Financial Terms Glossary: C

Cardholder The person who is issued a credit card and/or any authorized users. Cash Advance | A cash loan requested from your creditor, usually by using your credit card at an ATM machine or through a loan advance on your paycheck. These loans include special interest rates charged on the amount of the advance. Cash Advance Fee | A charge by the bank for using credit cards to obtain cash from the available cash. This fee can be stated in terms of a flat per transaction fee or a percentage of the amount of cash advance. Cash-Out Refinance | A new mortgage for an existing property in which the amount borrowed is greater than the amount of the previous mortgage. The difference is given to the borrower in cash when the loan is closed. Chapter 7 Bankruptcy | A type of consumer bankruptcy where your responsibility for your debts is cleared entirely. With this kind of bankruptcy you are not required to pay back debts you owe from before your filing. To qualify for a Chapter 7 bankruptcy your income must be below your state’s median income. Chapter 7 bankruptcy filing records remain on your credit report for 10 years and the record of each account included in your filing will remain on your report for 7 years. Chapter 11 Bankruptcy | A complex type of bankruptcy usually filed by businesses that wish to restructure their debts. Chapter 12 Bankruptcy | A type of bankruptcy specifically for farmers and fishermen. Similar to Chapter 13 bankruptcy but with a few special benefits. Chapter 13 Bankruptcy | A type of bankruptcy where the consumer must pay off some of their debts over time. Chapter 13 bankruptcy filing records remain on your credit report for 7 years from the discharge date or 10 years from the filing date if it is not discharged. Each account included in the filing will remain on your report for 7 years. Charge-Off When a creditor or lender writes off the balance of a delinquent debt, no longer expecting it to be repaid. A charge-off is also known as a bad debt. Charge-off records remain on your credit report for 7 years and will harm your credit score. After a debt is charged-off, it can be sold to a collections agency. ChexSystems A credit reporting company that tracks your banking history and provides this data to banks when you apply for a new checking account. Negative records, such as bounced checks, can be kept in their database for up to five years. If there are errors on your ChexSystems record, you can contact the company to submit a dispute. Closing Costs | The amounts charged to a consumer when they are transferring ownership or borrowing against a property. Closing costs include lender, title and escrow fees and usually range from 3-6% of the purchase price. Collateral An asset or property used as security against a loan. (See Secured Credit Card) Collections When a business sells your debt for a reduced amount to an agency in order to recover the amounts owed. Credit card debts, medical bills, cell phone bills, utility charges, library fees and video store fees are often sold to collections. Collection agencies attempt to recover past-due debts by contacting the borrower via phone and mail. Collection records can remain on your credit report for 7 years from the last 180 day late payment on the original debt. Your rights are defined by the Fair Debt Collection Practices Act. Combined Loan-to-Value Ratio | The total amount you are borrowing in mortgage debts divided by the home’s fair market value. Someone with a $50,000 first mortgage and a $20,000 equity line secured against a $100,000 house would have a CLTV ratio of 70%. Commitment Fee | A fee paid by a borrower to a lender in exchange for a promise to lend money on certain terms for a specified period. Usually charged in order to extend a loan approval offer for longer than the 30-60 day standard period. Quality lenders don’t usually charge these fees. Conforming Loan | A mortgage that meets the requirements for purchase by Fannie Mae and Freddie Mac. Requirements include size of the loan, type and age. Current loan size limits for single-family homes range between $200,000 and $400,000. Loans that exceed the conforming size are considered jumbo mortgages and usually have higher interest rates. Co-Signer An additional person who signs a loan document and takes equal responsibility for the debt. A borrower may want to use a co-signer if their credit or financial situation is not good enough to qualify for a loan on their own. A co-signer is legally responsible for the loan and the shared account will appear on their credit report. Convenience Check | Checks provided by your credit card company that you can use to access your available credit. These checks often have different rates and terms than your standard credit card charges. Convertible ARM | An adjustable rate mortgage that can be converted to a fixed-rate mortgage under specified conditions. Credit Bureaus | Also known as credit reporting agencies, these companies collect information from creditors and lenders about consumer financial behavior. This data is then provided to businesses that want to evaluate how risky it would be to lend money to a potential borrower. Once a low-tech system of regional credit reporting agencies, the industry is now consolidated into the three national credit bureaus – Equifax, Experian and TransUnion. Credit Counseling | A service that helps consumers repay their debts and improve their credit. Usually non-profit companies, most of these agencies offer helpful and affordable services. Consumers should be aware that there are also credit counseling agencies that are expensive, ineffective and even damaging to the client’s credit (see Credit Repair). Consumers should carefully review the company’s reputation and services before signing up. Credit File | Another term for your credit report. The term credit file is usually used to indicate the full record of your credit history maintained by a credit bureau. Your credit report may not include all the information in your credit file. Credit History | Another term for the information on your credit report. Your credit history is a record of how you have has repaid your credit obligations in the past. Credit Insurance | Protection against loss of life, disability, unemployment, etc.. Pays or cancels your monthly payments for a time period, if consumer loses their job through not fault of their own. Polices and protection plans vary. Usually monthly fee is based on the amount of the credit card balance. Credit Limit | The total amount that a company will allow you to charge to a credit card or credit line. It’s best for your credit score to keep your credit card balances below 10% of your credit limit. Credit Obligation | An agreement where a person becomes legally responsible for paying back borrowed money.