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Navigate the world of credit with confidence using our comprehensive glossary. This collection of credit-related terms and definitions will help you better understand your credit reports, credit scores, and the factors that influence them.
A
Active account
An account for which activity has been reported to a credit reporting company in the last 24 months.
Adverse action code
A two-digit numerical code that corresponds with a factor that impacts a credit score. Another term for “reason code.”
Adverse action code description
A short description that corresponds with the adverse action code.
B
Balance
The total amount owed as of the date reported by the Credit grantor.
Bankcard
The industry term for credit cards, charge cards, etc. This usually refers to a revolving credit account.
Bankruptcy
Legal protection from your creditors. A bankruptcy can appear on your credit reports for up to 10 years and is considered highly derogatory.
C
Charge card
Similar to a credit card except a charge card does not have a predefined credit limit and the balance must be paid in full each month.
Collection accounts
Accounts that have become 90 or more days past due and have been turned over to a special internal department with the lender or to an outside professional firm that specializes in collecting money owed that is seriously overdue.
Collection accounts (or collection agency accounts)
Accounts that have become 90 or more days past due and have been turned over to a special internal department with the lender or to an outside professional firm that specializes in collecting money owed that is seriously overdue.
Credit
The ability to purchase goods or services and pay for them later. Also can be defined as your “financial trustworthiness.”
Credit file
The information reported about you by lenders and other creditors and includes your personal identifying information, payment history and other credit attributes stored by a credit reporting company. “Credit file” is sometimes used interchangeably with credit report.
Credit history
The record of your behavior managing credit accounts in the past.
Credit inquiries
The more formal term for “inquiries.”
Credit limit
The highest amount that a credit grantor allows you to charge on a revolving account.
Credit reporting company
A firm which receives, maintains, and provides information about a consumer’s credit history. There are three national credit reporting companies – Equifax, Experian and TransUnion. There are also many smaller agencies. National credit reporting companies adhere to the requirements of the Fair Credit Reporting Act (FCRA).
Credit score
Your credit score is a three-digit number generated by a mathematical formula using information in your credit file to indicate the likelihood of whether you will become 90 days or more past due on your accounts at some point in the two years following the score being calculated. There are many credit scores available in the marketplace, including the VantageScore credit score, used by numerous auto lenders, mortgage lenders and credit card issuers.
Creditor
The lender or other business that extends credit to you.
Current
A payment status showing that a consumer is not late with payments at the time that the lender reported on the credit reporting company.
D
Data furnisher
A company that reports information to the credit reporting agencies. That information appears on consumer credit reports.
Date opened
A field on a credit report meant to indicate the date a creditor opened an account in the name of a consumer/applicant.
Date reported
A field on a credit report meant to indicate the most recent update made to an account or other credit report entry.
Debt buyer
A company that purchases large amounts of defaulted debt from credit card issuers and other lenders and service providers.
Debt to limit percentage
The relationship between your credit card balance and the credit card’s credit limit, expresses as a percentage. The debt to limit percentage is calculated by dividing your credit card balance by the card’s credit limit.
Delinquency
Delinquency typically refers to payments that are between 30-90 days late and which have been reported to one or more of the national credit reporting companies (CRCs). The extent of the payment tardiness is normally expressed in 30-day increments i.e. 30-days late, 60-days late, etc.
Derogatory
Information in the credit files that may be considered negative by lenders. Examples of derogatory information are a payment status that is 90 days or more late, public records and collections.
H
Hard inquiries
Credit inquiries made in response to a consumer applying for some form of credit. Hard inquiries can be considered by credit scoring models and can lower your credit scores.
HELOC
The acronym for a home equity line of credit, which is a credit line secured by the equity in your home.
High balance
The field on a credit report that indicates the historical highest balance, normally on a credit card account. For example, if you have a credit card and the largest balance you’ve ever had on that card was $7,750 that figure will be listed on your credit report as the “High Balance.”
I
Inquiry (inquiries)
A piece of information reported to one or more of the three national CRCs that consumer credit information has been accessed by a lender.
Installment account
A credit account with a fixed terms and even monthly payments. Examples of installment accounts are auto loans, furniture and appliance-related loans and student loans.
L
Late payment
A record on a credit report indicating the delinquency of an account. Late payment can be reported at 30, 60, 90, 120, 150, and 180 days past due.
O
Open account
A credit account that is currently active and available to a borrower.
Open account type
An account where the balance must be paid in full each month such as cell phone and public utility accounts.
P
Public record judgment/tax lien
Public records include information filed or recorded by local, state, federal or other government agencies that is available to the general public. The types of public records that can affect your credit score include judgments against you from collections agencies or in small claims court, or tax liens levied by a government authority.
R
Rated account
An account that shows a payment status, which can be “current” or “delinquent”.
Real estate account
Refers to a mortgage-related credit account such as a first mortgage or home equity line of credit (HELOC).
Retail revolving account
An account issued by a retail outlet or store, which allows the balance to be carried over from month-to-month.
Revolving account
An account, usually a credit card, which allows the balance to be carried over from month-to-month.
Revolving utilization
Another term for the “Debt to limit percentage.”
S
Score factors
Another term for “Adverse action code” and “Reason codes.”
Secured account
A credit account that is backed by collateral, such as a house, car. In the case of a secured revolving account such as a credit card, the collateral is typically a cash deposit.
Status
The current information reported to one or more of the national CRCs on a particular credit account. For example, an account’s status could be “delinquent” if a payment was missed.
T
Tax lien
A report in your credit file related to owed taxes or failure to pay taxes.
U
Unsecured account
A credit account that is not backed by collateral such as a cash deposit, a home or car.
Utilization
The percentage of the credit limit on a revolving account, such as a credit card, that has been used.
W
Worst status
The identification of the most negative payment information associated with a credit account. For example, an accounts worst status could be “delinquent” if a payment was missed.