GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

Terms Relating to Credit and Credit Ratings

annual crediting capDefinition (Banking, Credit, Investment) (Investments, Financial-banking)
The highest rate that can be credited to an equity-indexed annuity in a year.
bad creditDefinition (Banking, Credit, Mortgage) (Mortgages, Financial-banking)
Someone who carries a higher credit risk.
bad credit loanDefinition (Banking, Credit) (Financial-banking)
A loan taken out by someone with bad credit.
bankruptcy (BK)Definition (Bankruptcy, Credit) (Financial-banking)
A court action under the Federal Bankruptcy Code by which a debtor's debts may be discharged, usually by transferring assets to a trustee, or rescheduled.
Certified Credit Professional (CCP)Est. 1928, Toronto, Ontario, Canada
CCP is a credit management designation given out by the Credit Institute of Canada to its members with 5+ years of work experience who have successfully completed the CCP education courses.
  ➥  Formerly FCI (Fellow Credit Institute).
combined loan-to-value (CLTV)Definition (Banking, Loan, Mortgage Lender, Mortgage, Credit, Credit Rating, Qualification, Finance, Preapproval) (Mortgages)
The connection between the unpaid principal balances of all the mortgages on a property (first and second usually) and the property's appraised value (or sales price, if it is lower).
  ➥  A term used by mortgage lenders and mortgage underwriters.
Companies' Creditors Arrangement Act (CCAA)Est. 1985, Canada
A Canadian Act to facilitate compromises and arrangements between companies and their creditors to avoid bankruptcy, foreclosure, seizure of assets or employee job loss.
  ➥  Available to insolvent corporations owing in excess of $5 million.
Consolidated Credit Counseling Services of Canada (CCCSC)Company Est.2005, Canada
consumer creditDefinition (Banking, Credit) (Financial-banking)
Loans for personal use as opposed to business or commercial lending. These loans are typically unsecured and not backed by collateral.
Consumer Credit Association (CCA)Company, UK
creditDefinition (Banking, Credit, Mortgage, Investment) (Investments, Mortgages, Financial-banking)
Money that a lender gives to a borrower on condition of repayment over a certain period.
credit appraisal and rating tool (CART)Acronym (Credit, Appraisal)
Credit Association of Canada (CAC)Company Est.1944, Canada
Credit Association of Greater Toronto (CAGT)Company, Toronto, Ontario, Canada
credit card (CC)Definition (Banking, Credit Card, Financing, Credit, Line Of Credit) (Financial-banking)
A plastic card with a coded magnetic stripe that, when signed, entitles its bearer to a revolving line of credit, with a credit limit and interest rate determined by the borrower's income and credit report.
  ➥  A payment card that gives customers access to a revolving line of credit.
credit historyDefinition (Banking, Credit, Mortgage) (Mortgages, Financial-banking)
A record of an individual's or company's past borrowing patterns and whether or not debts were repaid on time.
credit insuranceDefinition (Credit, Insurance) (Insurance)
Insurance that covers borrowers and/or lenders if one is unable to repay debts.
credit life insuranceDefinition (Credit, Mortgage, Insurance, Life Insurance) (Mortgages, Estate-management, Insurance)
Life insurance that repays the insured's debts upon their death. The death benefit decreases as the debt is paid off.
credit limitDefinition (Banking, Credit) (Financial-banking)
The maximum amount of charges a cardholder may apply.
credit lineDefinition (Banking, Credit, Line Of Credit) (Financial-banking)
The maximum money amount available in an open-end credit arrangement such as a credit card or overdraft protection.
credit repositoryDefinition (Banking, Credit, Mortgage, Realty) (Mortgages, Real-estate, Financial-banking)
Another term for a credit bureau.
credit riskDefinition (Banking, Credit) (Financial-banking)
The risk of loss assumed under a financial contract that a borrower or a counter-party to a loan or other credit-related contract may default or fail to fulfill its obligations.
credit scoreDefinition (Banking, Credit, Mortgage) (Mortgages, Financial-banking)
Also referred to as a 'Beacon Score' is a number, between 300 and 900, that reflects a person's credit history. Lenders calculate this number using a computer system as part of the process for assigning rates and terms to the loans they grant.
credit worthinessDefinition (Banking, Credit, Mortgage) (Mortgages, Financial-banking)
How likely an individual or entity is to default on their debt.
creditorDefinition (Banking, Credit, Mortgage) (Mortgages, Financial-banking)
One who is owed money.
creditor insuranceDefinition (Banking, Credit, Mortgage, Insurance) (Mortgages, Insurance, Financial-banking)
Insurance that repays debt if the borrower cannot.
debt service ratio (DSR)Acronym (Mortgage Lenders, Debt, Loan, Stock Market, Credit, Finance, Financial Derivatives)
debt to income (DTI)Definition (Mortgage Lenders, Debt, Mortgage, Credit, Lender)
The percentage of an individual's income that is used to repay debt.
  ➥  A ratio used by mortgage lending underwriters when determining an individual's credit worthiness and their ability to service a mortgage loan.
documentary creditDefinition (Banking, Contract, Credit, Legal) (Financial-banking, Legal-contracts)
Written undertaking by a bank on behalf of an importer authorizing an exporter to draw drafts on the bank up to a specified amount under specific terms and conditions. They are used to facilitate international trade. In the United States these instruments are called commercial letters of credit.
Fair Isaac Corporation (FICO)Company Est.1956
  ➥  Introduced the FICO® Score used in credit reports.
Fonds Communautaire d'Emprunt de la Mauricie (FCEM)Est. 1999, Quebec, Canada
Providing access to financing, consulting and support to individuals and businesses with limited access to conventional financial services.
  ➥  French acronym for Mauricie Community Loan Fund
good creditDefinition (Banking, Credit, Mortgage) (Mortgages, Financial-banking)
Someone who carries little credit risk.
gross debt service (GDS)Definition (Debt, Mortgage Lender, Credit, Mortgage, Credit Rating) (Mortgages)
The total monthly mortgage (or rent) payments, property taxes, utilities and maintenance fees as a percentage of gross monthly income.
  ➥  Used by mortgage lender underwriters to determine one's ability to qualify for a mortgage loan.
home equity credit line (HECL)Acronym (Credit, Mortgage)
  ➥  More commonly known as Home Equity Line of Credit (HELOC).
home equity line of credit (HELOC)Definition (Loan, Credit, Mortgage, Home Loan) (Mortgages, Financial-banking)
An open-ended loan, paid as revolving debt, that is backed by the equity in the property.
  ➥  Also known as a Home Line of Credit.
Institut Canadien du Crédit (ICC)Company, Canada
  ➥  French acronym for Credit Institute of Canada.
interest-crediting methodsDefinition (Banking, Credit, Insurance, Investment) (Investments, Insurance, Financial-banking)
A number of methods used to establish how interest is accrued, owed and dispersed to the parties due.
joint creditDefinition (Banking, Credit, Mortgage) (Mortgages, Financial-banking)
Credit that is issued to two people based their credit reports and their combined assets and incomes. The repayment of joint credit is the responsibility of both parties.
limited income verification (LIV)Acronym (Credit, Qualification, Preapproval)
loan management account (LMA)United States
  ➥  Demand line of credit offered by Bank of America.
low to moderate income borrower (LMIB)Acronym (Credit, Qualification, Preapproval)
merged credit reportDefinition (Banking, Credit, Mortgage) (Mortgages, Financial-banking)
A summary of one's credit history from the big two credit bureaus: Equifax and Trans Union.
no credit historyDefinition (Banking, Credit, Mortgage) (Mortgages, Financial-banking)
To have no record of an individual's credit worthiness.
no income no asset (NINA)Acronym (Credit, Qualification, Preapproval)
no income verification (NIV)Acronym (Credit)
non-refundable creditDefinition (Banking, Taxes, Credit) (Taxation, Financial-banking)
Tax credits reduce your tax liability dollar-for-dollar. Non-refundable credits can get your tax bill down to zero.
Ontario Association of Credit Counselling Services (OACCS)Company, Grimsby, Ontario, Canada
opened end line (OEL)Acronym (Credit)
repossess (REPO)Acronym (Loan, Credit)
revolving creditDefinition (Banking, Credit, Mortgage) (Mortgages, Financial-banking)
A line of credit that does not have a specified repayment schedule but may require a minimum payment to cover interest and contribute to paying off principal. Typical of credit card loans, chequing account cash reserve or overdraft accounts that have pre-approved lines of credit.
secured credit cardDefinition (Banking, Credit Card, Credit) (Financial-banking)
A credit card that a cardholder secures with a savings deposit to ensure payment of the outstanding balance if the cardholder defaults on payments. It is used by people new to credit, or people trying to rebuild their poor credit ratings.
self employed (S/E)Acronym (Credit, Qualification, Preapproval, Employment)
Société du Crédit Agricole du Canada (SCA)Company, Canada
  ➥  French acronym for Farm Credit Canada.
total debt service (TDS)Definition (Debt, Mortgage Lender, Credit, Mortgage, Qualification, Lending) (Mortgages)
The ratio of a borrower's total monthly debt payments to his or her monthly gross income. Lenders use this ratio to determine how much of a loan a borrower is qualified for.
total loan to value (TLTV)Acronym (Loan, Mortgage, Credit)
verbal verification of employment (VVOE)Acronym (Credit, Qualification, Employment)
verification of deposit (VOD)Acronym (Credit, Document)
verification of employment (VOE)Definition (Credit, Qualification, Employment) (Mortgages, Financial-banking, Legal-contracts)
Confirmation that a loan applicant is telling the truth about where he or she works and how much he or she makes.
verification of loan (VOL)Acronym (Loan, Mortgage, Credit)
  ➥  A document signed by a lender or creditor verifying that a loan was approved.
verification of mortgage (VOM)Acronym (Mortgage, Credit)
verification of rent (VOR)Acronym (Rental Property, Credit, Document)
wage earner (W/E)Acronym (Credit, Qualification, Preapproval)

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