Credit Glossary

When you get you credit report, you find that there are numerous terms used that you are not familiar with. As a result, your understanding of the report varies from what it actually means.

Credit language is different from everyday language and with a few definitions you can master it. The explanations of terms that you will commonly find in your credit report are given below in alphabetical order.

1. Accounts In Good Standing – This means that your finances are in good order and should appear in your credit report as positive items.
2. Beacon Score – Each credit bureau has a different name for its credit score. Like, Experian uses the term - FICO score. For TransUnion, it is Empirica. And for credit score by Experian, it is the Beacon score.
3. Capacity – This is one of the factors that is used to determine your creditworthiness. Your income and job stability is taken into account when you apply for a loan. It is then used to determine your debt repayment capacity of current loan and the loan for which you have applied.
4. Collection Account - When an outstanding payment has been sent to the collection department, it is termed as a collection account. Debts that are long outstanding are sent to this account and affect scores negatively.
5. Consolidation Loan – When many debts are brought together and consolidated into a single loan amount for easy and quick monthly repayment, it is known as consolidation loan.
6. Credit – It is your promise to repay loan taken now. The repayment is done in the future.
7. Credit Counseling Services – These are services that are provided by non-profit organizations or other companies to help debt ridden consumers manage their debt and budgeting.
8. Creditworthiness – It is the measure of your ability to repay your loans as assessed by a lender after viewing your credit report.
9. Credit History – It is a record of repayment of all debts borrowed by you.
10. Credit Report – It is the file where a record of all your financial transactions is kept.
11. Credit Bureaus – These are the three companies, Experian, Equifax and Trans Union that collect and compile financial information about you and sell it further to lenders and employers et al.
12. Credit Scoring – This is a method or system that assigns a numerical value to your credit report after taking all factors into consideration.
13. Status Date – It is the date on which the creditor’s last report any information.
14. Default – You default when you fail to repay the promised amount.
15. Delinquent – Unpaid accounts exceeding 90 or 120 days are known as delinquent accounts.
16. Disclosure – The procedure to provide you with credit history is known as disclosure.
17. Dispute – It is challenging incorrect or erroneous information that appears in your credit report.
18. End-User – An end-user is a business or person receiving your credit report enabling them to assess your creditworthiness and take decision accordingly.
19. Equal Credit Opportunity Act – This Act forbids any kind of discrimination on the basis of race, gender, religion et al against consumers applying for credit.
20. Fair Credit Reporting Act – This Act governs the credit bureaus.
21. Fair Debt Collection Practices Act – This act forbids wrongful means of debt collection.
22. Garnishment – This is a process by which a lender can collect the debt owed to him by seizing a part of the borrower’s wages or bank account et al after obtaining judgment.
23. Investigation – It is the process that the credit bureau employs to verify all disputes initiated by consumers.
24. Judgment – It is a legal decision and is recorded publicly. It appears on your credit report when the judgment pertains to debts or finances.
25. Liability – It is the debt that you are legally bound to repay.
26. Lien – When a creditor attaches a public notice to your property, so that you cannot sell it without repaying your debt to him, it is known as lien.
27. Result Notice – This is the result of investigation that leads to updating or deletion of any information from your credit report. The consumer can request the notice to be sent to all those employers or creditors who viewed the report during this time.
28. Obsolescence – It is the time limit during which negative items stay in credit report as laid down under FCRA.
29. Opt In – When you agree to have your name included for prescreened insurance, credit, marketing lists et al, you opt in. The Credit bureaus add your name to these list and you can get it removed anytime.
30. Opt out – When you wish to get your name removed from the above-mentioned list, the CRA informs the marketing services et al your opting out.
31. Payment Status – This is a history of your credit account that shows all your payments including bankruptcies, delinquencies, collection accounts and any other negative items during the past 7 years.
32. Permissible purposes – These are the exceptional reasons under which you can request for check of credit rating. The reasons include employment, insurance underwriting, subpoenas and court orders et al.
33. Personal Information – The part of credit report that includes your name, Date of birth, past and current address, employment history and Social Security Number is called as Personal Information.
34. Public Record – This is court record available to the public and it includes bankruptcies, liens and judgments.
35. Reschedule – Revising your timetable for repayment of loans, extending the duration of the loan is called as rescheduling.
36. Risk scoring Model – This is a model that determines your creditworthiness in numerical form.
37. Source – The originating company or business that supplies information appearing in credit report is known as the Source.
38. Third-party Collector –The person from a collection agency who collects long overdue debts on behalf of the original creditor is called a third party collector.
39. Tradeline – When a credit-grantor enters a line in your credit history, describing the status of your account and other details pertaining to it, it is known as Tradeline.
40. Verification – The process of checking information and data disputed by a consumer is known as verification. It involves checking of original documents that are submitted.
41. Victim Statement – When you feel that your identity has been compromised, you can add a statement to your credit report alerting creditors about it. This statement remains in the report for a period of 7 years or until the consumer requests for its removal.
42. Wage Assignment – When a borrower signs an agreement with a creditor allowing him to collect part of his wages to repay debt in case he defaults is known as Wage assignment.