Glossary of Credit Related Terms

Bad Credit

A term used to describe a poor credit rating. Common practices that can damage a credit rating include making late payments, skipping payments, exceeding card limits or declaring bankruptcy. "Bad Credit" can result in being denied credit.

Balance

Your balance is the amount of money you owe the card issuer, and includes purchases, fees, interest and transaction charges.

Balance Transfer

Moving a balance (debt) from one credit card to another. This is often done with special checks or forms, or may be offered as an option on some credit card applications. The usual reason is to shift an ongoing debt to an account with a lower interest rate.

Balloon Mortgage

A mortgage where the monthly payments are based on a 30-year schedule, but the entire mortgage becomes due at the end of a set term, normally five to seven years.

Balloon Payment

A large extra payment that may be charged at the end of a loan or lease.

Bankruptcy

A proceeding in U.S. Federal 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 (total liquidation of assets). Chapter 11 - Business Reorganizations. 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 making the debtor still liable for all debts.

Bill Aka Monthly Statement

Each billing cycle (usually once per month) your card issuer will send you a bill. The bill will detail the activity on your account for that billing cycle. The reverse side of your bill usually describes some of the basic terms of your card agreement, including how the interest is calculated and where to call with questions. See your card agreement for complete information on the terms.

Billing Cycle

The time between your last bill and your current bill, usually 28 to 31 days.

Budget

A financial plan for saving and spending money.

Buydown

A lump sum payment made to the creditor by the borrower or by a third party to reduce the amount of some or all of the consumer's periodic payments to repay the indebtedness.