Glossary

Adverse Credit, Prime, Sub-prime, Equity... confused? DOn't be! This dictionary aims to explain in clear English some of the words and phrases financial services companies use.

Adverse Credit

Adverse Credit is term referring to your credit rating, if you are described as having adverse credit you are deemed to be a less then ideal candidate to loan money to.

Annual Percentage Rate (APR)

The cost of credit that consumers pay, expressed as a simple annual percentage. These are the most effective way to compare loan offers you may receive.

Arrears

Arrears are payments you have been unable or unwilling to keep up with, arrears are usually referred to in units of months. If you are two months in arrears then you owe two months payments. Arrears are always noted down on your credit record and can affect your future ability to obtain credit such as loans or credit cards.

Bad Credit

If you have bad credit you will find it hard to obtain such products as credit cards, loans and mortgages. Similar to adverse credit.

Bankruptcy

This is usually a final resort for anyone with dire debt problems, only ever recommended if all other avenues have been exhausted. Recommended beforehand would be debt management or an IVA.

Consumer Credit Act

A consumer credit act is a requirement for all financial businesses, it outlines a course of action from the office of fair trading, save under certain conditions.

County Court Judgment (CCJ)

If you have a CCJ it means a judge has ruled against you in court, this incurs a fine of the amount you owed plus any costs fine which must be paid off legally.

Credit Card

A card indicating the holder has been granted a credit limit. The holder can then purchase goods up to the limit agreed to with the creditor.

Credit Rating

Your credit rating indicates how credit worthy you are, it can have a major bearing on whether you can obtain a loan, mortgage or credit cards. It lists all your credit activity, as in which loans you taken out, if they were paid on time, if you have any CCJs against your name or if you have gone through bankruptcy.

Creditor

A creditor is a lender of finance such as a loan, credit card or mortgage.

Credit Search

A credit reference agency will search your credit record on behalf of a lender to see if you have any CCJs or defaults. This will give the lender an accurate description of how credit worthy an applicant is which in turn will inform there decision on weather you can have a loan and if so what APR to charge.

Data Protection Act (DPA)

The Data Protection Act was brought in to protect consumers' personal information from being made available anybody wishing to buy it.

Debt consolidation

When you consolidate loans you replace a multiple of loans with a single loan, often with a lower monthly payment and a longer repayment period. It's also called a consolidation loan.

Debt Management

Debt management is a financial agreement a company organises for you with your creditors, it allows you to lower your monthly payments in accordance to government legislation.

Default

If you miss a payment to one of your creditors then you are in default. If you have a default on your credit rating it can damage your chances of getting a loan, credit card or mortgage.

Direct Debit

A direct debit is an arrangement made with your creditors and bank. It is a promise to pay a certain amount of money on a certain day or days of the month. They are an excellent way to stay on top of your finances and can help you save money through no late payments and often companies discount customers who use DD.

Equity

The equity you have in your home is the market value of set with the amount secured against it.

Fixed Rate Loan

A fixed rate loan is a loan that has its interest rate and APR fixed at the start and through the duration regardless of changes in market indexes or other interest rate fluctuations.

Flexible Rate Loan

A flexible rate loan is often easier to get as its interest can vary according to market index or other fluctuations in rates.

Guarantor

A guarantor will 'guarantee' any debt will be paid back for the primary lender, this may be because the primary lender cannot achieve the loan therefore the lender needs a guarantor for the loan.

Independent Financial Advisor (IFA)

A person qualified to give financial advice to clients on life insurance, pensions, funds, and other financial products, who is not tied to any one financial institution. They may charge their clients a fee for their advice or may receive a commission on the products which the client buys.

Interest Rates

The interest rate on a loan is the yearly price charged by a lender to a borrower in order for the borrower to obtain a loan. This is usually expressed as a percentage of the total amount loaned.

Legal Charge

The legal document held by Land Registry that records who has a claim on your property e.g. your lender.

Loan Application

A loan application is a form filled in when credit is required, it outlines the details of a borrower so the lender can judge the credit worthiness of the applicant.

Loan Consolidation

The bringing together of all loan debt into one payment, can save you time and money if done correctly.

Useful Financial Links

Please find below some links that you may find useful from JST Financial. These links are to external sites and will open in a new window.

	Consumer Direct from The Office of Fair Trading carries extensive Loans information, covering everything from Unsecured Loans to Right to Buy Mortgages.
	MoneyMadeClear (The Financial Services Authority) offers a great, free to use Loans Calculator.
	Trading Standards offer advice on taking out a loan and what your rights are.

If you know of any other links that you believe may be of use to our visitors, please contact us.