You approached a financing company to apply for a car loan. But the person-in-charge who entertained you seemed to assume that you are finance whiz like him too. After his five-minute marathon explanation, you're already crossed-eyed and seeing stars.

Fortunately, you're one of those people who have enough sense to retreat when the next step is confusing. Besides, the financial advisor should not be talking over your head. If he did, he might have been ensnaring you to financial pitfalls.

To avoid being lost in a credit jargon labyrinth the next time you apply for a car loan, we have placed here basic terms about credit. Go over them and roll them off your tongue and try to sound as if you were using them for years.

A "credit bureau" is the agency which is tasked with the checking and compiling of credit information. This is not the agency that grants the loan, but the report from it will greatly influence the decision of the finance company to either approve or reject your car loan. If you are residing in the United States, there are three major credit bureaus that are consulted by most financial companies: Equifax, Experian, and Trans Union.

The company that approves, provides, and releases your car loan is called the "credit grantor". You should approach a reputable loan company. Otherwise, you might be the next victim of a loan shark.

Your "credit history" shows entries regarding your bill payments. It specifies how much you owe and to whom you owed it. It will also show whether you have paid the agreed amounts or not.

The "credit report" is more comprehensive than the credit history. It indicates the details of your first credit payment up to the most recent one. It will also include your current and previous addresses and your social security number.

Together with the credit report, the finance company will analyze your "debt-to-income ratio". This is computed by dividing your total monthly debt by your total monthly income. The lower is your ratio, the more credit worthy you are.

The finance company will also evaluate your "credit score". Your credit score is, in fact, based on your credit report and reflects whether you deserve to be granted another loan or not. Your credit score will be used by potential credit grantors to quickly determine whether you have the capacity to pay or you have too many debts already.

If you have an untainted credit, you are considered a "prime borrower". Your credit score could be 660 or higher. And finance companies would likely grant you a car loan. But if your credit is tarnished, you are considered a "subprime borrower". You will have lesser chances of having your car loan approved. But there are "subprime lenders" who would be willing to provide you with loans.

We hope that the above terms will be useful to you.