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Debt Glossary of TermsCoaching Modules: Most coaching modules are in report format. We have numerous educational reports written by the Fresh Start team to assist you in eliminating your debt and improve your financial knowledge base. The modules are designed to be educational information that can be acted upon to change your financial situation.Debt to Income Ratio: Most mortgage lenders use this ratio to analyze your financial well-being. It is figured by using your monthly debt divided by your monthly income. The lower the percentage the better your financial picture. This is often referred to as credit worthiness. Equity: An increase in the value of your home or decrease in the loan amount on your home creates equity. Equity is the difference between what is owed on your home and the sale value. Most home equity lenders will allow you to borrow up to 80% of that value. Fair Isaac and Company: Fair Isaac is the company responsible for creating the popular FICO score. This three digit score is created using information from your credit report and ranges from 300-850. Principal: This is the amount of money that is actually owed not including interest. If you purchased an item for $100 on your credit card that would be the principal balance. Secured debt: Secured debt has collateral such as a home mortgage or car loan. Term: The time required to repay a loan. Unsecured debt: Unsecured debt has no collateral. Credit card debt is an example of unsecured debt. A car loan would be an example of secured debt. |
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