Financial Terms Glossary: E F G

Empirica Score | A co-signer is legally responsible for the loan and the shared account will appear on their credit report. There are thousands of slightly different credit scoring formulas used by bankers, lenders, creditors, insurers and retailers. Each score can vary somewhat in how it evaluates your credit data. Equal Credit Opportunity Act (ECOA) | A law that protects consumers from discrimination on the basis of race, sex, public assistance income, age, marital status, nationality or religion in the credit and lending process. Equifax One of the three national credit bureaus (also known as credit reporting agencies) that collects and provides consumer financial records. Equity The fair market value of a home minus the unpaid mortgage principal and liens. You build up equity in a home as you pay down your mortgage and as the property value increases. Also called the lendable value or net value. Experian One of the three national credit bureaus that collects and provides consumer financial records. Experian (formerly known as TRW) operates the ConsumerInfo, FreeCreditScore and CreditExpert brands. Expiration Term | The set number of years that a record will remain on your credit report as mandated by the FCRA. Most negative records stay on your credit report for 7-10 years. The shortest expiration term is two years for inquiry records. The longest expiration term is 15 years for paid tax liens or indefinitely for unpaid tax liens. Positive information can also stay on your credit report indefinitely. Fair and Accurate Credit Transaction (FACT) Act | The FACT Act was signed into law December 2003 and includes several consumer credit industry regulations. This law requires credit bureaus to provide all US residents with a free copy of their credit report once every 12 months. The law also includes new privacy regulations, identity theft protections and dispute procedure requirements. First passed in the 1970’s that promotes accuracy, confidentiality and proper use of information in the files kept by credit reporting agencies. This law specifies the expiration terms of records on your credit report, defines who can access your credit data and grants consumers the right to view and dispute their credit records. Fannie Mae | The largest mortgage investor. A government-sponsored enterprise that buys mortgages from lenders, bundles them into investments and sells them on the secondary mortgage market. Formerly known as the Federal National Mortgage Association. Federal Housing Administration (FHA) | A division of the Department of Housing and Urban Development (HUD) that provides mortgage insurance and sets construction and underwriting standards. FICO Score | A specific credit score developed by Fair Isaac Corporation. There are thousands of slightly different credit scoring formulas used by bankers, lenders, creditors, insurers and retailers. Each score can vary somewhat in how it evaluates your credit data. File Freeze | Consumers can request that the credit bureaus freeze their credit reports. This freeze stops new credit from being issued in your name by blocking creditors, lenders, insurers and other companies from accessing your credit data. In some cases, a $10 fee for each credit bureau is required to process the file freeze. The freeze can also be temporarily or permanently undone for an additional fee. Finance Charge | The total cost of using credit. Besides interest charges, the finance charge may include other costs such as cash-advance fees. First Mortgage | The primary loan on a real estate property. This loan has priority over all other “secondary” loans. Fixed Expense | Expenses that don’t change from month to month; any bill that is the same amount every month, like rent, mortgage payments, car payments, etc. Fixed Rate | An interest rate for a credit card or loan that remains constant. Fixed-Rate Option | A home equity line of credit financing option that allows borrowers to specify the payments and interest on a portion of their balance. This can be done a few times during the life of the loan, usually for an additional fee. Fixed Rate Mortgage (FRM) | A mortgage with an interest rate that remains constant for the entire duration of the loan. FRM’s have longer terms (15-30 years) and higher interest rates than adjustable rate mortgages but are not at risk for changing interest rates. You can shop and compare mortgage options securely online. Foreclosure When a borrower is in default on a loan or mortgage, the creditor can enact a legal process to claim ownership of the collateral property. Foreclosure usually involves a forced sale of the property where the proceeds go toward paying off the debt. Fraud Alert | If you suspect that you are a victim of identity theft, you may contact the credit bureaus to request that a 90-day fraud alert is placed on your credit reports. If you have been a victim of identity theft you only need to contact one bureau to have a temporary 90 day alert added to all three of your credit reports. This 90-day alert notifies potential creditors that your identity may have been stolen and suggests that they take extra steps to confirm your identity before opening a new account. If it turns out that your identity has been stolen, you can request an extended 7 year alert by providing documentation of the crime (such as a police report). There is also a special 1 year fraud alert available for military personnel on activity duty. Freddie Mac | Formerly known as the Federal Home Loan Mortgage Corporation, this is a government-sponsored firm that buys mortgages from lenders, pools them with other loans and sells them to investors. Front-End Ratio or Front Ratio | A calculation of the percentage of your monthly pre-tax income that goes toward a house payment. The general rule is that your front ratio shouldn’t exceed 28%. Garnishment When a creditor receives legal permission to take a portion of your assets (bank account, salary, etc) to repay a delinquent debt. Ginnie Mae | Also known as the Government National Mortgage Association. A part of the Department of Housing and Urban Development that buys mortgages from lending institutions and pools them to form securities, which it then sells to investors. Grace Period | A period of time, often about 25 days, during which you can pay your credit card bill without incurring a finance charge. With most credit card accounts, the grace period applies only if you pay your balance in full each month. It does not apply if you carry a balance forward or in the case of cash advances. If your account has no grace period, interest will be charged on a purchase as soon as it is made. Gross Income | Your total income, before any taxes or other deductions have been applied.