Account
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An Account refers to assets, liabilities, income, expenses, and equity, as represented by individual ledger pages to which debit and credit entries are chronologically posted to record changes in value. |
Account Condition
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A snapshot of the current state of debits and credits, and whether the status is current or delinquent, open or closed. |
Account Number
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A specific series of numerical and/or alpha digits that are assigned to your specific account, to differentiate your credit history from someone else within that creditor’s infrastructure. |
Accounts in Good Standing
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Your creditworthiness is affirmed or denied by the stated status. |
Adjustment
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Any change in a numerical value that is required to be accurate. |
Algorithm
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An effective method for solving a problem expressed as a finite sequence of steps. Algorithms are used for calculation, data processing, and many other fields. As it relates to the Credit Reporting Agencies, algorithms are the means by which your credit score is calculated based upon the variables in the system. |
APR (Annual % Rate)
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Describes the interest rate for a whole year, rather than just a monthly rate, as applied on a loan, mortgage loan, credit card, etc. |
Asset
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Anything you own that has a value or use. |
Authorized User
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A person authorized by the contractually responsible party to use the account to charge goods and services on the cardholder’s account, but who is not responsible for repayment of the debt. |
Bankruptcy
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US Federal Court proceeding that may legally release a person from repaying debts owed. |
Bankruptcy Code
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Federal laws governing the conditions and procedures under which persons claiming inability to repay their debts can seek relief. |
Bankruptcy Discharged
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A court order terminating bankruptcy proceedings on old debts. |
Bankruptcy Dismissed
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A court order that denied ones bankruptcy petition making the debtor still liable for all debts. |
Budget
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A financial plan for saving and spending money. |
Capacity
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Assessed by weighing a borrower’s earning ability and the likelihood of continuing income against the amount of debt the borrower carries at the time the application for credit is made. |
Chapter 7 Bankruptcy
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Chapter of the Bankruptcy Code that provides for court administered liquidation of the assets of a financially troubled individual or business. |
Chapter 11 Bankruptcy
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Chapter of the Bankruptcy Code that is usually used for the reorganization of a financially troubled business. Used as an alternative to the liquidation under Chapter 7. The US Supreme Court has held that an individual may also use Chapter 11. |
Chapter 12 Bankruptcy
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Chapter of the Bankruptcy Code adopted to address the financial crisis of the nation’s farming community. Cases under this chapter are administered like Chapter 11 cases, but with special protections to meet the special conditions of family farm operations. |
Chapter 13 Bankruptcy
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Chapter of the Bankruptcy Code in which debtors repay debts according to a plan accepted by the debtor, the creditors and the court. Plan payments usually come from the debtor’s future income and are paid to creditors through the court system and the bankruptcy trustee. |
Charge Off
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Accounting term to indicate that the creditor does not expect to collect a balance owing on an account. Action of transferring accounts deemed uncollectible to a category such as bad debt or loss. Collectors will usually continue to solicit payments but the accounts are no longer considered part of a company’s receivable or profit picture. |
Civil Action
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Any court action against a consumer to regain money for someone else. Usually, it will be a wage assignment, child support judgment, small claims judgment or a civil judgment. |
Co-Signer
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Person who pledges in writing as part of a credit contract to repay the debt if the borrower fails to do so. The account displays on both the borrowers and co-signer’s credit reports. |
Co-Maker
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A creditworthy co-maker is sometimes required in situations where an applicant’s qualifications are marginal. A co-maker is legally responsible to repay the charges in the joint account agreement. |
Collateral
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Specific Asset pledged as a secondary and subordinate security by a borrower or guarantor. |
Collection
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Process of recovering amounts owed to a firm by its customers. |
Collection Account
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Delinquent or past-due account transferred from routine account to the collection department or a collection agency. |
Collection Agency
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Firm specializing in obtaining payment commitments from delinquent customers, recovering in part or in full amounts due, or taking court action to force the recovery. |
Consolidation Loan
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Installment loan that pays off two or more older loans with a new loan. A consolidation loan usually has a longer payback period, and an installment amount that is lower than the combined total of the installment amounts of the paid off loans. |
Consumer
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A purchaser of a good or service in retail. The end-user in the distribution chain of a good or service. |
Consumer Credit Counseling
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Organizations which help consumers find a way to repay debts through careful budgeting and management of funds. |
Credit
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An agreement based largely on trust under which goods, services, or money is exchanged against a promise to pay later. |
Credit Bureau
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Credit Reporting Agency, or “Bureau”. A firm that collects, stores, analyzes, summarizes, and sells credit related information on a person and firm for a fee. |
Credit Card
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A rectangular piece of plastic used instead of cash or checks authorizing payment for goods and services. |
Credit Consultant
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Trained and educated professionals who help consumer to understand their credit rights, help them to determine if they need to file for bankruptcy or not, help them to improve their credit reports and raise their credit scores, help to negotiate their debt, and thoroughly educate their clients on different aspects of their credit and financial status so that they know what all of their options are. |
Credit Limit
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The maximum amount of money you can charge on a particular credit account. |
Credit Risk
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The measure of a persons creditworthiness. People who are more likely to repay their debts on time are considered a better risk by lenders, and will be charged lower interest rates for borrowing money. |
Credit Scoring
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Tool used by credit grantors to provide an objective means of determining the risk in granting credit. |
Creditworthiness
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The ability of a consumer to receive favorable consideration and approval for the use of credit from an establishment to which they applied. |
Date of Status
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Date on the credit report that the creditor last reported information about the account. |
Debt-to-Credit Ratio
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Total expenditures on credit accounts, divided by the total of credit limits extended, expressed as a percentage. |
Default
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Failure to do something required by an agreement, in the performance of a duty, or under a law. Failure to meet the terms of a loan agreement. |
Delinquent
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or Delinquency. Failure to repay an obligation when due or as agreed. In consumer installment loans, missing two consecutive payments will normally make the account delinquent. In credit card payments, a delay of 15-30 days is generally allowed before declaring delinquency. |
Discharge
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Formal statement of relinquishment that releases an entity from debt, liability or obligation. |
Disclosure
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Statutory or good faith revelation of a material fact; compulsory reporting of all positive and negative information about the entity in an audit report. |
Disclosure A
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Amendment to the Truth in Lending Act that requires the disclosure of the costs involved in credit card plans that are offered by mail, telephone or applications distributed to the general public. |
Dispute
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Disagreement followed by opposition against something. In the case of the credit bureaus, the consumer’s right to correct misleading, inaccurate or unverifiable information on his credit report. |
Equifax
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One of the three largest national credit reporting agencies, headquartered in Atlanta, Georgia. |
Experian
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One of the three largest national credit reporting agencies, headquartered in Costa Mesa, California. |
Finance Charge
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An amount of money charged as a percentage applied to the balance owed to a creditor, and included with the monthly requirement repayment amount. |
Fixed Rate
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An annual percentage rate that does not change. Usually expressed in a mortgage loan. |
Grace Period
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By agreement, the time period you have to pay a bill in full to avoid interest being applied to the balance owed. |
Guarantor
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Person or firm that endorses a three-party agreement to guarantee that promises made by the first party (principal) to the second party (client or lender) will be fulfilled, and assumes liability if the principal fails to fulfill them. |
High Balance
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The highest amount that you have owed on an account to date. |
Installment Credit (loan)
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Consumer or business loan in which the principal and interest are repaid in equal installments at fixed intervals. These loans are commonly secured by the item purchased or by the personal property of the borrower. |
Involuntary Bankruptcy
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A petition filed by certain credit grantors to have a debtor judged bankruptcy. If the bankruptcy is granted, it is known as an involuntary bankruptcy. |
Judgment
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An official decision of a court given at the end of a trial. In civil cases, a judgment determines the respective rights and claims of the parties involved. A judgment may also include the reasoning forming the basis of the court’s decision. It may be cited as an authority, and treated as a precedent for other similar cases. Also called an “order”. |
Liability
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Amount for which you are legally obligated to a creditor. |
Lien
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Creditor’s conditional right of ownership (called a security interest) against a debtor’s asset or property that bars its sale or transfer without paying off the creditor. |
Line of Credit
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In open-end credit, the maximum amount a borrower can draw upon or the maximum that an account can show as outstanding. |
Mortgage Identification #
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Indicates that a loan is registered with Mortgage Electronic Registration Systems Inc. (MERS) which trans the ownership of mortgage rights. This number will follow the homeowner throughout the mortgage. |
Notice of Results
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If an investigation of your credit history results in information being updated or deleted, you may request that the corrected information in your credit history be sent to eligible credit grants and employers who reviewed your information within a specific timeframe. If your investigation does not result in a change to your credit history, results will not be sent to other lenders. |
Obsolescence
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A term used to describe how long negative information should stay in a credit file before it is consider irrelevant to the credit granting decision. |
Opt-In
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The ability of a consumer who has opted out to have their name re-added to prescreened credit and insurance offer lists, direct marketing lists and individual reference service lists. |
Opt-Out
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The ability of a consumer to notify credit reporting agencies, direct marketers, and list compilers to remove their name from all future lists. Consumer may opt-out of prescreened credit and insurance offere lists by calling 1-888-5OPTOUT. |
Permissible Purposes
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There are legally defined permissible purposes for a credit report to be issued to a third party. Permissible purposes include credit transactions, employment purposes, insurance underwriting, government financial responsibility laws, court orders, subpoenas, written instructions of the consumer, and legitimate business needs. |
Personal Statement
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You may request that a general explanation about the information on your report be added to your report. The statement remains for two years and displays to anyone who reviews your credit information. |
Public Record Data
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Included as part of the credit report, this information is limited to tax liens, lawsuits and judgments that relate to the consumer’s debt obligations. |
Repossession
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Forced or voluntary surrender of purchased merchandise to its owner or seller by its buyer, due to his or her inability to pay. Legal process by which a lender takes possession of assets or property pledged as collateral in case of borrower default. |
Revolving Account
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Charge or credit account that does not have to be paid in full before obtaining goods or services against the available credit limit. |
Security
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A financing or investment instrument issued by a company or government agency that denotes an ownership interest and provides evidence of a debt, a right to share in the earnings of the issuer, or a right in the distribution of a property. Securities include bonds, debentures, notes, options, shares and warrants, but not insurance policies, and may be traded in financial markets such as stock exchanges. |
Security Alert
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Statement that is added once a credit agency is notified that a consumer may be a victim of fraud or identity theft. It remains on file for 90 days, and requests that a creditor request proof of identification before granting credit in that person’s name. |
Service Credit
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Agreements with service providers. You receive goods such as electricity, and services such as apartment rental, with the agreement that you will pay for them each month. Your contract may require payments for a specific number of months, even if you stop the service. |
Settlement
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Agreement reached between two or more contending parties. |
Trade Line
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An account listed on a credit report. Each separate account is a different trade line. A trade line describes the consumer’s account status and activity. |
TransUnion
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One of the three largest national credit reporting agencies, headquartered in New York. |
Vacated
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Indicates a judgment that was rendered void or set aside. Also relates to defaults. |
Variable Rate
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An annual percentage rate that may change over time as the prime lending rate varies, or according to your contract with the lender. |
Victim Statement
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A statement that can be added to a consumer’s credit report to alert credit grants that a consumer’s identification has been used fraudulently to obtain credit. The statement requests the credit grantor to contact the consumer by telephone before issuing credit. It remains on file for 7 years unless the consumer requests that it be removed. |
Writ of Replevin
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Legal document issued by a court authorizing repossession of security. |
