Important Terms to Know

Charge-off – The balance on a credit obligation that a lender no longer expects to be repaid and writes off as a bad debt.

Consumer Credit File – A credit bureau record on a given individual. It may include: consumer name, address, Social Security number, credit history, inquiries, collection records, and public records such as bankruptcy filings and tax liens.

Consumer Disclosure – When your credit report is given directly to you, it is called a consumer disclosure because it discloses the contents of your credit file to you, the consumer. When you ask to see your credit report, it is recorded as a soft inquiry. Soft credit report inquiries are recorded on your credit report, but they don’t affect your credit score.

Credit Bureau – A credit reporting agency that is a clearinghouse for information on the credit rating of individuals or firms. Is often called a “credit repository” or a “consumer reporting agency”. The three largest credit bureaus in the U.S. are Equifax, Experian and TransUnion.

Credit Bureau Risk Score – A type of credit score based solely on data stored at the major credit bureaus. It offers a snapshot of a consumer’s credit risk at a particular point in time, and rates the likelihood that the consumer will repay debts as agreed.

Credit History – A record of how a consumer has repaid credit obligations in the past. Credit obligation An agreement by which a person is legally bound to pay back borrowed money or used credit.

Credit Report – Information communicated by a credit reporting agency that bears on a consumer’s credit standing. Most credit reports include: consumer name, address, credit history, inquiries, collection records, and any public records such as bankruptcy filings and tax liens.

Credit Risk – The likelihood that an individual will pay his or her credit obligations as agreed. Borrowers who are more likely to pay as agreed pose less risk to creditors and lenders.

Default – A failure to make a loan or debt payment when due. Usually an account is considered to be “in default” after being delinquent for several consecutive 30-day billing cycles.

Delinquent – A failure to deliver even the minimum payment on a loan or debt payment on or before the time agreed. Accounts are often referred to as 30, 60, 90 or 120 days delinquent because most lenders have monthly payment cycles.

Dispute – When a consumer believes something on his or her credit report is incomplete or inaccurate, he or she may perform a credit report dispute. Credit report agencies are required under the Fair Credit Reporting Act (FCRA) to investigate and correct or remove any inaccurate information that cannot be verified.

Fair Credit Reporting Act (FCRA) – Federal legislation that promotes the accuracy, confidentiality and proper use of information in the files of every “consumer reporting agency”.

Inquiry – An item on a consumer’s credit report that shows that someone with a “permissible purpose” (under FCRA rules) has previously requested a copy of the consumer’s report. Fair Isaac credit bureau risk scores take into account only inquiries resulting from a consumer’s application for credit.

Subscriber – Customers of a credit report agency who regularly credit checks and credit reports. These include mortgage companies, banks, credit card companies, auto dealers, collection agencies, and apartment managers.

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