Debt consolidation - Useful terms to know

The financial industry, like most every other in the business world, has its unique lingo. While a good number of of them are commonly used and will be familiar to the reader, several may not. We have compiled a simple glossary, in no particular order, that explains the meanings of a good number of of the more frequently used terminology, or lingo in the banking and lending industry. Anyone interested in debt consolidation will find these terms useful

Adjustable Interest Rate - An adjustable interest rate would be what a customer would happen upon when receiving a loan that came with an interest rate that could go up or down over time. A good number of credit cards feature an adjustable interest rate, normally based on some well known financial index, such as the Prime Rate or the London Inter Bank Offering Rate (LIBOR.)

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Credit Card - A cplastic card, commonly issued by a bank or credit union or retail establishment, that permits a person to make purchases by signing his or her name. Bank cards permit the buyer to make the payment at a later date. These cards traditionally have a purchasing limit imposed by the card's issuing bank, depending upon the total credit score of the card's account holder. Obligations not paid in full will accrue interest.

Credit Bureau - The term is generally employed to describe three companies - Trans Union, Experian and Equifax, that keep documentation of the monetary transactions of Americans so that they may compile them into a credit history.  While three major credit bureaus keep track of the great majority of monetary records, they are not the only institutions that do so.

Credit Report - The actual document prepared by the credit bureau which shows a consumer's financial history, including debts paid, debts not paid, and bankruptcy filings, if any. These reports will often include the credit score.

Delinquency - Failure to pay, especially if the failure lasts longer than a month, will regularly be marked on a credit report, which notes 30, 60, 90 and 120 day delinquencies.

Annual Percentage Rate - The interest rate on an American Express or loan or mortgage, stated in terms of a rate per 12 months. Annual percentage rate is usually abbreviated as APR.

Bankruptcy - Bankruptcy is the act of saying that someone cannot pay existing bills and is a formal procedure carried out in a courtroom. While applying for bankruptcy, a debtor might be relieved of having to pay some of his or her financial obligations. Federal law ratified recently makes it much harder, strenuous and pricey to resort to personal debt relief now.

Fixed Interest Rate - An interest rate that does not vary over the span of the loan or mortgage or repayment time period. The opposite would be an Adjustable Rate, which can change over time.

Debit Card - Similar to a credit card, but with no "pay later" clause. At the time of purchase, the money is withdrawn directly from the customer's checking account. An effortless way to buy, as it involves no cash.

Credit Score - Also known as a FICO Score, FICO is a three digit score, varying from 300 upt to 850, that signifies, in a nutshell, a consumer's total credit worthiness. Individuals with a score of six hundred twenty or better are usually considered excellent risks for a loan or mortgage. Consumers with less significant scores will probably have to pay suboptimal subprime interest rates.

These are just a few of the many commonly used vernacular in the financial world. The ordinary consumer who frequently uses banks, credit cards and home loans will encounter these terms rather often in the course of doing business.