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Security Glossary

Asset
An item of value that is owned by a person. Though typically thought of as an item high in value, such a house or car, an asset can be of any monetary value that has worth and usefulness. However, the monetary value and usefulness value may be different and therefore certain items that may be deemed assets by the owner will not be considered as assets for the purpose of financial transactions such as loans from a bank.
Beacon Score
The name of the credit score used by Equifax, one of the three national credit bureaus. Based on the FICO credit score calculation, Equifax gives greater importance to some criteria and lesser importance to other criteria from what the other credit bureaus give. For this reason Equifax gave the credit score that they give out a separate name for identification purposes.
Buyers Agent
A real estate agent that works for the buyer rather than the seller. A regular real estate agent, even when representing the buyer, is realistically working for the seller since it is the seller that pays the commission. A buyers agent may still receive a commission from the seller, but since they are contracted with the buyer they will also receive a contract fee from the buyer.
Carfax Report
A report that is generated on a specific vehicle using the vehicle identification number (VIN). Carfax as a company receives information from more than 20,000 data sources including every U.S. and Canadian provincial motor vehicle agency plus many auto auctions, fire and police departments, collision repair facilities, fleet management and rental agencies, as well as other data sources. Having this data stored based on the VIN a report can be created that shows you any type of maintenance, repair, theft, fraud, etc. that has taken place with the car. You will be able to know if the car is in good condition, worth the sales price, is stolen, etc.
Credit Reporting Agency
A credit reporting agency (CRA) is a company that gathers and sells financial history information on where you work and live, how you pay your bills, and whether you've been sued, arrested, or filed for bankruptcy. They can be called "credit reporting agency" "reporting agency" or simply "CRA". The most common type of CRA is the credit bureau.
The information that a credit reporting agency sells about you to creditors, employers, insurers, and other businesses is called a consumer report (or a credit report).
Credit Report
If you've ever applied for a credit card, loan, insurance, or a job, there's a file about you. This file contains information on where you work and live, how you pay your bills, and whether you've been sued, arrested, or filed for bankruptcy.
Companies that gather and sell this information are called Consumer Reporting Agencies (CRAs). The information CRAs sell about you to creditors, employers, insurers, and other businesses is called a credit report.
Certificate of Deposit (CD)
A financial product of banks, thrift institutions, and credit unions. They are similar to savings accounts in that they are insured and virtually risk free. However, they have a time frame associated in which you cannot withdraw money from the account without receiving a penalty. This is an incentive to set the money in a CD account and leave it there for the whole duration of the time frame. Earned interest rates are usually higher than a traditional savings account which means that your reward for leaving the money until the CD matures (completes the fixed term) will be more interest earned than your savings account would earn off the same initial amount.
Collateral
A borrower's pledge of specific property to a lender to secure repayment of a loan. The collateral serves as protection for a lender against a borrower's risk of default (a borrower failing to pay the principal and interest under the terms of the loan). For mortgage and home equity loans the collateral will be the house. For auto loans the car will be the collateral. For other loans, the house, car, or some other type of property can secure the loan as collateral.
Compounding
In relation to interest earned on a financial loan, compounding is the concept of adding accumulated interest back to the principle amount of the loan. This results in interest being earned on the interest accumulated on the loan.
Credit Bureau
A company that provides credit information on individual borrowers. This helps lenders assess credit worthiness, the ability to pay back a loan, and can affect the interest rate applied to loans. Interest rates are not the same for everyone, but instead are based on risk-based pricing, a form of price discrimination based on the different expected costs of different borrowers, as set out in their credit rating.
Credit bureaus collect and collate personal financial data on individuals, from financial institutions with which they have a relationship. The data are aggregated and the resulting information is made available on request to contributing companies for the purposes of credit assessment and credit scoring. Given the large number of consumer borrowers, these credit scores tend to be mechanistic. In other words, the different credit bureaus collect data from a variety of sources and then apply a mathematical algorithm to assess the likelihood that an individual will repay a given debt given the frequency that other individuals in similar situations have defaulted. Given the mechanical nature of this calculation, an individual's credit score is highly dependent on the information input into the algorithm. If a credit bureau has collected inaccurate or misleading data, an individual's credit score could be adversely effected as a result. Consequently, most consumer welfare advocates advise individuals to review their credit reports at least once per year, in order to ensure that the reports are accurate.
Creditor
A creditor is one that has provided some property or service to a second party under the assumption that the second party will return an equivalent property of service. In the financial sector, a creditor is typically a person or institution that loans money to the second party with expectation that the money will be paid back.
Empirica Score
The name of the credit score used by TransUnion, one of the three national credit bureaus. Based on the FICO credit score calculation, TransUnion gives greater importance to some criteria and lesser importance to other criteria from what the other credit bureaus give. For this reason TransUnion gave the credit score that they give out a separate name for identification purposes.
Fair Isaac Score
The name of the credit score used by Experian, one of the three national credit bureaus. Based on the FICO credit score calculation, Experian gives greater importance to some criteria and lesser importance to other criteria from what the other credit bureaus give. For this reason Experian gave the credit score that they give out a separate name for identification purposes.
FICO
An acronym for Fair Isaac Corporation. Fair Isaac Corporation is the company that developed the system to calculate credit scores. Founded in 1956, the company provides consulting services and enterprise decision management systems. The FICO score that they developed is a measure of credit risk that are the most used credit scores in the world.
Identity Theft
A crime involving obtaining personal or financial information of another person for the purpose of assuming that person's name or to make transactions or purchases.
Liability
The legal obligation to pay a debt. Current liabilities are debts payable within twelve months; long-term liabilities are debts payable over a period of more than twelve months.
MSRP
An acronym for Manufacturers Suggested Retail Price. It represents a suggested selling price for the retailer, suggested by the manufacturer. This is also referred to as the list price and sticker price. However, it is not always the actual sales price of the car or other item for purchase.
NADA
An acronym for National Automobile Dealers Association. NADA represents more than 19,700 new car and truck dealers, both domestic and international. Membership is open to any new-automobile dealership holding new-automobile or truck sales and service franchise. They also provide counsel on legal and regulatory matters, represent dealers on Capitol Hill, develops research data on the automobile industry, and operates training and service programs designed to improve dealership business operations, sales and service practices.
Pharming
Pharming is similar to phishing, however pharming seeks to obtain information through domain spoofing (which is basically IP Spoofing). Upon setting up a fraudulent website, which resembles and contains copies of pages from a legitimate site, hackers change DNS entries and users are automatically redirected to a bogus site. At this site, which looks like the legitimate site the user is accustomed to, users are asked to supply private and personal information that is ultimately used in identity theft scams. Phishing attempts to scam most people one at a time, but pharming allows scammers to target large groups of users all at one time.
Phishing
Phishing is a type of deception designed to steal valuable personal data, such as credit card numbers, passwords, account data, or other information. Phishing is typically carried out using e-mail (where the communication appears to come from a trusted website) or an instant message. For example, an email is sent, pretending to be from a financial institution, in which the recipient is asked to visit a website to confirm his/her banking information; this site is a fradulent likeness of the genuine site, but when the user enters sensitive information, the fraudster captures that information for his own use—typically for identity theft.
Pre-approved
The term used to indicate that you have reported all income and debts to the lender and they have gone through the review process (which will include credit rating and report review) and approved you to receive a specific dollar amount for a loan. All that remains is to sign the loan contract and get the loan financed.(See also Pre-qualified.)
Pre-qualified
The term used to indicate that you have reported all income and debts to a lender in preparation to receive a loan. Being pre-qualified indicates that you are eligible to receive up to a certain amount of money. However, being eligible and being approved are two different things. When you are pre-qualified you still have to go through a credit check, income verification, etc. to verify that you are creditworthy for the loan. (See also Pre-approved.)
Real Estate Agent
An agent that works with home buyers to find a home that meets their needs and wants, as well as works with home sellers to get a house sold. The real estate agent is paid on commissions by the seller once the transaction is done and all contracts are sold. Typical commissions are between 3-5% of the selling price of the home.
VantageScore
The name of a credit rating product that is offered by the three major credit bureaus. The product was unveiled by the three bureaus in 2006 as an attempt to compete with the FICO score. All three bureaus use the same formula to calculate the VantageScore; however, there are still discrepancies between the resulting scores if run for each of the credit reports (just as the FICO scores). This is due to the different data that the three bureaus have on the credit reports. The VantageScore has been advertised as something that will help banks and lenders drill down into the "subprime" categories (borrowers with less than perfect credit or harder to substantiate credit).
Vehicle History Report
See Carfax Report