Credit & Debt.
How borrowing works, what it really costs, and your rights when debt gets hard. Plain definitions for credit reports, loans, collections, and the fine print that trips people up.
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30/60/90-day late reporting
30/60/90-day late reporting is how lenders flag a missed payment to credit bureaus based on how many days past due you are.
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Credit Card
A credit card lets you borrow from a lender up to a set limit to make purchases, which you repay, with interest charged on any balance you carry.
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Credit utilization
The percentage of your available credit that you're currently using. Lower is better.
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Debt snowball vs. debt avalanche
Two ways to order debt payoff: snowball clears the smallest balance first for momentum, avalanche targets the highest rate first to pay less interest.
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Delinquency
Delinquency means a payment is past due. A loan or bill becomes delinquent the day after you miss the due date.
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Derogatory mark
A derogatory mark is a negative item on your credit report, like a late payment, collection, or bankruptcy, that signals missed or unpaid debt.
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Earned wage access
A service that lets you draw part of your already-earned pay before payday, usually for a fee or a tip that can act like high-cost interest.
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Lease vs. buy a car
Leasing pays only for the years you drive the car, then hands it back; buying pays for the whole car and you keep it. Lower payments vs. ownership.
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Credit score
A three-digit number that summarizes how reliably you've paid back borrowed money.
Collections
What happens when an unpaid debt is handed to or sold to a company whose whole business…
Credit utilization ★
The percentage of your available credit that you're currently using.
Minimum payment
The smallest amount your credit card issuer will accept each month without penalty.
Charge-off
When a lender gives up on collecting a debt, writes it off their books, and reports it as…
All credit & debt terms, A to Z
A 4 terms
Annual Fee
An annual fee is a yearly charge some credit cards bill you just for keeping the card, separate from any interest.
annualcreditreport.com rights
Your annualcreditreport.com rights let you pull your credit reports from all three bureaus for free, the only federally authorized free source.
Authorized user
Someone added to another person's credit card who can spend on it but has no legal obligation to pay, and may inherit the account's credit history.
Avalanche method
The avalanche method is a debt-payoff strategy where you attack the highest-interest debt first, which minimizes the total interest you pay.
B 3 terms
Balance transfer
Moving credit card debt to a new card with a 0% promotional rate, paying a fee up front to pause the interest.
Bankruptcy (Chapter 7 vs 13)
The two main personal bankruptcies: Chapter 7 wipes out most unsecured debts in months; Chapter 13 restructures them into a 3-to-5-year payment plan.
Buy now, pay later
Splitting a purchase into a few interest-free installments at checkout, a real convenience that behaves like invisible debt when stacked.
C 19 terms
Cash advance
Using your credit card to get cash, which skips the grace period, adds a fee, and usually charges a higher interest rate from day one.
Cease-and-Desist Letter
A cease-and-desist letter tells a debt collector in writing to stop contacting you, which under federal law they generally must honor.
Charge card vs credit card
Charge card vs credit card: a charge card must be paid in full monthly, while a credit card lets you carry a balance and pay interest.
Charge-off
When a lender gives up on collecting a debt, writes it off their books, and reports it as a serious negative on your credit.
Collateral
Something of value you pledge to back a loan, which the lender can take and sell if you don't repay.
Collections
What happens when an unpaid debt is handed to or sold to a company whose whole business is pursuing payment.
Cosigner
Someone who signs a loan with you and becomes fully, legally responsible for the entire debt if you don't pay.
Court summons for debt
An official court notice that a creditor or collector is suing you over a debt and that you must respond by a deadline or risk losing automatically.
Credit builder loan
A credit builder loan is a small loan where the money is held in a locked account while you make payments to build credit, then released at the end.
Credit bureau
A credit bureau is a company that collects your borrowing history into a credit report and sells it to lenders who want to check you out.
Credit Card★
A credit card lets you borrow from a lender up to a set limit to make purchases, which you repay, with interest charged on any balance you carry.
Credit Counseling
Credit counseling is a service, usually free or low-cost from a nonprofit, that reviews your budget and debts and helps you make a plan.
Credit dispute
A credit dispute is a formal request asking a credit bureau to investigate and correct information on your credit report that you believe is wrong.
Credit freeze
Locking your credit reports so no one, including you, can open new credit in your name until you lift it.
Credit Limit Increase
A credit limit increase is when your card issuer raises the maximum you can borrow on a credit card, either automatically or after you ask.
Credit mix
Credit mix is the variety of credit types you have, like cards plus an installment loan; it is a small part of your credit score.
Credit report
Your credit report is a record of how you have borrowed and repaid money, kept by credit bureaus and read by lenders.
Credit score
A three-digit number that summarizes how reliably you've paid back borrowed money.
Credit utilization★
The percentage of your available credit that you're currently using. Lower is better.
D 11 terms
Debt consolidation
Combining several debts into one new loan, ideally at a lower rate, with one payment, fixed payoff date, and a behavioral catch.
Debt Management Plan
A debt management plan is a program through a nonprofit credit counselor that combines your debts into one monthly payment, often at lower interest.
Debt Settlement
Debt settlement is paying a lump sum that is less than your full balance to close a debt, usually after you have fallen behind.
Debt snowball vs. debt avalanche★
Two ways to order debt payoff: snowball clears the smallest balance first for momentum, avalanche targets the highest rate first to pay less interest.
Debt Validation Letter
A debt validation letter is your written request asking a debt collector to prove you actually owe the debt before you pay anything.
Default
What happens when you fail to repay a debt as agreed for long enough that the lender treats the loan as broken, with serious credit and legal fallout.
Default judgment
A default judgment is a court ruling against you that a creditor wins automatically because you did not respond to the lawsuit by the deadline.
Deferred Interest
Deferred interest is a financing deal where interest builds the whole time and is charged in full if you do not clear the balance before the deadline.
Delinquency★
Delinquency means a payment is past due. A loan or bill becomes delinquent the day after you miss the due date.
Derogatory mark★
A derogatory mark is a negative item on your credit report, like a late payment, collection, or bankruptcy, that signals missed or unpaid debt.
Discretionary Income
Discretionary income is the money left after taxes and basic necessities, and it is the figure income-driven student loan plans use to set your payment.
F 2 terms
FICO vs VantageScore
FICO and VantageScore are the two main credit-scoring models; they read the same history but use slightly different math, so your numbers differ.
Fraud alert
A fraud alert is a free flag you place on your credit file that tells lenders to verify your identity before opening new credit in your name.
G 3 terms
Garnishment
A court-ordered deduction from your paycheck or bank account to pay a debt you owe.
Goodwill letter
A goodwill letter is a polite request asking a lender to remove an accurate late mark from your credit report as a one-time courtesy.
Grace period
The window between your credit card statement closing and the due date, when paying the statement in full means zero interest.
I 2 terms
Identity theft report
An identity theft report is an official report of identity theft that unlocks stronger legal rights to remove fraudulent accounts from your credit.
Intro APR Offers
An intro APR offer is a low or zero percent rate a card gives for a limited time on purchases or balance transfers before the regular rate kicks in.
L 5 terms
Lease vs. buy a car★
Leasing pays only for the years you drive the car, then hands it back; buying pays for the whole car and you keep it. Lower payments vs. ownership.
Length of credit history
Length of credit history is how long you have had credit accounts open; older accounts generally help your credit score.
Loan Flipping★
Loan flipping is when a lender repeatedly refinances your loan to generate new fees, even when it leaves you worse off.
Loan Forgiveness
Loan forgiveness is when a lender or the government cancels part or all of a debt you owe, most often on federal student loans under specific programs.
Loan term★
A loan term is the length of time you have to repay a loan, and a longer term lowers the monthly payment while raising the total interest you pay.
M 3 terms
Mandatory Arbitration Clause
A mandatory arbitration clause is fine print that forces you to settle disputes through a private arbitrator instead of suing in court.
Medical debt rules
The federal and credit-bureau rules that limit how and when unpaid medical bills can appear on your credit report and hurt your score.
Minimum payment
The smallest amount your credit card issuer will accept each month without penalty. Designed to keep the account current, not to pay it off.
N 3 terms
New car vs. used car★
A new car costs more and depreciates fastest early; a used car costs less because the first owner took that hit, but carries more unknowns.
New credit
New credit is how recently and how often you have applied for or opened accounts; a burst of applications can briefly lower your score.
Nonprofit Credit Counselor
A nonprofit credit counselor is a trained, mission-driven advisor who helps you with budgeting and debt, usually with a free initial review.
O 2 terms
Origination Fee
An origination fee is an upfront charge a lender adds for processing a new loan, often a percentage of the amount borrowed.
Origination fee (personal loan)
An origination fee is an upfront charge a lender takes for processing a personal loan, often deducted from the amount you actually receive.
P 12 terms
Pawn loan
A small loan secured by an item you hand to a pawn shop; you redeem the item by repaying with fees, or forfeit it if you don't.
Pay off debt vs. invest★
Whether to send spare money to debt or investments. It weighs a debt's guaranteed interest rate against an investment's uncertain return.
Pay-for-delete★
Pay-for-delete is an arrangement where a debt collector agrees to remove a collection account from your credit report in exchange for payment.
Payday alternative loan
A small, lower-cost loan from a federal credit union, capped by regulation, designed as a safer substitute for a payday loan.
Payday loan
A small, short-term loan against your next paycheck, with fees that work out to triple-digit annual interest rates.
Payment history★
Payment history is the record of whether you pay your bills on time; it is the single biggest factor in most credit scores.
Penalty APR
A penalty APR is a much higher interest rate a credit card can charge after a late payment, sometimes well above your normal rate.
Personal loan★
A personal loan is a fixed lump sum you borrow and repay in equal monthly installments over a set term, usually at a fixed interest rate.
Predatory Lending★
Predatory lending is the practice of pushing loans with unfair, deceptive, or abusive terms that are designed to trap the borrower in debt.
Prepayment penalty
A prepayment penalty is a fee some lenders charge if you pay off a loan early, because they lose the future interest they expected to collect.
Prequalification vs Preapproval
Prequalification is an early estimate of what you might qualify for; preapproval is a firmer offer based on a closer look at your credit and finances.
Promissory note
A promissory note is a written, signed promise to repay a specific amount of money under set terms, making it a legally binding record of a debt.
R 7 terms
Refund anticipation loan
A short-term loan against your expected tax refund that pays you a few days sooner in exchange for fees that eat into the refund.
Reinvestigation
Reinvestigation is the investigation a credit bureau is legally required to run after you dispute an item on your credit report.
Rent reporting
Rent reporting is a service that adds your on-time rent payments to your credit report so they can help build your credit history.
Rent-to-own★
A deal where you make weekly or monthly payments to use an item, and after enough payments you own it, usually for far more than the cash price.
Repossession
The lender taking back the car (or other secured property) after missed payments, often without warning, and the debt frequently surviving the loss.
Revolving Credit
Revolving credit is a borrowing limit you can draw from, repay, and reuse, like a credit card, rather than a one-time loan with fixed payments.
Rewards: Cash Back vs Points
Cash back returns a percentage of your spending as money; points are credits you redeem for travel, gift cards, or statement credits at varying values.
S 6 terms
Secured credit card
A credit card backed by a refundable cash deposit, used to build or rebuild credit when no one will issue you a regular card.
Secured vs unsecured debt
Secured vs unsecured debt: secured debt is backed by collateral the lender can seize, while unsecured debt is backed only by your promise to repay.
Soft Inquiry
A soft inquiry is a check of your credit that does not affect your credit score, often used for prequalification or by you checking your own report.
Statement balance vs. current balance
The statement balance is what you owed when the cycle closed; the current balance adds everything since. Pay the statement balance to stay interest-free.
Statute of limitations on debt
The statute of limitations on debt is the state-set time limit for a creditor to sue you over an old debt; after it passes, the debt is time-barred.
Store credit card★
A store credit card is a card tied to one retailer that you usually can only use there, often carrying a high APR and a deferred-interest trap.
T 3 terms
Time-Barred Debt
Time-barred debt is old debt past your state's statute of limitations, so a collector can no longer win a lawsuit to force you to pay it.
Title loan★
A short-term loan where you hand over your car's title as collateral, often at triple-digit APR, and lose the car if you can't repay.
Tradeline
A tradeline is any single credit account listed on your credit report, such as a credit card, car loan, or mortgage.