Definitions of Important Words on Your Credit Report

Definitions of common terms and phrase used throughout the your credit reports and credit scores.

A

account – 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 number  – A reference number assigned to accounts, by the creditor or collection agency, to uniquely identify a consumer as the owner of that account.

account reviews  – Inquiries made into a consumer’s credit history by creditors, with whom the consumer has a current relationship. These inquiries are not included in the business version of a consumer’s credit report.

adverse action  – 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, creditors must disclose the reasons for any adverse action.

adverse information  – Information about a consumer that a creditor or other entity considers a risk or unacceptable, such as a past due account.

B

bank card or debit card – A credit card issued through a bank.

bankruptcy  – A legal proceeding to give a person or business some relief from debts. See also Chapter 7 Bankruptcy, Chapter 11 Bankruptcy, Chapter 12 Bankruptcy, and Chapter 13 Bankruptcy.

business version (of a credit report)  – An abbreviated version of a consumer credit report. The business version of a credit report is what creditors see and does not contain promotional inquiries or account reviews.

C

Chapter 7 Bankruptcy  – 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  – 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  – The chapter of the Bankruptcy Code adopted to address financial difficulties of the nation’s farming community.

Chapter 13 Bankruptcy  – 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  – A credit card that requires full payment of the bill each month; no interest is charged. The American Express Card and Diners Club Card are examples.

consumer version (of a credit report)  – The consumer version of a credit report lists inquiries, such as promotional inquiries and account review. Only the consumer can request this version of their credit report. Creditors cannot see this version; they see only the business version of credit reports.

credit  – A consumer’s ability to make purchases, obtain services, or borrow money based on his or her promise, ability, and demonstrated willingness to repay.

credit reporting agencies – A company that gathers information about how consumers use credit, which the credit reporting agency in turn provides to potential creditors, employers and others who have a legally-recognized reason (permissible purpose) to inquire about the creditworthiness of an individual.

A company that gathers information about how consumers use credit, which the credit bureau in turn provides to potential creditors, employers and others who have a legally-recognized reason (permissible purpose) to inquire about the creditworthiness of an individual.

credit risk  – An assessment of a consumer’s likelihood of fulfilling the terms of a credit agreement.

credit score  – A mathematical calculation that reflects a consumer’s creditworthiness. The score is an assessment of how likely a consumer is to pay his or her debts.

creditor  – Person or business to whom a debt is owed.

creditworthiness  – A description of a consumer’s credit behavior and management that leads to a creditor’s decision whether or not to make an offer of credit.

D

date closed – The date when a credit agreement or account was terminated.

date opened  – The date when a credit account was established.

default  – Failure of a consumer to make loan or credit repayments as agreed in a loan or credit agreement. See manner of payment.

dispute  – To question the accuracy of information in a credit report.

F

Fair Credit Reporting Act (FCRA)  – The FCRA protects consumer’s privacy by defining permissible purposes a business or individual must have when requesting a credit report; provides consumers with the right to obtain copies of their credit reports for free if denied credit; defines obsolete information; and declares that reasonable procedures must be used to ensure accuracy.

fraud  – Intentional misuse of information of truth in order to induce another to part with something of value or to surrender a legal right.

I

Identity  – The distinguishing character or personality of a consumer. Also includes any unique information about a consumer such as a Social Security number.

identity confirmation  – The successful verification of a consumer’s identity.

inquiry  – An examination of a consumer’s credit history.

installment loan  – A credit account in which the debt is divided into amounts to be paid successively at specified intervals set by the terms of the loan.

installment loan account number  – A reference number assigned by the creditor to a specific installment loan account (for example: auto, student, furniture, jewelry).

L

Lien  – An interest that a creditor has in a consumer’s property that lasts until the satisfaction of some debt or duty.

line of credit  – Credit limit established by a creditor.

M

Manner of Payment (MOP)  – A series of codes or statements used to show the payment habits (prompt, delinquent, etc.) of a consumer.

mortgage  – A document in which the owner pledges his/her/its title to real property to a creditor as security for a loan.

mortgage account number  – An account number created by a creditor that is usually found on either the monthly statement or coupon book issued with the loan.

O

open account  – An account that is active, still in use, or is closed, but still being paid.

P

paid as agreed  – 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  – The particular circumstances under which a consumer credit report may be disclosed by a credit reporting agency in accordance with the Fair Credit Reporting Act.

promotional inquiry  – An inquiry made into a consumer’s credit report for purposes of a promotional offer.

public records  – Information that is available to the general public, including tax liens, court judgments, and bankruptcy.

R

retail card  – A credit card that is issued by a retail store.

revolving charge account  – Credit automatically available up to a predetermined limit so long as a consumer makes regular payments.

S

Score  – See credit score.

Secure Sockets Layer (SSL)  – An Internet security standard that is used to establish a secure connection on the World Wide Web.

Skimmer  – Skimmers are credit and debit card readers. When you give someone your card to pay, the card is run through an additional machine, which captures the information that appears on your credit card.

T

Tradeline  – Any credit account such as a bank loan, credit card, or mortgage.

 

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