An FHA-insured loan that allows a borrower to make non-luxury improvements (like renovations or repairs) to their home. Title I loans less than $7,500 don't require a property lien.

Title insurance

A policy, usually issued by a title insurance company, which insures a home buyer against errors in the title search. The cost of the policy is usually a function of the value of the property, and is often borne by the purchaser and/or seller. Similar insurance is also available that protects the lender against any claims that arise from arguments about ownership of the property.

Title search

A check of public records to be sure that the seller is the recognized owner of the real estate, and that there are no unsettled liens or other claims against the property.

Total expense ratio

Total obligations as a percentage of gross monthly income including monthly housing expenses plus other monthly debts.

Tradeline

Entry by a credit grantor to a consumer's credit history maintained by a credit reporting agency. A tradeline describes the consumer's account status and activity. Tradeline information includes the names of companies where the consumer has accounts, dates accounts were opened, credit limits, types of accounts, balances owed, etc.

Transaction

1. Any agreement between two or more parties that establishes a legal obligation.
2. The act of carrying out such an obligation.
3. All activities affecting a deposit account that are performed at the request of the account holder.
4. All events that cause some change in the assets, liabilities or net worth of a business.
5. An action between a cardholder and a merchant or a cardholder and a member that results in activity on the cardholder account.

Transaction fee

A fee charged each time you draw on your credit line.

"Truth-in-Lending"

1. A federal law obligating a lender to give full written disclosure of all fees, terms and conditions associated with the initial loan period. Requires disclosure of the annual percentage rate to home buyers shortly after they apply for the loan. Also known as Regulation Z.
2. (Truth-in-Lending Act) Title 1 of the Consumer Protection Act. Requires that most categories of lenders disclose the annual interest rate, the total dollar cost and other terms of loans and credit sales.

Two Step Mortgage

A mortgage in which the borrower receives a below-market interest rate for a specified number of years (most often 7 or 10), and then receives a new interest rate adjusted (within certain limits) to market conditions at that time. The lender sometimes has the option to call the loan due with 30 days notice at the end of seven or 10 years. Also called "Super Seven" or "Premier" mortgage.

Calculators