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Credit
inquiry:
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An
"inquiry" shows the name of the company or individual
who has requested your credit file. Each inquiry is listed
on the credit file so that you know who has obtained a copy
of it. In addition to checking your file when you first apply
for credit, credit grantors typically request regular updates
of your credit file after an account has been opened, when
it is being renewed or for limit increases. These are listed
as "update" inquiries in a separate section of your
credit file. They are for your information only and are not
displayed to other credit grantors.
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Credit
file:
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Your credit file is created when you first borrow money or
apply for credit. On a regular basis, companies that lend
money or issue credit cards to you - including banks, finance
companies, credit unions, retailers - send specific factual
information related to the financial transactions they have
with you to credit reporting agencies.
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Credit Rating:
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Every
piece of credit history information in your credit file is
assigned a rating by the credit grantor. The most common ratings
are "R" ratings. These are known as North American
Standard Account Ratings and are the most frequently used.
The "R" indicates that the item being described
involves revolving credit. If you always pay on time, it will
be coded an R1. If an amount was written off because you never
paid it back, it is coded R9. The R ratings are a coding system
that translates "on time", "one month late",
"two months late", etc., into two-digit codes
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Credit
Score:
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is a numeric value assigned by credit grantors to indicate
how likely someone is to pay back a loan or credit card according
to the agreed repayment terms. It is an indicator of the level
of risk that a borrower might represent. It is used as a predictor
of future performance. Credit grantors often use an automated
scoring process to help make that risk assessment.
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| Creditor: |
A
person or business from whom you borrow or to whom you owe money. |
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| Credit
Insurance: |
Health,
life, accident, or disruption of income insurance designed to
pay the outstanding balance of debt. |
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| Credit
Loss: |
A
loan receivable that has become uncollectable and is written
off. |
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Credit
Repair Clinic:
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A independent business that offers for a fee to fix my poor
credit rating. However, credit granters state that only responsible
credit practices over time can improve a poor credit history.
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| Creditworthiness: |
Past,
present and future ability to repay debts. |
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Gross
Debt Service Ratio (GDS):
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The
percentage of gross annual income required to cover payments
associated with housing (mortgage principal and interest,
taxes, secondary financing, space heating, and 50% of condominium
fees, if applicable). Most lenders prefer that the GDS be
no more than 30%.
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Credit
counseling:
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This
type of organizations is not the same as Credit Repair Clinics,
and can offer you professional advice on how to improve your
credit practices.
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Debt:
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An
obligation to repay a sum of principal, plus interest. In
corporate terms, debt often refers to bonds or similar securities.
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Debt
Cards:
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A
card that allows the cost of a purchase to be automatically
deducted from the customer's bank account and credited to
the merchant.
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Debt
Capacity:
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An
assessment of a person of firms ability and willingness to
repay a loan from anticipated future income or cash flow of
other sources.
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Financing: |
The
raising of capital through the creation of corporate debt by
issuing a form of document (bond, note, debenture) evidencing
the amount owned and payable on specified dates or on demand. |
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| Default: |
A
borrower defaults on his obligations when he fails to make a
required payment of principal or interest at a specified time. |
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| Demand
Line of Credit/Loan: |
A
line of credit that enables a customer to borrow on a daily
or on demand basis. Credit cards are a prime example. A demand
loan must be repaid in full on demand. |
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| Depreciation: |
It
is a bookkeeping entry representing the decline in value of
an asset that is wearing out. |
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Direct
Debt:
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A
means of authorizing recurring payments (e.g. mortgage payments,
insurance premiums) to be drawn on an account.
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Direct
deposit/Direct Funds Transfer (DTF):
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A
means of authorizing payment made by governments or companies
to be deposited directly into a recipient's account. Used
mainly for the deposit of salary, pension and interest cheques.
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Direct
Placement:
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Selling
a new issue not by offering it for sale publicly but by placing
it with one or several institutional investors.
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| Disposable
Income: |
Is
defined as total consumer income less taxes and government transfers. |
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| Documentary
Credit: |
Written
undertaking by a bank on behalf of an importer authorizing an
exporter to draw drafts on the bank up to a specified amount
under specific terms and conditions. Some time know as commercial
letter of credit |
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Domicile:
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The
"official" residence of an individual. For insurance
contracts, the province of domicile determines under which
provincial laws the deceased estate will be probated. Everyone
has a "domicile of origin" until they adopt a "domicile
of choice".
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| Due
Diligence: |
A
term and process used to Identify any risks and issues relating
to a proposed transaction. Process of systematically evaluating
all information, and verity that it is, what is proposed to
be. |
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| Durable
Goods: |
Orders
for durable goods-products expected to last more than three
years, such as business machinery and major household appliances
Retail sales of durable goods to consumers are another leading
indicator. Because such purchases can be put off during bad
times, any increase reflects a changing trend in consumer spending. |
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Effective
Annual Interest Rate:
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The
rate that is actually earned by the end of a year.
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Effective
Interest Rate (Real Estate):
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A
variable interest rate translated into the rate that would
be paid if the interest was compounded on a semi-annual basis.
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Export
Credit:
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Insurance
to cover political and/or commercial risks of selling goods
or services in foreign markets.
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Export
Financing:
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Financing
products offered by Banks and Government agency to support
the activities of Canadian companies expand into foreign markets,
consisting of loans, guarantees, letters of credit, insurance.
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| Endorse: |
To
sign the back of a cheque in order to cash it. |
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Foreclosure:
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A legal process by which the lender or the seller forces a
sale of a mortgaged property because the borrower has not
met the terms of the mortgage. Also known as a repossession
of property.
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| Finance
Charge: |
The
total accumulated interest charges that the account attracts,
plus any transaction fees. |
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| Fraud
Alert: |
A
statement is added to your file to alert credit grantors that
you may be a victim of fraudulent activity. |
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| Grace
Period: |
Usually
occurs at the start of a loan period, normally associated with
credit card services. Length of time during which repayments
of loan principal are excused. |
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| Gross
Debt Service Ratio (GDS): |
The
percentage of gross annual income required to cover payments
associated with housing (mortgage principal and interest, taxes,
secondary financing, space heating, and 50% of condominium fees,
if applicable). Most lenders prefer that the GDS be no more
than 30%. |
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| Governing
Law: |
Refers
to the laws by which the contract and agreement's are established
and will be enforced. |
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Gross
Effective Rent (to tenant - Real Estate):
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This is the annualized "all-in" average rent to
be paid by the tenant over the term. To calculate, divide
the total present value value cost of occupancy by the area.
Take the present value per square foot and amortize it over
the term of the lease at an appropriate discount rate. The
monthly payment multiplied by 12 is the gross effective rent
on the lease. The (GER) can be used to compare scenarios whose
lease terms are not exactly the same.
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Gross
Income:
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Income before taxes including wages, income from investments,
monetary gifts, and liquid assets.
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Guarantor:
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A third party who agrees to repay any outstanding balance
on a loan if you fail to do so. A guarantor is responsible
for the debt only if the principal debtor defaults on the
loan.
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Identify
fraud:
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When
somebody has lost or had your personal identification stolen
and is being use to obtain goods or services illegally. |
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Home
Banking:
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A
way to access bank accounts by phone or by computer (EDI).
Typically customers can transfer funds, pay bills and make
account inquiries.
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Home
Equity Loan:
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A
home equity loan is a line of credit secured by your home.
Also called an "equity loan" or a "second mortgage,"
the Bank gives you the line of credit and places a second
mortgage loan on your home until the debt is paid off. Once
the debt is paid off, you can apply again for something else.
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Insolvent:
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You
are insolvent if you have debt obligations in excess of $1,000
and are unable to meet your obligations as they come due,
have ceased making payments, or have debts due and accruing
which exceed the value of your assets.
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Interac
Interac
Direct Payment:
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Canada's
largest shared network of ABMs. It allows cardholders to access
their accounts from any ABM on the network regardless of which
financial institution owns the machine.
A method of paying for goods and services electronically with
the funds taken immediately and directly from your bank account
and transferred directly into the merchant's account. You
use your banking card to do this.
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Interest:
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The fee charged for the use of money supplied by a lender.
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Expense: |
Is
the interest paid on money borrowed to earn investment income.
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| Interest
Rate: |
A
fixed, specified ratio of compensation paid to a lender by a
borrower on the amount loaned. |
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| Late
Charge: |
The
lender may impose a its minimum fee for a late payment. If delinquency
is a common occurrence the lender may impose its maximum charge
($100.) |
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| Letter
of Credit: |
A
written undertaking form a bank guaranteeing payment. |
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| Leverage: |
The
use of borrowed money to buy more of an asset than would otherwise
be possible in order to increase the potential profit earned
on that asset. |
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Liabilities:
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What
you owe.
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| Lien: |
A
claim upon a piece of property for the payment or satisfaction
of a debt or obligation. |
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Margin:
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The amount of money supplied by an investor as a portion of
the total funds needed to buy or sell a security, with the
balance of required funds loaned to the investor by a broker,
dealer, or other lender.
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Margin
Account:
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A
special account set up by a broker for a client who wants
to buy and sell securities using margin.
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Margin
Call:
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A
call from a broker to a client asking for more money to back
up a security purchased on margin when such a security has
declined in value. If more money is not supplied, the security
is usually sold by the broker.
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| Mezzanine
finance: |
A
loan advanced prior to a firm going public. Venture capitalists
are active at this stage of a corporations growth |
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| Mortgagee: |
The
lender.
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| Mortgagor: |
The
borrower. |
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Obligation:
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Another
name for debt.
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| Overdraft: |
The
withdrawal from a bank account of an amount greater than the
positive balance in the account. Often used to refer to a negative
balance in one's account. |
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Payee:
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The
name of the person to whom the money in a cheque is to go.
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Personal
disposable income:
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Personal
income minus personal income tax payments. Also called “take-home
pay.”
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Personal
Identification Number (PIN):
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A
security code known only to the bank card holder and used
to access on-line financial services.
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Personal
Net Worth:
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Total
assets minus total liabilities of an individual.
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Personal
Savings:
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The
difference between personal disposable income and personal
consumption spending.
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Personal
Unsecured Loans:
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These are loans that require no collateral and are not "secured"
by any real assets.
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Personal
Guarantee:
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A legal contract binding a individual with the responsibility
for payment of a debt or performance of some obligation if
the person and or a company fails to perform.
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| Promise
to pay: |
The
statement the borrower makes within the signed agreement to
the lender that specifies how the loan is to be repaid, the
costs and and fees incurred if legal action is taken to recover
the debt. |
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| Prime
Rate: |
The
rate at which banks will lend to their best (prime) customers.
The all in cost of a bank loan to a prime credit equals the
prime rate plus the cost of holding compensating balances. |
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Promissory
Note:
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1) An unconditional promise to pay on demand or by a fixed
date a certain amount of money.
2)
A written promise to pay money or money's worth usually for
goods and/ or services received.
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| Refinance
(Real Estate): |
To
pay off (discharge) a mortgage and any other registered encumbrances
and arrange for a new mortgage with the same lender. |
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| Revolving
Line of Credit: |
Is
designed a short-term financing loan. Normally associated with
business activities where the interest is linked to the lenders
prime rate. |
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| Revolving
Loan: |
(also
known as borrowing via overdraft) is a variable rate operating
line of credit. It provides a credit facility on your business
account up to a pre-approved limit. |
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Receivable:
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Amounts
payable to a person or corporation for goods and/or services
produced, sold or rendered for which a bill has been sent.
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Receiving
Order:
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A
court order made in response to a petition from your creditors,
that effectively vests your property to a trustee, who will
administer your estate in accordance with the Bankruptcy and
Insolvency Act.
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Residence
(Student Loan):
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For the purpose of qualifying for a Canada student loan, the
province or territory of residence is where the student has
most recently lived for a least 12 months consecutive months
excluding full-time attendance at a post-secondary institution.
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| Reverse
Mortgage: |
Reverse
mortgages allow individuals with significant equity in their
homes to use it as a source of income. Individuals receive either
a lump sum or a series of payments and use their residence as
collateral. The principle and interest is repaid from the estate
upon death or sale of the home. Reverse Mortgages are currently
available to residents of British Columbia and Ontario. The
amount of equity ranges from 15% to 45%. |
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| Personal
Identification: |
Contains
key identification information, such as your name, address,
birth date and Social Insurance Number (SIN). |
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| Public
Record Information: |
Contains
information about secured loans, bankruptcies and/or judgments.
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| Rating
What it Means: |
R0
Too new to rate; approved but not used
R1 Pays (or paid) within 30 days of payment due date or not
over one payment past due
R2 Pays (or paid) in more than 30 days from payment due date,
but not more than 60 days, or not more than two payments past
due
R3 Pays (or paid) in |
A-B-C-D-E-F-G-H-I-JK-L-M-N-O-P-Q-R-S-T-U-V-W-XYZ
