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Canadian Financial, Real Estate and Mortgage Glossary
How often this word is used
76% - Very Often
76% - Very Often
|Synonyms:||FICO score, beacon score, credit score, credit worthiness|
|Notes:||A metric to measure the credit worthiness of a debtor.|
|Filed Under:||financial-banking, mortgages|
|Tags:||credit rating, qualification|
Definition of credit rating (CR)
- credit rating (CR)
- 1. A judgement of someone's ability to repay debts, based on current and projected income and history of payment of past debts. Sometimes expressed as a number called a credit score.
Related Terms and Acronyms:
credit bureau (CB)
A company that collects and sells information about how people handle credit. It issues credit reports that list how individuals manage their debts and make payments, how much untapped credit they have available and whether they have applied for any loans. The reports are made available to individuals and to creditors who profess to have a legitimate need for the information.
➥ Company that determines one's credit worthiness.
credit card (CC)
A plastic card with a coded magnetic stripe that, when signed, entitles its bearer to a revolving line of credit, with a credit limit and interest rate determined by the borrower's income and credit report.
➥ A payment card that gives customers access to a revolving line of credit.
credit report (CR)
A report on a loan applicant's willingness and ability to make payments in a timely manner in the past. This report is provided to the bank by an outside agency.
➥ A report that outlines the credit worthiness of an individual or entity.
- Equifax (EF) A major credit bureau company in Canada along with Trans Union.
gross debt service (GDS)
The total monthly mortgage (or rent) payments, property taxes, utilities and maintenance fees as a percentage of gross monthly income.
➥ Used by mortgage lender underwriters to determine one's ability to qualify for a mortgage loan.
- pre-qualification An informal process in which a lender will offer an opinion on how much money you may be able to borrow. This opinion is based entirely on the financial information you provide and is neither binding nor necessarily accurate because lenders have not yet verified your financial information.
- qualifying ratios As calculated by lenders, the percentage of income that is spent on housing debt and combined household debt. The first qualifying ratio, called the gross debt service or GDS is up to and including a maximum of 32% of the combined gross family income. The second qualifying ratio is the Total debt service or TDS is up to and including 40% of gross income.
- resident alien A person who is a legal permanent resident, but not a citizen, of Canada.
- total debt service (TDS) The ratio of a borrower's total monthly debt payments to his or her monthly gross income. Lenders use this ratio to determine how much of a loan a borrower is qualified for.
- underwriting (UW) Assessing individuals for eligibility and issuing and distributing a financial product such as insurance, equity capital or credit.
More Related Terms and Acronyms
- approval — Definition
- bad credit loan — Definition
- bad debt — Definition
- Credit Reporting Agency (CRA) — Acronym
- credit risk — Definition
- credit score — Definition
- debt — Definition
- Experian (XP) — Company, Canada, Acronym
- joint credit — Definition
- liabilities — Definition
- low-documentation loan — Definition
- non-resident alien (NRA) — Acronym
- revolving credit — Definition
- sub-prime borrower — Definition
- TransUnion (TU) — Acronym
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