Credit Repair Glossary

• Bad Credit

  A term used to describe a poor credit rating. Common practices that can damage a credit rating include making late payments, skipping payments, exceeding card limits or declaring bankruptcy. “Bad Credit” can result in being denied credit.

• Balance

  The total amount of money owed. It includes any unpaid balance from the previous month, new purchases, cash advances, and any charges such as an annual fee, late fee or interest. The balance should not be confused with the monthly payment (the minimum payment allowed each month), which is generally 2% - 5% for revolving credit cards.

• Bankruptcy

  Bankruptcy is a legal declaration of the inability to repay debts. Bankruptcy should be viewed as a last resort. It will have a severe impact on a credit rating and will remain on a credit report for ten years. Furthermore, bankruptcy is not a solution in all cases. Federal student loans, Federal tax debt and child support are all exempt from bankruptcy protection. Bankruptcy agreements vary but there are two types of agreements that most people choose: Chapter 7 and Chapter 13.

• Bankruptcy

  A bankruptcy is an official action and legal declaration that an individual, family or entity (such as a business) is no longer able to pay their debts.  A party seeking bankruptcy protection is asking for legal protection from their creditors.  There are different types of bankruptcy protection agreements, the most common of which are called Chapter 7 and Chapter 13. Congress recently passed bankruptcy reform legislation that greatly favors creditors, making it more difficult for creditors to obtain bankruptcy protection.  Bankruptcy is very damaging to your credit; however, in some situations it may be the right option.