Resources
Glossary of Credit Reporting Terms
A
Adverse Action
A negative decision made by a lender, employer, or insurance company based on information in your credit report. When this happens, you are entitled to a free copy of the credit report that was used.
Authorized User
Someone who has permission to use a credit card account but is not legally responsible for paying the balance. Authorized user accounts may appear on the user's credit report.
B
Bankruptcy
A legal process for individuals or businesses unable to pay debts. Chapter 7 bankruptcy involves liquidation; Chapter 13 involves a payment plan. Bankruptcies remain on credit reports for 7 to 10 years depending on the chapter.
Bureau (Credit Bureau)
One of the three major credit reporting agencies: Equifax, Experian, and TransUnion. Each bureau independently compiles credit reports based on information submitted by lenders, collectors, and other sources.
C
Charge-Off
When an original creditor writes off a debt as uncollectible for accounting purposes, typically after 180 days of non-payment. The debt is still legally owed and may be sold to debt buyers. Charge-offs significantly damage credit scores.
Collection / Collection Account
A debt that has been turned over to a collection agency or sold to a debt buyer. Collections appear as separate negative items on credit reports.
Co-signer
Someone who agrees to be responsible for a debt if the primary borrower defaults. The co-signed debt appears on both people's credit reports.
Credit Bureau
See Bureau.
Credit Freeze (Security Freeze)
A consumer protection measure that prevents new credit accounts from being opened in your name. The freeze must be lifted (temporarily or permanently) before any new credit checks can be performed. Credit freezes are free at all three bureaus.
Credit Report
A detailed record of your credit history, including accounts, payment history, balances, and other financial information. Compiled by credit bureaus from data submitted by lenders and collectors.
Credit Score
A numerical representation of creditworthiness, calculated from information in a credit report using specific scoring models. See Scoring Models.
Credit Utilization
The amount of credit being used divided by the total credit available, expressed as a percentage. Credit utilization is a major factor in credit scores.
D
Date of First Delinquency (DoFD)
The date you first became delinquent on an account, after which the account was never brought current. The 7-year credit reporting clock starts at this date. The DoFD does not change when a debt is sold or transferred.
Debt Buyer
A company that purchases delinquent debts from original creditors at a fraction of face value, then attempts to collect the full amount. Major debt buyers include Portfolio Recovery Associates, Midland Credit Management, and LVNV Funding.
Debt Validation
The process required by FDCPA section 1692g where a debt collector must verify a debt within 30 days of a written request from the consumer. The collector must provide verification of the debt and the original creditor's name and address.
Default Judgment
A court ruling against a defendant who fails to respond to a lawsuit. Default judgments are common in debt collection cases when consumers do not appear in court.
Delinquency
A failure to make a required payment by the due date. Delinquencies are typically reported when 30 or more days late.
Derogatory Items
Negative items on a credit report. Includes late payments, charge-offs, collections, and other negative information that hurts credit scores.
Discharge (Bankruptcy)
The legal release from personal liability for certain debts in a bankruptcy case. Discharged debts cannot be collected by creditors.
Dispute
A formal challenge to information on a credit report. The credit bureau is required to investigate and either correct, remove, or verify the disputed information within 30 days under FCRA section 611.
E
Equifax
One of the three major credit bureaus.
Experian
One of the three major credit bureaus.
F
FCRA (Fair Credit Reporting Act)
The federal law that governs credit reporting. Establishes consumer rights to access credit reports, dispute inaccuracies, and have negative information removed after 7 years. See FCRA explained.
FDCPA (Fair Debt Collection Practices Act)
The federal law that regulates third-party debt collectors. Prohibits abusive practices and establishes consumer rights including debt validation. See FDCPA explained.
FICO Score
A specific type of credit score developed by Fair Isaac Corporation. The most commonly used credit score, used by approximately 90% of top lenders. See Scoring Models.
Fraud Alert
A flag placed on a credit report that requires lenders to take additional steps to verify identity before approving new credit. Lasts one year (initial fraud alert) or seven years (extended fraud alert with police report).
Furnisher
A company that "furnishes" information to credit bureaus. Includes original creditors, debt collectors, and debt buyers. Furnishers have specific obligations under FCRA.
G
Garnishment
The legal process of withholding money from wages, bank accounts, or other sources to pay a debt. Generally requires a court judgment.
Goodwill Letter
A letter to an original creditor asking as a courtesy to remove or update negative information on a credit report. Often unsuccessful but costs nothing to attempt.
H
Hard Inquiry
A credit check made when applying for new credit. Hard inquiries appear on credit reports for 2 years and can slightly lower credit scores. See also Soft Inquiry.
Holder
The current owner of a debt. May be the original creditor or a debt buyer who purchased the debt.
I
Identity Theft
The fraudulent use of another person's identifying information, often to open accounts or obtain credit. Victims have specific rights and protections under FCRA and FDCPA.
Installment Account
A loan with fixed monthly payments and a defined end date. Auto loans, mortgages, personal loans, and student loans are installment accounts.
J
Judgment
A formal court decision in a lawsuit. Civil judgments were largely removed from credit reports starting in 2017-2018.
L
Late Payment
A payment made after the due date. Late payments are typically reported when 30 or more days late and remain on credit reports for 7 years.
Lien
A legal claim against property to secure a debt. Tax liens were largely removed from credit reports in 2018.
M
Medical Collection
A collection account for unpaid medical debt. Has special rules: cannot be reported until one year unpaid, must be removed when paid, must be at least $500 to be reported.
O
Open Account
An account that must be paid in full each month, like American Express charge cards. Different from revolving accounts which allow carrying a balance.
Original Creditor
The company that originally extended credit. The original creditor of a debt that has been sold is still the original creditor, even if they no longer own the debt.
P
Pay-for-Delete (PFD)
A negotiated agreement where a debt collector agrees to remove a collection account from credit reports in exchange for payment. Not required by law and many collectors refuse.
Payment History
Record of whether payments were made on time. The most important factor in credit scores.
Public Records
Court records that may appear on credit reports. As of 2017-2018, only bankruptcies are typically reported in this section. Tax liens and civil judgments were removed.
R
Re-aging
The illegal practice of reporting a debt with a more recent Date of First Delinquency than the actual original delinquency, making the debt appear newer. Violates FCRA section 605(c).
Removal Date / Fall-Off Date
The date when a derogatory item must be removed from a credit report. Generally 7 years from the original Date of First Delinquency under FCRA section 605.
Revolving Account
A credit account with a limit, where you can borrow up to the limit, pay down the balance, and borrow again. Credit cards are revolving accounts.
S
Settlement
An agreement to resolve a debt for less than the full amount owed. May be reported as "settled for less than full balance," which is better than unpaid but worse than paid in full.
Soft Inquiry
A credit check that does not affect credit scores. Self-pulls of your own report, employer background checks (with permission), and prescreened offers are soft inquiries. Soft inquiries are visible only to you.
Statute of Limitations (SoL)
The legal time limit for filing a lawsuit on a debt. Varies by state and type of debt. After SoL expires, the debt cannot be successfully sued for if the SoL defense is asserted. See Statute of Limitations by State.
T
Time-Barred Debt
A debt that is past the statute of limitations and cannot be successfully sued for if SoL is asserted as a defense.
Tradeline
A single account or credit obligation reported on a credit report. Each credit card, loan, or collection is a tradeline.
TransUnion
One of the three major credit bureaus.
Trended Data
Credit reporting that includes credit balances and behavior over time, not just current snapshots. Used in newer scoring models like FICO 10T and VantageScore 4.0.
U
Utilization
See Credit Utilization.
V
VantageScore
A credit scoring model developed by the three credit bureaus as a joint venture. See Scoring Models.
Verification
The process by which a furnisher confirms to a credit bureau that information being reported is accurate. Required as part of the dispute investigation under FCRA section 611.
W
Wage Garnishment
The legal process of withholding wages to pay a debt. Generally requires a court judgment. Texas does not allow wage garnishment for most consumer debts.