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Credit Repair Glossary

If you are serious about improving your credit score, you will need to know a number of credit repair terms.  We’ve collected some of the most important terms for you, and provided easy-to-understand definitions.  (so you can tell the difference between a “FAKO credit score” and a “FICO credit score”!).

Use the “Sort by Letter” navigation below to find a definition for the terms that you want to find.

  • "A" Loan (or "A" Paper)

    Learn what “A” loans or “A” paper are.  Here’s a hint—these loans are for people with excellent credit scores. If you have a bad credit score, don’t even think about this. The credit industry term used to describe a loan that reflects the best possible interest rate, terms and conditions. Consumers must demonstrate good credit in order to secure an “A” loan.

  • Advance Fee Loan

    A loan calculated so that all the finance charges and other creditor expenses are deducted before the consumer receives the principal.

  • Affinity Card

    A type of credit card that is offered jointly by two organizations. One is a credit card issuer and the other is a professional association, special interest group or other non-bank company. For example, Citibank and American Airlines sponsor the Citibank AAdvantage card (an affinity credit card).

  • Amortization

    The process of fully paying off indebtedness by installments of principal and earned interest over a definite time.

  • Annual Fee

    A yearly fee charged to the loan or credit card account to keep the account open. Some loans and credit cards have an annual fee and some do not.  The fee should be disclosed in your credit agreement with the lender or credit card company.

  • Annual Percentage Rate (APR)

    The cost of carrying a balance on a loan expressed as an annual percentage. To calculate the amount owed in interest each month divide the APR by 12. For example, if the APR is 18% the monthly rate is 1.5%.

  • Appraisal Fee

    Typically used in real estate financing and mortgages.  An appraisal fee is typically assessed to cover the cost of estimating the value of property offered as security.

  • APR (Annual Percentage Rate)

    The cost of credit at a yearly rate. Knowing the APR allows you to effectively compare loans, even when they are structured differently.  A typical APR for a long-term, secured loan (like a mortgage) is in the 5-15% range.  The APR for unsecured consumer debt can range from 7% to 35% for credit card debt, and from 200% to 600% (or more) for short term, high risk credit (like a payday loan, refund anticipation loan, or car title loan).  Having a good credit score can help make sure you get rates on the low end of those APR ranges.

  • Authorized User

    A person allowed to charge goods and services on a credit card by the primary user of that card. Authorized users—unlike users of a joint account—are not legally responsible for payment. 

  • Average Daily Balance

    The average daily balance is a method used to calculate finance charges. It is calculated by adding the outstanding balance on each day in the billing period, and dividing that total by the number of days in the billing period. The calculation includes new purchases and payments.

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