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||Mar 25, 2017
Glossary of credit repair terms and other credit items
An account represents a relationship between a company (the account owner) and consumer, where the consumer purchases a product or service in such a way that represents the transfer of money over time.
account reviews [top]
Inquiries made into a consumer's credit history by creditors, with whom the consumer has a current relationship.
adjustable rate mortgage (ARM) [top]
A mortgage where the interest rate fluctuates over the life of the loan.
adverse action [top]
An unfavorable action, such as the denial of credit, insurance or employment, taken by a creditor or other entity, affecting a consumer. Under the Fair Credit Reporting Act (FCRA), creditors must disclose the reasons for any adverse action.
annual fee [top]
The yearly fee charged by a lender to maintain an account.
annual percentage rate (APR) [top]
The cost of credit at a yearly rate. Knowing the APR allows you to effectively compare loans, even when they are structured differently.
balance transfer [top]
Moving your balance from one credit card to another to take advantage of features the new card offers.
The amount of money that you owe to a particular lender.
balloon mortgage [top]
A mortgage where the monthly payments are based on a 30-year schedule, but the entire mortgage becomes due at the end of a set term, normally five to seven years.
A credit card issued through a bank.
A legal proceeding that relieves you of the responsibility of paying your debts or provides you with protection while attempting to repay your debts.
The informal name for title 11 of the United States Code, the federal bankruptcy law.
Beacon® score [top]
Beacon® score is the name Equifax gives to its FICO® score.
Chapter 7 Bankruptcy [top]
The chapter of the Bankruptcy Code that provides for court-administered liquidation of the assets of a financially troubled individual or business.
Chapter 11 Bankruptcy [top]
The chapter of the Bankruptcy Code that is usually used for the reorganization of a financially troubled business. Used as an alternative to liquidation under Chapter 7.
Chapter 12 Bankruptcy [top]
The chapter of the Bankruptcy Code adopted to address financial difficulties of the nation's farming community.
Chapter 13 Bankruptcy [top]
The chapter of the Bankruptcy Code in which debtors repay debts according to a plan accepted by the debtor, the creditors, and the court.
charge card [top]
A credit card that requires full payment of the bill each month; no interest is charged. The American Express Card is an example.
A loan or credit card debt written off as uncollectible from the borrower. The debt, however, remains valid and subject to collection.
closed by grantor [top]
A credit account that has been closed at the grantor's request wherein a creditor cancels your charge privileges.
When a borrower falls behind, the lender contacts them in an effort to bring the loan current. The loan goes to "collection." As part of the collection effort, the lender must mail and record certain documents in case they are eventually required to foreclose on the property.
community property [top]
Applicable in certain U.S. states, property and obligations acquired by a husband or wife or both, during a marriage, is consequently owned by, and the responsibility of, both.
Consumer Leasing Act (CLA) [view] [top]
The purpose of this title is to assure a meaningful disclosure of the terms of leases of personal property so as to enable the lessee to compare more readily the various lease terms with credit terms where appropriate, and to assure meaningful and accurate disclosures of lease terms in advertisements.
Consumer Credit Protection Act (CCPA) [view] [top]
A landmark legislation which requires creditors to state the cost of borrowing in a common language so that consumers can readily understand exactly what the charges will be, compare costs, and shop around for more favorable terms.
consumer reporting agency (CRA) [top]
An agency that is a clearinghouse for information on the credit payment history of individuals or firms. See Credit Bureaus FAQ for more information.
A trust or promise to buy now and pay later under designated terms for goods or services.
credit bureau [top]
See consumer reporting agency.
credit card [top]
A card that allows a consumer to pay a portion or all of the outstanding amount each month and has a credit limit. Visa, MasterCard, and Discover are examples.
credit check [top]
An inquiry to confirm a consumer's credit payment history.
credit fraud [top]
A case when someone has stolen a consumer's identity by fraudulently using that consumer's social security number or other personal information to acquire credit in his or her name.
credit counseling services [top]
Organizations that help consumers find a way to repay debts through careful budgeting and fund management. Credit counseling services are usually non-profit organizations funded by lenders. By requesting a longer pay-off period from lenders one-by-one, a credit counseling service can often design a workable repayment plan on behalf of the consumer.
credit dispute [top]
To request an investigation of the accuracy of information on a credit report.
credit file [top]
The collection of information each of the credit reporting agencies maintains in their databases.
credit history [top]
The record of a consumer's credit accounts and manner of payment (MOP). Credit history includes high credit, current balance, credit limit, and 24 months of MOP history.
credit limit [top]
The maximum amount you are allowed to borrow from a lender under the terms of your agreement for an account.
credit monitoring service [top]
Services that monitor activity in your credit file and alert you to key changes in your file. You can then investigate the change to make sure it is not the result of identity theft or fraud.
credit repair [top]
Credit repair is a general term used to describe the practice of improving or rehabilitating one's financial reputation (creditworthiness) with creditors.
Credit Repair Organizations Act (CROA) [view] [top]
A federal law that provides consumer protections from fraudulent or disreputable credit repair services as part of the Consumer Credit Protection Act.
credit report [top]
A record of the information in your credit file that is used by a prospective lender, employer, or others to help evaluate you when you apply for a loan, job or in certain other circumstances. The report chronicles the credit payment history of a prospective borrower. See Credit Reports FAQ.
credit reporting agency (CRA) [top]
See consumer reporting agency.
credit report repair [top]
Credit report repair refers to a method of credit improvement whereby questionable negative items on a credit report are disputed with the three major credit bureaus in an attempt to remove these items from a consumer's credit report.
credit risk [top]
An assessment of a consumer's likelihood of fulfilling the terms of a credit agreement.
credit score [top]
A credit score is a numerical index which represents an estimate of an individual's financial creditworthiness. It is based on a subset of the information in an individual's credit report. Lenders, such as banks and credit card companies, use credit scores to determine credit limits and interest rates. See Credit Scores FAQ for more information.
Person or business to whom a debt is owed.
An assessment of a consumer's past credit behavior that allows a potential lender to decide whether or not to extend credit. Credit reporting agencies are private, for-profit companies that collect and sell information about a person's credit history. Typical clients include banks, mortgage lenders and credit card companies that use the information to screen applicants for loans and credit cards. There are three major credit bureaus, Equifax, Experian and TransUnion, and they are regulated by the federal Fair Credit Reporting Act (FCRA).
date closed [top]
The date when a credit agreement or account was terminated.
date opened [top]
The date when a credit agreement or account was established.
debit card [top]
A card that allows purchase amounts to be deducted directly from a consumer's personal checking account.
debt consolidation [top]
Debt consolidation entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.
debt management [top]
A process to reduce or eliminate outstanding debt by managing assets and dealing with creditors.
debt settlement [top]
A process to reduce or pay off old debt by negotiating a lower amount due with the creditor.
debt-to-income ratio [top]
Your income compared to the debt you owe.
The portion of a loss that the insured party must pay before the insurer payment coverage begins.
Failure to fulfill an agreed-upon financial obligation, such as making a loan payment.
Past-due payment on a loan.
discretionary income [top]
The money you have left over when all expenses and other financial obligations are paid.
disposable income [top]
Money left over after taxes are deducted.
See credit dispute.
Electronic Fund Transfer Act (EFTA) [view] [top]
A federal law which, in conjunction with Fair Credit Billing Act (FCBA), establishes procedures for resolving mistakes on credit billing and electronic fund transfer account statements.
Emperica® score [top]
Empirica® score is the name TransUnion gives to its FICO® score.
Equal Credit Opportunity Act (ECOA) [view] [top]
A federal law that requires creditors and other lenders to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.
One of three major consumer reporting agencies in the United States. The others are Experian and TransUnion.
One of three major consumer reporting agencies in the United States. The others are Equifax and TransUnion.
Fair and Accurate Credit Transactions Act (FACTA) [view] [top]
A federal law that amended the federal Fair Credit Reporting Act in many areas. The law provided, among other things, additional protections for consumers in connection with the prevention and remediation of identity theft and the accuracy of credit reports. It includes your right to a free copy of your credit report form each of the three major credit reporting agencies every 12 months, which must be requested through the centralized source established under the FACT Act.
Fair Credit Billing Act (FCBA) [view] [top]
This Act, amending the Truth in Lending Act, requires prompt written acknowledgment of consumer billing complaints and investigation of billing errors by creditors. The amendment prohibits creditors from taking actions that adversely affect the consumer's credit standing until an investigation is completed, and affords other protection during disputes. The amendment also requires that creditors promptly post payments to the consumer's account, and either refund overpayments or credit them to the consumer's account.
Fair Credit Reporting Act (FCRA) [view] [top]
The Act protects information collected by consumer reporting agencies such as credit bureaus, medical information companies and tenant screening services. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act. Companies that provide information to consumer reporting agencies also have specific legal obligations, including the duty to investigate disputed information. Also, users of the information for credit, insurance, or employment purposes must notify the consumer when an adverse action is taken on the basis of such reports. Further, users must identify the company that provided the report, so that the accuracy and completeness of the report may be verified or contested by the consumer.
Fair Debt Collection Practices Act (FDCPA) [view] [top]
Under this Act (Title VIII of the Consumer Credit Protection Act), third-party debt collectors are prohibited from employing deceptive or abusive conduct in the collection of consumer debts incurred for personal, family, or household purposes. Such collectors may not, for example, contact debtors at odd hours, subject them to repeated telephone calls, threaten legal action that is not actually contemplated, or reveal to other persons the existence of debts.
Developer of the the FICO® score, the worldwide standard for measuring a consumer's creditworthiness and credit risk.
Federal Trade Commission (FTC) [top]
A federal agency whose duty is to investigate unfair methods of competition in business, fraudulent advertising, etc., and to restrain or prosecute those charged with such practices. The Commission's primary purpose is to protect consumers.
A FICO® score is a credit score produced from models developed by Fair Isaac Corporation. The score is used to measure a consumer's creditworthiness and risk, and is in use worldwide. FICO® scores range from 300 - 850 and are available through all of the major consumer reporting agencies in the United States: Equifax, Experian, and TransUnion. (FICO® is a registered trademark of Fair Isaac Corporation).
finance charges [top]
The amount you are charged to use credit.
fixed-rate mortgage [top]
A mortgage where the interest rate of the loan remains the same over the life of the loan.
The legal procedure for satisfying claims against a mortgage borrower that is in default whereby the sale of real estate is forced in order to pay off a loan on which the owner of the property has defaulted. For example, a person who owes money to a creditor may have his or her wages garnished if he/she loses a lawsuit filed by the creditor. Up to 25% of a person's wages can be deducted.
A legal process whereby a lender who has obtained a judgment on a debt can receive full or partial payment by seizure of a portion of the debtor's assets (wages, bank account, etc.).
grace period [top]
The number of days between a statement due date and the payment due date during which you do not incur finance charges.
gross monthly income [top]
What you earn before taxes are deducted.
Home Ownership and Equity Protection Act [view] [top]
This law addresses certain deceptive and unfair practices in home equity lending. It amends the Truth in Lending Act (TILA) and establishes requirements for certain loans with high rates and/or high fees.
identity confirmation [top]
The successful verification of a consumer's identity.
identity theft / identity fraud [top]
A crime that involves using another's name, Social Security Number or other personal information to acquire credit, make purchases or commit a crime in that name.
Identity Theft and Assumption Deterrence Act [view] [top]
This law makes identity theft a Federal crime with penalties up to 15 years imprisonment and a maximum fine of $250,000. It establishes that the person whose identity was stolen is a true victim, and allows them to seek restitution in the event of conviction. It also establishes the Federal Trade Commission (FTC) as a central agency to act as a clearinghouse for complaints, referrals, and resources for assistance for victims of identity theft.
An examination of a consumer's credit history. When your credit report is made available to another party, such as a lender, landlord or insurer.
installment loan [top]
A credit account in which the amount of the payment and the number of payments are predetermined or fixed.
The cost of borrowing or lending money, usually a percentage of the amount borrowed or loaned.
interest rate [top]
The amount charged by a lender for borrowing money.
A final court ruling resolving the key questions in a lawsuit and determining the rights and obligations of the opposing parties.
A fee attached to a delinquent account.
late payment [top]
A delinquent payment; a failure to deliver a loan or debt payment on or before the time agreed. Late payments are reported to the credit bureaus by creditors, and appear as negative items on your credit reports.
A legal claim upon real estate or personal property for the satisfaction of a debt. Liens you agree to are called security interests, and include mortgages, home equity loans, car loans and personal loans for which you pledge property to guarantee repayment. Liens created without your consent are called nonconsensual liens, and include judgment liens (liens filed by a creditor who has sued you and obtained a judgment), tax liens and mechanics liens (liens filed by a contractor who worked on your house but wasn't paid).
line of credit [top]
Credit limit established by a creditor
The use of property as security for a promise to pay a debt to a lender.
open account [top]
An account that is active or still being paid.
paid as agreed [top]
A designation on the credit report that indicates the consumer is repaying the credit account according to the terms of the credit agreement.
permissible purpose [top]
As defined in 604 of the Fair Credit Reporting Act (FCRA), only specific reasons for requesting a credit report are deemed "permissible." Requests not meeting this criteria must be denied.
The outstanding balance of a loan, exclusive of interest and other charges.
Fees paid to a lender for a loan. They are often linked to the interest rate and are generally used to lower the interest rate of the loan.
When a mortgage lender reviews your credit and commits to a specific loan amount.
When a mortgage lender reviews your credit history, income, assets and liabilities in order to determine an appropriate loan amount.
promotional inquiry [top]
An inquiry made into a consumer's credit report for purposes of a promotional offer.
public record [top]
Information obtained from court records about such things as state or federal tax liens, bankruptcy filings and judgments against you in civil actions. Public records are open to any person who requests them.
The act of a lender, due to non-payment, regaining possession of property sold to you that has been pledged as collateral for a loan.
revolving balance [top]
The total balance of all revolving credit accounts.
revolving charge account [top]
Credit automatically available up to a predetermined limit so long as a consumer makes regular payments.
revolving credit [top]
An account that requires at least a specified minimum payment each month plus a service charge on the balance, which can fluctuate up to the credit limit. As the balance declines, the amount of the service charge, or interest, also declines.
See credit score.
secured credit card [top]
A credit card secured by a savings account.
A charge upon real or personal property for the satisfaction of debts related to taxes.
The amount of time in which a loan must be repaid in full.
Truth in Lending Act (TILA) [view] [top]
This Act (Title I of the Consumer Credit Protection Act (CCPA)) vests the Commission with responsibility for assuring compliance by non-depository entities with a variety of statutory provisions. Specifically, the Act requires all creditors who deal with consumers to make certain written disclosures concerning all finance charges and related aspects of credit transactions (including disclosing finance charges expressed as an annual percentage rate). Furthmore, it establishes a three-day right of rescission in certain transactions involving the establishment of a security interest in the consumer's residence (with certain exclusions, such as interests taken in connection with the purchase or initial construction of a dwelling). The Act also establishes certain requirements for advertisers of credit terms.
One of three major consumer reporting agencies in the United States. The others are Equifax and Experian.
variable rate [top]
A variable rate is an interest rate that may fluctuate over the life of a loan, typically in response to changes in the interest rate marketplace.
First announced in March 2006, VantageScore® is the latest addition in consumer credit scoring models. Its methodologies and algorithms were cooperatively developed by the three major consumer reporting agencies: Equifax, Experian, and TransUnion. While the formula for calculating this particular score is different, a VantageScore® effectively serves the same purpose as a FICO® score: to measure consumer creditworthiness. VantageScores® range from 501 - 900.
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