Credit Score
A number that reflects a person's credit history used by lenders to assess risk and creditworthiness. One's credit score is affected by spending and repayment habits.

Credit Union
A nonprofit financial institution offering similar services as a commercial bank and operated as a cooperative, owned and controlled by the people who use its services. Credit unions are known for offering low interest rates on loans and high rates on savings accounts.

Creditworthiness
The risk level of a borrower, as viewed by a lender. Borrowers likely to make timely payments on debt are considered a better risk by lenders.

Debt
Money a borrower owes to a lender. A person can incur debt from many different sources, such as credit cards, department store cards and loans. Debt is typically classified into two categories: secured and unsecured. A debt is secured when the debtor's asset may be controlled by the creditor if the debtor fails to make payments. An unsecured debt does not use collateral and carries a higher interest rate than secured debt because the creditor takes on more risk.

Debt Consolidation
The process of combining multiple debts into a one large debt to lower interest charges and create a more manageable budget by dealing with only one lender. This process usually extends the repayment length to reduce monthly payments.

Debt Consolidation Loan
An advancement of money to pay off financial liabilities and transform multiple debts into one loan at a reduced interest rate and monthly payment.

Debt Management
A plan created to help a consumer pay off debts and sustain financial responsibility. Debt management programs may, but do not always, include debt negotiation, budgeting and financial counseling.

Debt Negotiation
The process that takes place between a creditor and debtor, or an agency representing the debtor, to settle on a repayment amount less than the initial balance.

Debt Relief
A solution to handle multiple debt obligations. This solution occurs with three basic types of debt relief: debt consolidation, debt settlement and credit counseling.

Debt Settlement
A debt-relief method provided by a third-party firm who acts on behalf of debtors to help resolve debts by entering into negotiations with creditors to assist the repayment of debts. Creditors agree to waive part of the debt, usually 40 to 60 percent, and accept the remaining sum as full repayment.