When you request for your credit report, there may contain terminology which to you may sound foreign. Add to this problem is the fact that the terms found on the credit report may be used by people in different ways. This glossary provides clear definitions of the common terms used in credit reports and in the discussions thereof.
A
Account Payment History—This pertains the record of monthly payments made since the creation of one’s account. The data contained on the report are used in determining the borrower’s credit risk.
Account Review—This pertains to the credit history of the borrower as the creditor reviews it.
Alternative Financial Services—This is non-traditional ways of lending funds like the microfinance. Alternative financial service is used by borrowers who are considered to have low income.
AnnualCreditReport.com—This is pertains to the web site maintained and operated by three principal consumer reporting bureaus in the United States. A consumer based in the United State can request for three credit reports for free every year by downloading the report from this web site.
Application Scoring. This objectively evaluates every credit application to determine the risk.
B
Bad debt—This pertains to the money lent to a borrower by a creditor but which has been indicated as loss. This occurs when the creditor does not have any option left to recover the money loaned to the borrower, or when the borrower has filed for bankruptcy.
Bankruptcy—This pertains to a circumstance where the borrower or a business is incapable of paying his debt to his creditor. There are laws and statutes in the United States that regulate the declaration of or the process of bankruptcy.
Borrower—This pertains to an individual who takes an amount of money with an obligation of returning such fund within a period. In general, the borrower understands that it is not only the amount of money loaned that must be returned, but some interest as well.
Business File—This pertains to a business’ credit file.
C
Collateral—This pertains to a borrower’s assets which may be offered as guarantee to a loan. An example of a collateral is the borrower’s home, which may be forfeited in favour of a creditor upon the borrower’s failure to pay the money loaned.
Comments on Accounts—This pertains to extra information given to the credit file. The one who may provide for the comment is either the creditor or a consumer.
Consumer Reporting Agency—Check the credit bureau.
Consumer Statement—This pertains to a section where a statement is added by a consumer to his or her credit file. This is done when the consumer feels that some data should be needed to further explain the statement on the credit file.
Consumer Statement—This pertains to a section where a statement is added by a consumer to his or her credit file. This is done when the consumer feels that some data should be needed to further explain the statement on the credit file.
Cost of Credit—This pertains to a sum of money that is added or charged by a creditor to a loan that should be repaid by a borrower.
Credit Algorithm—This pertains to the mathematical formula used in determining the borrower’s credit score. Its objective is to identify the likeliness that a borrower will repay the loan.
Credit Bureau—This pertains to a company undertaking the research and the data researched are given to the creditors in exchange for a sum of money.
Credit Dispute—This pertains to a circumstance where a certain consumer objects to what is written on his or her credit report and asks for an investigation.
Credit Grantor—Another term used to describe a creditor.
Credit History—This pertains to an elaborate summary a consumer’s or borrower’s transactions with creditors.
Credit Limit—This pertains to the maximal sum of money that a consumer can borrow on the trade line.
Credit Obligation—This pertains to a debt a consumer or business is legally compelled to repay.
Credit Rating—This pertains to the analysis of a prospective borrower’s history of credit. It is distinguished from the credit score, which is based on some mathematical formula. The credit rating is rather based on a credit expert’s interpretation.
Credit Reference Agency—Check out Credit Bureau
Credit Report—This pertains to a piece of document which provides a thorough analysis of a business’ or consumer’s credit history. It includes data like existing or outstanding debts and current balances.
Credit Report Monitoring—This pertains to an act of tracking down a consumer’s credit history to find out suspicious transactions.
Credit Risk—This pertains to a risk that a borrower may default on his or her loan or making delayed payments. If the consumer or borrower is deemed to be of low credit risk, he or she may not have difficulty obtaining a loan or he or she may get lower interest.
Credit Score—This pertains to the borrower’s statistical summary, which is used in determining suitability for taking a loan. The score is based on a notion that a borrower’s transaction history with credit can predict his or her future actions.
Credit Status—This pertains to a creditor’s assessment of a possible borrower’s creditworthiness.
Credit Tracking—Check out report monitoring
Credit Utilization Rate—This pertains to a percentage rate of a credit available and which a borrower is currently using. It is a factor used in determining a consumer’s credit score.
Creditor—This pertains to an entity whether an institution or an individual that provides to consumers credit or loan.
Credit Class-This pertains to a creditor type that will lend the money. An example is a credit card company.
Creditworthiness—Check out credit risk.
D
Data Mining—This pertains to a methodology of identifying the process in determining the credit score.
Debit Card—This pertains to card type where a consumer pays for his or her purchases from the funds available on his or her checking account.
Debt to Available Credit Rating—This pertains to the sum of money a borrower may already owe in comparison to the sum of credit available to him or her. If the debt to available credit rating is high, it means a borrower might be considered of a higher risk.
Default—This pertains to a situation where a borrower defaults on his or her payment of loan as it dues.
Deferred—This pertains to a situation where a loan payment is postponed.
Delinquencies—This pertains to certain circumstances where a borrower fails to tender payments to loans as they fell due. An example is when a consumer fails to pay on time the minimum amount due to a credit card.
Disclosure—This pertains to a circumstance where a borrower is permitted to take a look on his or her credit file.
E
Equifax—The Equifax is among the famous consumer reporting bureaus in the United States. And as such, it has in its possession data on more than 400 million credit owners throughout the globe.—The Equifax is among the famous consumer reporting bureaus in the United States. And as such, it has in its possession data on more than 400 million credit owners throughout the globe.
Experian—This is another consumer reporting bureau used mostly by the creditors based in the U.S.
F
Fair Credit Reporting Act (FCRA)—A law which took effect in 1970 to insure a consumer’s right to his or her credit report (but does not give the same right when it pertains to his or her credit score).
Federal Trade Commission—This is an institution in the United State that has the charge in protecting the consumers. An example is its regulation of the amount which the consumers are required to pay in order to get hold of their respective credit scores.
FICO Score—This pertains to the credit score furnished by FICO. In determining the credit score, the company uses its popular FICO algorithm.
Finance Charge—Check out cost of credit.
Foreclosure—This pertains to a proceeding where a mortgaged property is sold and have its proceeds applied to pay the loan defaulted.
G
Grantor—This pertains to an entity that offers the credit.
H
Hard Inquiry—This pertains to the credit report’s copy already requested and releasedfor a business or consumer. If, for an instance, a consumer has several hard inquiries, it indicates that such consumer has requested for several loans.
High Credit—This pertains to the maximum credit amount a consumer took from the trade line.
I
Individual Account—This pertains to a circumstance where there is only one person who has the responsibility of repaying the money loaned.
Inquiry—This pertains to the request to have a look at a credit report.
Insolvency—This is a debtor’s inability to pay back the money owed.
Instalment Credit—This is a very common type of loan, whereby, payments are tendered regularly. An example is mortgage.
J
Judgment—This refers to a tribunal which issued a ruling concerning a debtor’s financial obligations.
L
Late Payments—Check out delinquencies.
Lender—This refers to an individual or an institution that offers funds to certain borrower with an understanding that the same shall be paid back, and generally with interest.
Loan—This pertains to a sum of money borrowed with an obligation of returning the same.
Loan Balance—This pertains to the remaining sum of money that a borrower is obliged to repay.
Loan Purpose—This pertains to the cause, objective, or ground from which a borrower must provide in obtaining a loan. The purpose is a principal factor considered in identifying the possibility of being able to pay back the loan.
M
Major Delinquency—This pertains to a circumstance where a collateral is resorted to in order to obtain repayment of the entire or remaining loan.
N
No File Found—This means that a credit history does not exist for a certain consumer.
O
Obligation—This pertains to any financial debt.
P
Personal Creditor—This pertains to a consumer or person who borrows money from his or her family or friends. On this kind of loan, no interest may be charged and there exists no contract between them.
Possibility of Default—This pertains to the likeliness or possibility that a certain borrower may default in the future on his or her loan.
Potential Borrower—This refers to an individual or business that applies for credit.
Principal Balance—Thispertains to the sum of money which is part of loan and which requires payment. The amount is not inclusive of other charges and interest.
Prospective Lenders—This pertains to individuals or businesses that may consider applying for credit.
Public Record—This pertains to the data concerning the credit situation of a certain borrower obtain in accordance with a court order. It may include other past events like bankruptcies.
R
Real Creditor—This pertains to a creditor who maintains the expectation that all who shall borrow from him or her should expect to execute a contract to that effect. Examples of real creditor are finance companies and banks.
Revolving Account—This pertains to a particular credit account where a borrower enjoys the option of making a deferred payment of loan. But in so doing, an additional interest shall be charged. An example is a credit card.
Risk-based Pricing—This pertains to a circumstance where a loan interest rate shall be decided by the risk level imputed to such loan. When applied to a given situation, it may mean that if a borrower enjoys creditworthiness on a higher level, he or she may be charged with lower interest rates.
S
Scoring Model—This pertains to a statistical formula used in determining a credit score.
Soft Inquiry—This pertains to a circumstance where a consumer requests to have a look at his or her credit report.
T
Tax Lien—This pertains to the security interest charged on consumers who failed on their tax obligations. It can reflect on their credit reports when they failed to pay their taxes.
Trade Line—This is an account’s technical term. Most consumers have several trade lines.
Trans-Union—This is the third biggest consumer reporting bureau in the U.S. It offers credit reports both for consumers and businesses.
U
Unsecured Loan—This pertains to the loan that has no collateral or any form of security.