Information provided is considered reliable, but cannot be guaranteed. Professional assistance should be sought before taking action in specific situations.
A Glossary of Credit Report Terms
· Account in Good Standing
An account in good standing has a positive status and should reflect
favorably on your creditworthiness.
· Beacon Score
Your Beacon Score is the credit score that creditors look at when
determining if you are credit-worthy. It’s determined by negative entries
for late payments, and positive entries for payments on time. Note that
every time you apply for credit, it becomes a negative entry.
· Capacity
Capacity is a factor in determining creditworthiness. It’s determined by
weighing your earning ability and the likelihood of continuing income
against the amount of debt you carry at the time of the credit application.
Capacity may be considered in a credit decision, but the credit report
doesn’t contain information about earning ability or the likelihood of
continuing income.
· Collection Account
A collection account refers to the status of an account owed to a creditor
when it’s been transferred from a routine debt to a Collection Department
of the creditor’s firm or to a separate professional debt collecting firm.
· Consolidation Loan
A consolidation loan is usually obtained for the purpose of reducing the
amount of the payments of bills owing by consolidating the debt into one
loan payment. In effect, you pay off several bills with the proceeds from
one loan, leaving you with one consolidated monthly payment.
· Consumer Credit Counseling Service
Consumer credit counseling services are organizations which help you to
find a way to repay debts through careful budgeting and management of
funds. They’re usually non-profit organizations, funded by creditors.
These counseling services have the power to request that creditors accept a
longer pay-off period, or other successful repayment plan.
· Credit
Credit refers to your right to defer
payment or debt, or in other words, your promise to pay in the future
in order to buy or borrow in the present.
· Creditworthiness
Your creditworthiness refers to a creditor’s measure of your past and future ability and willingness to repay debts.
· Credit History
Your credit history is a record of how you’ve borrowed and repaid debts.
· Credit Report
Your credit report is a record
or file given to a prospective lender or employer showing your credit
standing. It’s used to help determine your creditworthiness.
· Credit Reporting Agency (CRA)
A CRA is a
company which gathers, files and sells information to creditors and/or
employers, to facilitate their decisions to extend you credit or to
hire you. The three major CRAs are Experian, Equifax and Trans Union.
· Credit Scoring System
The credit scoring
system is a statistical system which determines whether or not to grant
credit by assigning numerical scores to various characteristics related
to creditworthiness.
· Date of Status
The date of status, on your credit report, is the date the creditor last reported information about your account.
· Default
You’re in default when you fail to meet the terms of a credit agreement.
· Delinquent
Delinquent accounts are classified
into categories according to the time past due. Common classifications
are 30, 60, 90 and 120 days past due.
· Disclosure
Disclosure refers to the process of providing you with your credit history as required by the FCRA.
· Dispute
If you believe an item of information
on your credit report is inaccurate or incomplete, you may challenge,
or dispute the item.
· Garnishment
Garnishment is a legal process
where a creditor has obtained judgment on a debt and may subsequently
obtain full or partial payment by seizure of a portion of a debtor’s
assets (wages, bank account, etc.).
· Investigation
Investigation refers to the
process a CRA goes through to verify credit report information you
dispute. The CRA contacts the credit grantor who supplied the
information and asks them to review the information and report back.
· Judgment
A judgment is an official court
decision of an action or suit. This public record may be listed on your
credit report in matters of money and debts owed.
· Liability
Your liability, or liability amount, is your legal responsibility to repay debt.
· Lien
A lien is a notice a creditor attaches
to your property that tells the world that you owe the creditor money.
You can’t sell that property without paying off the creditor.
· Notice of Results
If an investigation of your
credit report results in information being updated or deleted, you may
request a notice of results be sent to eligible credit grantors and
employers who reviewed your information within a specific period of
time.
· Obsolescence
Obsolescence refers to how long
negative information should stay in a credit file before it’s not
relevant to the credit granting decision. (7-10 years)
· Payment Status
Your payment status reflects
the previous history of your account, including any delinquencies or
derogatory conditions occurring during the previous 7 years.
· Permissible Purposes
Permissible purposes
refers to the only reasons you may request a credit report, including
credit transactions, employment purposes, insurance underwriting,
government financial responsibility laws, court orders, subpoenas,
legitimate business needs, etc.
· Personal Information
Your personal
information is the information on your personal credit report
associated with the records that have been reported to a CRA by you,
your creditors and other sources. It may include name variations, your
driver’s licence number, your Social Security (Insurance) number, your
birth date, your spouse’s name, your employers, your telephone numbers
and information about your residence.
· Public Record
A public record is any and all
information obtained by the CRA from court records, such as liens,
bankruptcy filings and judgments. They’re open to any person who
requests to see them.
· Reschedule
When you reschedule, you revise
the timetable for loan repayments, and are usually granted longer
repayment periods and often, new loans to pay the old ones.
· Risk Scoring Models
Risk scoring models are a numerical determination of your creditworthiness.
· Source
The source refers to a business or organization that supplied certain information that appears on your credit report.
· Third-Party Collectors
Third-party collectors, or collection agencies, are under contract to collect debts for a credit department or company.
· Tradeline
A tradeline is an entry by a credit
grantor to your credit history. It describes your account status and
activity, including names of companies where you have accounts, dates
accounts were opened, credit limits, types of account, balances owed
and payment histories.
· Verification
Verification is the process of
verifying whether data in your credit report is correct or not. It’s
initiated when you question some information in your file. CRAs will
accept authentic documentation you submit that will help in the
verification.
· Victim Statement
A victim statement is added
to your credit report to alert credit grantors that your identification
has been used fraudulently to obtain credit. The statement requests the
credit grantor to contact you by telephone before issuing credit, and
remains on file for 7 years unless you request it be removed.
· Wage Assignment
A wage assignment is a signed
agreement by a buyer or borrower, permitting a creditor to collect a
certain portion of your wages from your employer in the event of
default.
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Author: Gareth Marples -- reprinted with permission www.glossary-of-terms.net
