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Credit Report Glossary

Available credit: The unused portion of credit that falls within the consumer's applicable credit limit, if any.

Credit activity: Activity is any transaction that appears on your bill, including purchases, cash advances, finance charges and fees. It also includes any payments made.

Cash advance: You can use your credit card at a bank or an automatic teller machine to get a cash loan. The interest rate for a cash advance is typically higher than it is for purchases, and there is usually no grace period. There can also be a handling fee for withdrawing cash in addition to the interest charges, which can raise the cost significantly.

Credit balance: Your balance is the amount of money you owe the card issuer, and includes purchases, fees, interest and transaction charges.

Collection agency: If you fail to pay a credit or charge card bill, the card issuer may send your overdue bill to a collection agency, a company that will attempt to obtain payment from you. If this happens, your account may be listed as a "collection account" on your credit report. If you do not pay your bill and your card issuer has to go to a collection agency to attempt to obtain payment from you, you may be liable for the cost of the collection agency's services. Check your cardholder agreement to see if your card includes this potential fee.

There are certain things a bill collector cannot lawfully do: use or threaten to use violence or other criminal means to harm you, your property or your reputation; use obscene or profane language; publish your name; list your debt for sale to the public; or place telephone calls to you or any other person without identifying himself or herself as a bill collector. If a collection agency goes beyond these boundaries, you have legal rights protecting you.

Credit bureau: A credit bureau keeps a record of your credit history for any card or loan issuer to review when considering your application for credit. The three major credit reporting agencies in the United States are Equifax, Experian (formerly TRW) and Trans Union. Also known as credit reporting agency.

Credit card: A credit card allows you to make partial payments for purchases, but charges interest on the amount owed. You can also pay your balance off in full to avoid interest payments. Banks and other card issuers set interest rates and fees.

Credit counseling: Advice given by professional counselors to people about how to use credit responsibly and how to get out of serious debt. Resource: visit this searchable database of government-approved credit counseling services.

Credit dispute: Credit and charge card bills are governed, in the United States, by the Fair Credit Billing Act, which is included in the Truth in Lending Act. If you think your bill is wrong, write to your card issuer at the address listed on your statement. You must write no later than 60 days after receiving the first statement where the error appeared. The card issuer must acknowledge your letter within 30 days, and correct the error or explain why it thinks the statement was correct, within two billing cycles (but in no event later than 90 days) after receipt of your letter. You do not have to pay the amount in question while it is being investigated, but you must pay the rest of your bill. Fill out our credit dispute form.

Credit inquiry: When a prospective or current creditor checks your report, it's called a credit inquiry. Your credit report has a section which shows all the requests for your report in the last 2 years. Too many inquiries in a short time are considered a bad sign by lenders.

Credit limit: Your credit limit is the maximum amount you may charge on a credit card. Some card issuers set a separate limit for purchases and cash advances. Many banks will allow you to spend more than your credit limit, but may charge you a fee for doing so. It is up to you to keep track of your credit limit and how much available credit you have left.

Credit monitoring: A service, typically by subscription, in which an individual's credit reports at one or more credit bureaus are monitored for changes. The benefits include prevention of identity theft.

Creditor - an entity that extends credit to an individual or business and expects repayment at an agreed upon term and interest rate. Many creditors "report" on their customers' payment habits to the nation's large credit bureaus which compile this information into credit histories.

Credit record/credit file: A person's up-to-date credit history. For persons with long histories, the file may contain entries that have been compiled for decades.

Credit repair: The process of turning around bad credit by disputing errors and improving credit behavior.

Credit report: A summary of your recent credit history plus additional facts about you, including your age, address, marital status, employment history and other details that will help creditors judge your creditworthiness.

A credit report includes a record of any card that you hold now, held in the past, or for which you have applied. It also includes the credit limit and your payment history. You should request a copy of your credit report periodically to check it for accuracy. It's free. If you find an error, write to the credit bureau and request that the agency research and correct the error. You cannot have correct information removed from your records for seven years, or 10 years in the case of bankruptcy.

Credit scale: A numerical scale which represents credit risk. It runs from 300-850. The higher numbers represent the least risk.

Credit score: a number from 300-850 derived from variables in your credit report which represents your risk to a lender.

Credit status: A credit report will describe the status of your accounts -- the type of account (charge, credit or installment loan) and whether your account has been paid on time, is past due or canceled.

Creditworthy: Judged to be qualified to have credit.

Debit card: This card allows you to deduct the amount of your purchase directly from your checking account for payment to the merchant.

Default: Failure to pay a debt as outlined in the cardholder agreement, bankruptcy, or an inability or unwillingness to pay your debt. If you default on your credit card account, the issuer will cancel your account and demand full payment of the outstanding balance.

Equal Credit Opportunity Act: The Equal Credit Opportunity Act requires that U.S. financial institutions and other creditors make credit equally available to all creditworthy customers without regard to race, color, religion, national origin, sex, marital status or age. For example, a creditor cannot ask you to reapply, close your account or change terms of a loan if you become widowed or divorced. Income from pensions, annuities or part-time employment may not be excluded by a creditor in evaluating a consumer's creditworthiness.

Equifax: One of the big three credit reporting bureaus in the U.S.

Experian: One of the big three credit reporting bureaus in the U.S.

Fair and Accurate Credit Transactions Act (2003): FACTA gave Americans the right to see 1 free credit report from each of the 3 major bureaus once a year.

Fair Credit Reporting Act: The U.S. Fair Credit Reporting Act seeks to achieve fair, timely and accurate reporting of credit information by regulating the activities of credit bureaus, limiting access to credit bureau information, and requiring that creditors disclose certain information regarding their use of credit bureau or third party information. Under the Fair Credit Reporting Act, you have the right to see the credit history maintained by a credit bureau about you.

Fair Isaac: Company which developed the top credit scoring systems in the U.S.

FICO score: Credit rating score based on models developed by Fair Isaac. All credit bureaus use scoring methods derived from Fair Isaac's methods. Your FICO score provides a summarization of your credit report in numerical form.

Finance charge: The cost of consumer credit expressed as a dollar amount. A finance charge would include the following types of charges imposed by card issuers: interest, transaction fees and service fees.

Identity theft: Crime in which one person impersonates another by stealing their personal information for financial or other gain.

Inquiry: Your credit report has an inquiry section that lists anyone who has asked for your credit history.

Installment credit: A credit agreement that allows you to repay credit in regular payments over a specified time.

Interest: A charge for borrowed money, generally a percentage of the amount owed

Late payment: Most charge and credit card bills list the date by which payments are due. If you miss the due date, the account is considered past due and you may be charged a fee. Your credit report may reflect late payments, and if you have made a habit of paying late, creditors may be dissuaded from granting additional credit.

Liability: Liability refers to the responsibility for charges to an account. Generally, a cardholder agrees to be liable for any charges to his or her account, including purchases, fees and finance charges. If the cardholder allows someone else to make charges to his or her account (through, for example, an additional card), the cardholder is still responsible for paying the bill. Two people who apply for a card together may both be responsible for the entire balance. Your liability is described in the cardholder agreement you receive from the issuer. Be sure to read it carefully.

Minimum payment: The minimum amount you are required to pay the credit card issuer each month. You may, however, choose to pay more. Paying the minimum monthly payment may be helpful when you can only afford to make a small payment. However, interest charges can really add up when you stretch out a loan with minimum payments.

For example, at an 18.5 percent interest rate, it will take you more than 11 years to pay off a debt of $2,000 if you only pay the minimum balance due each month. During this time, you will pay interest charges of $1,934 -- almost doubling the cost of your purchase. (This calculation is based on making a payment which is 1/36th of the outstanding balance, or $20, whichever is larger.)

Over-the-limit fee: When you charge more than your credit limit allows, you may be charged an over-the-limit, or over-credit-limit, fee. Your card issuer may allow you to exceed your credit limit without telling you in advance, and you may not know you have done so until you receive your bill.

Partial payment: Paying less than the full amount due.

Past due: When you do not make at least the minimum payment on time, your account is considered past due.

Personal finance: All the matters that make up your individual financial picture. Savings, budgeting, credit, risk management, insurance. Learn more about handling yours responsibly at the Dmoz Personal Finance Directory.

Principle: The amount of money you owe, not including the interest due on it

Rapid Rescoring: A new credit scoring method which allows changes to an individual's credit report to be re-evaluated much faster than normal, within 48 hours.

Revolve: To carry over a debt from month to month, paying interest on the amount owed.

Revolving credit: A credit agreement that allows consumers to pay all or part of the outstanding balance on a loan or credit card. As credit is paid off, it becomes available again to use for another purchase or cash advance.

TransUnion (Trans Union): One of the big three credit reporting bureaus in the U.S.

Truth in Lending Act: The Truth in Lending Act seeks to tell U.S. consumers important information about credit terms that can help them make informed credit choices and should protect them against inaccurate and unfair billing practices. The Truth in Lending Act was amended by, and includes, the Fair Credit Billing Act.

Unsecured loan: A loan based on a consumer's promise to pay, without savings or other collateral as a guarantee. Sometimes called a signature loan.

Unused credit: The amount of credit you have available before you reach your credit limit.

Zero balance: If you have no previous outstanding balances on your card account and no new activity that month, this means that you have a zero balance. You might not get a bill since you do not owe anything.

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