Glossary
A collection agency is a business that tries to collect unpaid debts for creditors. If you aren’t paying back money that you owe, the person or business you owe the money to may hire a collection agency to try to get you to pay the money back.
A consolidation loan is when you combine most or all of your debts into a single, new loan. Consolidation loans almost always have a lower monthly payment, lower interest rate, or both, than credit cards or payday loans. Banks and credit unions usually offer these loans.
A consumer proposal is a legal process to help you get out of debt. A Licensed Insolvency Trustee helps you make a plan to give to your unsecured creditors.
If a creditor accepts your plan, one or both of the following happens:
- you pay only part of what you owe them
- you have more time to pay them back
A credit reporting agency is a business that keeps a record of your credit history. It also calculates your credit score. The two main credit reporting agencies in Canada are Equifax and TransUnion.
A cooling off period is the amount of time you have to change your mind to cancel a contract without giving a reason and without penalty. Not all contracts have cooling-off periods, or the same cooling off period.
Credit is getting money, goods, or services now in exchange for your promise to pay them back later. Rent payments, phone bills, utility bills, loans, and money you borrow on a credit card or a line of credit, are common types of credit.
Credit counselling is a service for people with money problems. It helps you find the best way to reduce your debt or pay it off. You can also learn how to make a budget and keep to it, and how to improve your credit report and credit score. There are non-profit and for-profit credit counselling services.
Credit history, also known as a consumer report or consumer information, is the information a consumer reporting agency has about:
- the money you’ve borrowed from businesses, such as credit card companies or banks
- the bills that you pay regularly, like your rent or your hydro bill
For example, if you have a mortgage, the credit reporting agency will have detailed information about the money you borrowed and the bills you pay, including:
- the amount of your mortgage or line of credit
- the interest rate you pay on your borrowed money
- the repayment schedule for the borrowed money
- if you paid your bills in full and on time
A credit limit is the total amount of money you can borrow from a lender. This term is most often used for credit card limits. For example, a credit card may have a credit limit of $5,000.
Your credit rating is calculated by a consumer reporting agency. Your credit rating is based on your credit history. It tells a creditor how likely you are to pay back your debts based on how you did (or did not) pay your debts or bills in the past.