Credit Score Terms

Annual Credit Score

Your credit history is really in a constant state of change if you do anything with regards to credit, like use a charge card, make a car payment or mortgage payment, etc. You are entitled to a free annual credit report from the three credit reporting agencies. This report, however, will not provide you with your credit scores. It can be used to review what is in your credit file at the point in time that you obtain your credit report.

Bankruptcy

This is a proceeding in United States Bankruptcy Court which may legally release a person from repaying debts owed or set up a payment plan to Bankruptcy Court for repayment of creditors involved in the Bankruptcy. A bankruptcy normally shows on ones credit report for up to 10 years.

The process of transferring accounts that are considered uncollectible to a category such as bad loss or debt. Even though these accounts are no longer considered a part of a company's profit picture or receivables collectors will usually continue to solicit payments.

Civil Action

This is any court action against a consumer in order to regain money for someone else. Usually this is for collection of things like child support, small claims judgment, wage assignment, judgment or a civil judgment.

Closed Date

The date that a credit account was closed.

Co-maker

A co-maker is someone who is creditworthy that can co-sign for a loan when an applicant's qualifications are marginal. The co-maker is also legally responsible to repay the debt in this joint account agreement.

Credit Items

Information reported by current or past creditors about an item of credit with that credior. This will include information like original loan amount, payment history, date of loan, etc.

Credit Worthiness

When one applies for new credit the prospective new creditor wants to know if you are credit worthy. Which means are you a credit risk or are you likely to repay the new loan that they are about to grant to you. They determine your creditworthiness by reviewing your credit history and your credit scores.

Date Opened

A field on the credit report that indicates the date an account was opened.

Delinquent

When a payment on ones credit account is received by the creditor after the agreed upon due date then the payment is considered delinquent. If the payment is not received within 30 days after the due date then the payment is considered 30 days past due. Other classifications are 60, 90 and 120 days past due.

Discharge

This is an action granted by the courts which will release a debtor from most of his or her debts that were included in a bankruptcy. Debts such as alimony, child support and certain student loans cannot be discharged.

Dispute

When a consumer believes that a line item on their credit report is inaccurate or incomplete they may dispute the item. The credit reporting agency that receives the dispute letter will investigate and correct or remove any incorrect information. This process usually take 30 to 60 days to complete.

ECOA (Equal Credit Opportunity)

This is a federal law which prohibits creditors form discriminating against any credit applicants on the basis of marital status, sex, color, race, age, religion and/or the receipt of public assistance.

Finance Charge

The amount of interest due/paid on a debt. Finance charges are usually included and collected with each monthly payment.

Fixed Rate

An annual percentage rate for a consumer's debt that does not change during the life of the loan.

Grace Period

This is a period of time that a debtor has to pay a bill in full and avoid interest charges.

Inquiry

When someone with "permissible purpose" retrieves a consumer's credit report then an item is added to that consumer's credit history showing that inquiry. This may be as a result of the consumer applying for new credit with someone or it may be something like a credit card company trying to verify if they want to extend an offer of a new credit card to the consumer.

Lein

A lein is a legal document used to create a security interest in another's property. A lein is often given as a security for the payment of an unpaid debt. Leins are usually placed against a person's property, such as their home or business, for the unpaid debt for which the lein was granted. If this property is later sold the lein will have to be paid before clear title can be acquired for the property.

Original Amount

This is the original amount borrowed during a loan. Later amounts shown as the balance due may include interest, late fees, etc.

Payment Status

This term is a reflection of the previous payment history of the account. A payment status will take into consideration ontime payments, delinquencies (delinquent 30 days, 60 days, 90 days), any redemptions or repossessions and charge offs of the consumer debt.

Repossession

When a creditor takes possession of property pledged as collateral on a loan contract on which the borrower has fallen significantly behind in their payments this is termed a repossession.

Request for Credit History Report

This is what a credit grantor, direct marketer or potential employer will do to obtain a copy of a consumer's credit report. When this request is fullfilled an inquiry will show on the credit report.

Secured Credit

This is a loan for which some type of acceptable collateral has been pledged. This is usually something like a house or automobile. It you are obtaining a bank line of credit it could be a CD or some other form of cash asset.