505 Financial Solutions Resources

Glossary

401(k) are plans offered by companies and help you save for retirement. The money you set aside is tax deferred, and it’s frequently matched in part, meaning your company will dedicate their money to your account as well. 

This terms stands for annual percentage rate, and it refers to how much interest you’re paying on the money you borrow. It’s especially important to pay attention to when signing up for a credit card– the higher your APR, the more money you’ll ultimately pay if you don’t pay off your balance in full each month.

Your assets are items of value. Things like your car or major savings funds are good examples– and they’re used to calculate your net worth.

How much money you have, or owe, in an account.

This scary term means that you owe more money than you can afford to pay, and it generally occurs through the combination of mortgages, credit card debt, student loans, car payments and more. In short, it happens when you borrow too much. Declaring bankruptcy can solve hopeless financial situations, but it should be used as a last resort. When you file for it, it stays on your record for 10 years– and all of your assets are seized.

Limits you place on spending on types of items or categories (see below) so that you reach your financial goals

A written contract defining the terms applicable to a credit card account, which usually includes the interest rate charged, annual fees, transaction fees, and the method of calculating interest.

The bank or financial institution that gives you a credit card.

A numerical value used to forecast how likely you are to pay back your debt.

A system creditors use to help determine whether to give you credit, and how much to charge you for it.

A consumer’s financial report card.

Comes from calculating your credit history against a systems called Fico or vantage Score 3.0 .

Debt consolidation is a useful strategy when you’ve accumulated debt from multiple, high-interest sources (such as credit cards). It allows you to make one (usually lower interest) payment each month, reducing the amount of money you spend repaying your debts overall.

Fair Isaac & Co scores range from 300 to 850 vantage Score

Lending institutions charge a nominal fee for carrying or servicing a loan or account.

A savings account opened at a credit union. The shares represent the ownership interest in the credit union.

A high-risk loan based on the consumer’s promise to pay without collateral or savings as a guarantee for repayment.

These laws set the maximum interest rates that lending institutions may charge for their consumers.

An interest rate that fluctuates up or down on a schedule based on an economic index, such as the prime rate

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