Glossary
The words that turn up in housing letters, benefit decisions, credit reports and charts — explained plainly, with no assumption that you have met them before.
- Allocation policyClaims
The published rules a local council uses to decide who joins its housing register and in what order applicants are considered. Every council writes its own, so the criteria that matter in one area may carry no weight in another.
- Asset allocationWealth
How a portfolio is divided between different types of investment. Allocation decisions typically explain far more of a portfolio's behaviour over time than the choice of any individual holding.
- BandingClaims
The priority group an application is placed in on a housing register, usually labelled Band A down to Band D. Bands reflect assessed housing need rather than time waiting, though time within a band often decides order.
- Companies HouseWealth
The UK registrar of companies. It handles incorporation and holds the public record of directors, registered office and annual filings. Registering takes minutes; the filing obligations that follow are ongoing.
- Credit reference agencyWealth
A company that compiles your borrowing record and sells it to lenders. The UK has three main agencies, and they do not all hold identical information, so a file can look different depending on which one a lender checks.
- Credit utilisationWealth
The proportion of your available revolving credit that you are currently using. Reported to credit reference agencies each month, usually on your statement date rather than the date you pay.
- Daily living componentClaims
The part of a Personal Independence Payment claim covering everyday activities — preparing food, washing, dressing, managing medication, communicating and managing money. Scored separately from mobility.
- DefaultWealth
A marker added when a lender considers an account to have broken its terms, usually after several missed payments. It stays on a credit file for six years from the date of default, whether or not the balance is later cleared.
- DescriptorsClaims
The numbered statements used to score a Personal Independence Payment claim. Each describes a level of difficulty with a specific activity, and each carries points. The assessment is built around these statements rather than around a diagnosis.
- DiversificationWealth
Spreading investments so that no single holding or sector determines the outcome. It reduces exposure to any one failure but does not remove market risk, and it does not prevent losses.
- DrawdownTrading
The fall from a peak in account value to the low that follows, usually quoted as a percentage. Recovery is not symmetrical: a 50% drawdown requires a 100% gain to get back to level.
- Hard searchWealth
A credit check recorded on your file and visible to other lenders, normally made when you formally apply for credit. A soft search — used for eligibility checks and for viewing your own report — is visible only to you.
- LeverageTrading
Controlling a position larger than the capital committed to it. It magnifies gains and losses equally, and it shortens the distance between an ordinary adverse move and a position being closed out.
- Limited companyWealth
A business registered as its own legal entity, separate from the people who own it. It brings limited liability and a distinct tax treatment, alongside directors' duties and public filing requirements a sole trader does not have.
- Local connectionClaims
A link to the council's area — such as living there, working there, or having close family there — that most allocation policies require before an application is accepted. The qualifying period varies by council.
- Mandatory reconsiderationClaims
A formal request for the Department for Work and Pensions to look at a decision again. It is normally the required step before an appeal can be made, and it has a time limit that runs from the date of the decision letter.
- Market structureTrading
The pattern of highs and lows a market prints over time, used to describe whether it is trending or ranging. It is a way of reading what has already happened, not a forecast of what happens next.
- Mobility componentClaims
The part of a Personal Independence Payment claim covering planning and following a journey, and moving around. Scored separately from daily living, so a claim can result in one component, both, or neither.
- Payment historyWealth
The month-by-month record of whether accounts were paid on time. It is generally the most heavily weighted part of a credit file, and it is built slowly — which is why there are no legitimate shortcuts.
- Position sizingTrading
Deciding how much to commit to a trade so that a loss at your stop costs a planned, survivable amount. It is determined before entry, and it does more to shape long-run results than the choice of entry itself.
- Risk capacityWealth
How much loss your circumstances could actually absorb, as distinct from risk tolerance — how much loss you feel able to sit through. The two often differ, and planning has to respect the lower of them.
- Risk-reward ratioTrading
The distance to your stop compared with the distance to your target. It says nothing on its own — a ratio is only meaningful alongside how often the approach actually reaches its target.
- Specialist registerClaims
The General Medical Council's list of doctors recognised as specialists in a particular field. In the UK, only a clinician on this register may initiate a prescription for an unlicensed cannabis-based medicine.
- Stop lossTrading
A predetermined level at which a position is closed to cap the loss. In fast or thin markets a stop may fill worse than the level set, so it limits risk without guaranteeing an exact outcome.
- Support and resistanceTrading
Price areas where a market has previously stopped falling or stopped rising. They mark where activity has clustered before; they are areas of interest rather than levels that hold reliably.
- Time horizonWealth
How long before you need the money back. A short horizon limits how much volatility a plan can sensibly carry, regardless of how comfortable the volatility feels.
- Unlicensed medicineClaims
A medicine without a UK marketing authorisation for the condition being treated. Most cannabis-based medicinal products fall into this category, which is why prescribing is restricted to specialists who take personal responsibility for the decision.
- VolatilityTrading
How much and how quickly a price moves. Higher volatility widens the stop a position needs, which means a smaller position for the same risk — it changes size, not just nerve.
- XAU/USDTrading
The ticker for gold priced in US dollars — XAU is the standard code for one troy ounce of gold. Its movement reflects the dollar and real yields as much as it reflects gold itself.
Ask us what a letter actually means.
If something in a decision letter, a credit report or a form does not make sense, send it over. We would rather explain it than have you guess.