Credit Report and Credit Score Speak

Your Guide to Fully Understanding your Credit Report and Score.

Credit report and credit score speak can be dry and vague – come on there’s no denying it. That’s why I’ve put together this handy glossary of terms to help you actually understand what you need to know to maintain a healthy credit report and a high credit score.

Adverse action notice – The notification that you’ve been denied a loan, credit card, insurance or anything else based on your credit history. On the notification you will see which credit agency was used. You have the legal right to contact them within 60 days for a free copy of your credit report – to examine it for the reason for your denial.

Authorized user – Any individual who is authorized to use a credit card, but who is not responsible for paying the balance.

Bureau – refers to a credit reporting agency.

Business credit report – is similar to a personal credit report, but this one displays the credit worth of a company instead of an individual. The 2 main business credit reporting agencies within the United States are Dunn & Bradstreet and Experian.

Charge-off – is the loss that the lender takes once they decide that the borrower will not repay the credit given.

Co-signer – Any individual who has vouched for or taken responsibility to pay back a loan or credit in the event that the borrower defaults on repayment.

Credit report disclosure – is basically the disclosure or your credit report information to you. It includes all of the information/contents of your credit report. Requesting credit report disclosure is completely confidential.

Consumer reporting agency – or credit bureau is a company that gathers and stores our individual credit histories of every U.S. citizen. They use this information to grade you based on the FICO scoring equation (See ,a href="get-a-free-credit-report.html">Get a Free Credit Report). The 3 major credit reporting agencies – Equifax, Experian and TransUnion will provide credit reports and scores when a potential lender requests it when you are seeking a loan or credit card approval.

Consumer statement – is added to your credit report if you’ve disputed a so-called inaccuracy and it isn’t resolved. This short note of disapproval on the customer’s behalf is added to their credit report.

CRA – is the abbreviated form of Consumer Reporting Agency.

Credit bureau – is also known as a credit reporting agency. There are 3 major credit bureaus within the U.S. - Experian, Equifax, and Trans Union – they are responsible for the collection of every individual’s credit history and to provide credit reports and scores to potential lenders.

Credit grantor – any lender that fronts money in the form of credit to a borrower. Credit grantors will request a copy of your credit report or score from one of the major 3 credit bureaus in order to determine your credit worthiness.

Credit report – basically your credit history. Think of your credit report as your financial report card. It indicates any existing debts and past repayment/outstanding or unpaid debts, bankruptcies, repossession and foreclosures in order to tell a potential lender if you are worthy of credit.

Credit repository – is yet another term for credit reporting agency or credit bureau. The major 3 within the U.S. - Equifax, Experian, and Trans Union – compile your credit report and score to alert potential lenders to your credit worthiness.

Credit score – a 3 digit number that evaluates your credit worthiness. Your credit score is based on all of the information in your credit report. The credit scoring model was created by the Fair Isaac Corporation (FICO) who will add or subtract points based on your credit repayment history.

Creditor – a lender of credit.

Debtor – a borrower of credit.

Debtor’s contract – or in other words your repayment terms on a loan or any form of credit.

Derogatory credit information – basically any negative information on your credit report.

ECOA – an abbreviation for the Equal Credit Opportunity Act, which ensures every citizen has the right to equal credit and is not discriminated based on gender, economic status, race, religion or sexual orientation.

End user – is any lender or financial institution that requests a credit report for potential lending reasons.

Equifax - one of the top 3 nationwide credit bureaus, with headquarters in Atlanta, Georgia.

Experian - one of the top 3 nationwide credit reporting companies, with headquarters in Nottingham, UK and Costa Mesa, California.

Fair Credit Reporting Act – or in abbreviation the FCRA, protects consumer rights involving credit reports.

FICO – abbreviated form of the Fair Isaac Corporation and the creators of the FICO score – the 3 digit number that determines a person’s credit worth.

FTC – an abbreviation for the Federal Trade Commission. The U.S. Government agency that regulates the credit bureaus for fairness.

Hard inquiry – is made by lenders who want to know when you apply for new credit within the past 2 years.

Header file – the top portion of a credit report that lists details about your name, addresses and personal identification. Your header file doesn’t include credit history.

High balance - indicates the highest amount you have ever owed to creditors.

Individual account – an account that one individual is solely responsible for repaying.

Inquiry – any instance where your credit report has been requested and viewed by a potential lender.

Identity theft – the criminal impersonation of an individual using their name, social security number (SIN) and financial history to get credit accounts.

Investigation – occurs any time an individual disputes any item on their credit report.

Joint account – a credit or savings account that two people share responsibility for.

Joint credit report – a credit report indicating the credit behavior of more than one person – for example, spouses, common law couples or legal partners (in some states).

No hit – the result of a credit report inquiry when the individual searched was searched using incorrect personal information.

Opt-out – any individual can asked to opt-out, or be removed, from pre-approved credit solicitations. To opt-out call 1-888-5-OPTOUT.

Pre-approval - credit reporting agencies provide pre-approvals to financial institutions in order for them to make offers of credit – mortgages, personal lines of credit and credit cards.

Reseller - a company that provides credit reports in order for rent approvals for apartments. These resellers request the information from Experian, Equifax, or Trans Union.

Security freeze – the temporary hold placed on your accounts if identity theft or fraud is suspected. Security freezes protect the account holder (the borrower).

Subscriber – any bank, mortgage companies, auto dealers, credit card company, insurance agency, property management firm or collection agency who may request your credit report is a subscriber.

Trade line - include any past credit borrowed from credit cards, mortgages, leases, and other loans.

TransUnion - one of the 3 nationwide credit bureaus with headquarters in Chicago, Illinois.

Universal data form – a standardized document that lenders use to manually report account information about borrowers to the credit bureaus.

Zip table – indicates which credit bureau should be used -Equifax, Experian, or Trans Union – according to zip code (location).