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Financial affairs: An explanation

If youíve experienced some financial difficulties recently, chances are that youíve been bombarded with a whole new vocabulary of case-specific jargon and monetary terms that have left you scratching your head as to their meaning. Letís have a look at some of the essentials that you need to understand to combat your debt.

The first term that you might come up against is adverse credit. Basically, this is a cover-all term used to describe applicants with a bad credit record or a poor history of credit transactions. Adverse credit is sometimes supplanted with the terms bad credit or impaired credit, but it all boils down to essentially the same thing involving late, missed or default payments, County Courts Judgements (CCJs), irregular mortgage arrears or insolvency. An adverse credit record means that the interest rates attracted on secured loans and mortgages tend to be higher.

Another concept frequently used is that of debt consolidation. Consolidating debt often features as sound debt advice, but itís also essential to understand exactly what this entails. A debt consolidation loan is the one loan that is taken to pay off other debts. You can consolidate debt to secure a lower or fixed interest rate, or just to have the piece of mind that youíre only servicing and paying off one loan. This can be achieved through a specific loan with a financial institution, or rolled over into home equity or homeowner loans. Note that the process to roll short-term debt o ver into a mortgage is usually done in refinance, and not at the time of purchase.