Credit & Debt Management Terms & Definitions

Debt considered beneficial because it helps acquire assets that appreciate in value or generate income, ultimately improving financial health.

A hard inquiry is a request by a lender to review your credit report when you apply for new credit, such as a mortgage or loan. It is recorded on your credit report and can temporarily lower your credit score by a few points.

A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by the equity in your home, allowing flexible borrowing and repayment up to a set limit.

Length of credit history measures how long you've had credit accounts open and active, serving as a key indicator of your experience and reliability in managing debt for lenders.

Loan default is the failure of a borrower to fulfill the terms of a loan agreement, typically by missing required payments, which can lead to severe financial consequences like foreclosure and credit score damage.

Loan qualification is the process by which lenders evaluate a borrower's financial health and creditworthiness to determine eligibility for a loan, assessing factors like credit score, debt-to-income ratio, and assets to mitigate risk.

Mortgage debt is the total outstanding amount of money a borrower owes to a lender for a loan secured by real estate. It typically includes the remaining principal balance and any accrued interest, paid over a set period.

A Net 30 account is a trade credit agreement allowing a business to purchase goods or services and pay the invoice within 30 days, offering short-term, interest-free financing and an opportunity to build business credit.

The PAYDEX Score, from Dun & Bradstreet, assesses a business's payment history with vendors on a 1-100 scale, indicating its reliability in making timely payments. It's vital for securing business credit and favorable terms.

Payment history is a record of how consistently and on-time you pay your debts, serving as a key indicator of your financial reliability to lenders, especially for real estate financing.

A legal process for individuals to eliminate or repay debts under federal law, significantly impacting credit, asset ownership, and future real estate investment capabilities.

Personal finances refer to the management of an individual's or family's money, including income, expenses, savings, investments, and debt, to achieve financial stability and goals.