FAQs

A B C D E F G H I J L M O P R S T U V W Z

A

Account Condition

Indicates the present state of the account, but does not indicate the payment history of the account that led to the current state. (i.e. open, paid, charge off, repossession, settled, foreclosed, etc).

Account number

The unique number assigned by a creditor to identify your account with them. Credit reporting agencies remove a specific amount of digits from each account number on the credit report as a fraud prevention measure.

Accounts in Good Standing

Credit items that have a positive status are reflected as such in your credit report and reflect favorably on your creditworthiness.

Adjustment

The percentage of the debt that is to be repaid to the credit grantors in a Chapter 13 bankruptcy.

Annual fee

Credit card issuers often (but not always) require you to pay a special charge once a year for the use of their service, usually between $15 and $55.

Annual percentage rate (APR)

A measure of how much interest credit will cost you, expressed as an annual percentage.

Authorized User

Person permitted by a credit cardholder to charge goods and services on the cardholder’s account but who is not responsible for repayment of the debt. The account displays on the credit reports of the cardholder as well as the authorized user. If you wish to have your name permanently removed as an authorized user on an account, you will need to notify the credit grantor.

B

Bankruptcy Code

Federal laws governing the conditions and procedures under which persons claiming inability to repay their debts can seek relief.

C

Capacity

A factor that is used in determining creditworthiness. Capacity is assessed by weighing a borrower’s earning ability and the likelihood of continuing income against the amount of debt the borrower carries at the time the application for credit is made. While capacity may be considered in a credit decision, the credit report does not contain information about earning ability or the likelihood of continuing income.

Chapter 7 Bankruptcy

Chapter of the Bankruptcy Code that provides for court administered liquidation of the assets of a financially troubled individual or business.

Chapter 11 Bankruptcy

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. The U.S. Supreme Court has held that an individual may also use Chapter 11.

Chapter 12 Bankruptcy

Chapter of the Bankruptcy Code adopted to address the financial crisis of the nation’s farming community. Cases under this chapter are administered like Chapter 11 cases, but with special protections to meet the special conditions of family farm operations.

Chapter 13 Bankruptcy

Chapter of the Bankruptcy Code in which debtors repay debts according to a plan accepted by the debtor, the creditors and the court. Plan payments usually come from the debtor’s future income and are paid to creditors through the court system and the bankruptcy trustee.

Charge-Off

Action of transferring accounts deemed uncollectible to a category such as bad debt or loss. Collectors will usually continue to solicit payments, but the accounts are no longer considered part of a company’s receivable or profit picture.

Civil Action

Any court action against a consumer to regain money for someone else. Usually, it will be a wage assignment, child support judgment, small claims judgment or a civil judgment.

Claim amount

The amount awarded in a court action.

Closed Date

The date an account was closed.

Communication

The FDCPA defines “communication” as the “conveying of information regarding a debt directly or indirectly to any person through any medium.”

1. General – The definition includes oral and written transmission of messages which refer to a debt.
2. Exclusions – The term does not include formal legal action (e.g., filing of a lawsuit or other petition/pleadings with a court; service of a complaint or other legal papers in connection with a lawsuit, or activities directly related to such service). Similarly, it does not include a notice that is required by law as a prerequisite to enforcing a contractual obligation between creditor and debtor, by judicial or nonjudicial legal process.

Co signer

A person or party who pledges in writing as part of a credit contract to repay the debt if the borrower fails to do so. The account displays on both the borrower’s and the co-signer’s credit reports.

Credit Limit/Line of Credit

In open-end credit, the maximum amount a borrower can draw upon or show as outstanding.

Creditor

A person to whom money is owed by a debtor; someone to whom an obligation exists.

The FDCPA defines “creditor” as “any person who offers or extends credit creating a debt or to whom a debt is owed.”

Credit Report

Confidential report on a consumer’s payment history and habits as reported by their creditors to a consumer credit reporting agency. The agency provides the information to those who grant credit and have a permissible purpose under the law to review the report.

Credit scoring system

A numerical system designed to measure the likelihood that a borrower will repay a debt created by assigning scores to various characteristics connected to creditworthiness.(see creditworthiness below)

Creditworthiness

The ability of a consumer to receive favorable consideration and approval for the use of credit and its associated terms, from an establishment to which they applied.

D

Date filed

The date that a public record was awarded.

Date of Status

The date showing on the credit report that the creditor last reported information about the account.

Debt

A debt is created when a creditor agrees to lend a sum of assets to a debtor. Debt is usually granted with expected repayment; in many cases, plus interest. A consumer has committed to pay money arising out of a transaction in which the money, property, insurance, or services (being purchased) are primarily for personal, family, or household purposes.

Debt Buyer

A debt buyer is a person or company that owns a consumer debt but is not the original creditor. A debt buyer typically purchased the debt in an effort to collect and profit on it.

Debt Collector

A party “who uses any instrumentality of interstate commerce or the mail in any business, the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due another.”

The term also includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. Such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests.

Debt Consolidation

Combining several loans or liabilities into one loan., debt consolidation is the process of taking out a new loan to pay off a number of other debts. Most people who consolidate their debt are usually doing it to attain a lower interest rate, or the simplicity of a single loan.

Default Judgment

A judgment entered against a party who fails to appear in court or respond to the charges.

Delinquent

Accounts classified into categories according to the time past due. Common classifications are 30, 60, 90 and 120 days past due. Special classifications also include charge-off, repossession, transferred, etc.

Discharge

Granted by the court to release a debtor from most of his debts that were included in a bankruptcy. Any debts that were not included in the bankruptcy, alimony, child support, liability for willful and malicious conduct and certain student loans, cannot be discharged.

Disclosure

As required by the FCRA, the act of providing the consumer with his or her credit history A credit reporting agency provides consumer credit report disclosures via the Internet, by U.S. Mail or in person.

Dismissed

When a consumer files a bankruptcy, the judge may decide to not allow the consumer to continue with the bankruptcy. If the judge rules against the petition, the bankruptcy is known as dismissed.

Dispute

If a consumer believes an item of information on their credit report is inaccurate or incomplete, they may challenge, or dispute the item. A credit reporting agency will investigate and correct or remove any inaccurate information or information that cannot be verified. A credit reporting agency gives consumers the option of disputing online or they may call the telephone number on their credit report for assistance.

Dunning Letter

A written communication from a debt collector or collection agency.

E

ECOA

Standard abbreviation for the Equal Credit Opportunity Act.

End-user

The business that receives the report for decision making purposes that meet the permissible purpose requirements of the FCRA.

Equal Credit Opportunity Act (ECOA)

Federal law, which prohibits creditors from discriminating against credit applicants on the basis of sex, marital status, race, color, religion, age, and/or receipt of public assistance.

Equifax

One of the three national credit reporting agencies, headquartered in Atlanta, Ga. The other two are Experian and TransUnion.

Experian

One of the three national credit reporting agencies, with U.S. headquarters in Costa Mesa, CA. The other two are Equifax and TransUnion.

F

Fair Credit and Charge Card Disclosure Act

Amendments to the Truth In Lending Act that require the disclosure of the costs involved in credit card plans that are offered by mail, telephone or applications distributed to the general public.

Fair Credit Billing Act

Federal legislation that provides a specific error resolution procedure to protect credit card customers from making payments on inaccurate billings.

Fair Credit Reporting Act (FCRA)

Federal legislation governing the actions of credit reporting agencies.

Fair Debt Collection Practices Act (FDCPA)

Federal legislation prohibiting abusive and unfair debt collection practices.

False Representations

This occurs when a debt collector implies falsely that he or she is an attorney or government representative, or misrepresents that he or she works for a credit reporting agency and this is not true. This is a violation under FDCPA section.

Finance Charge

Amount of interest. Finance charges are usually included in the monthly payment total.

Fixed Rate

An annual percentage rate that does not change over time.

G

Garnishment

Legal process which dictates a creditor that has obtained a judgment on a debt may obtain full or partial payment by seizure of a portion of a debtor’s assets (wages, bank account, etc…).

Grace period

The time period you have to pay a bill in full and avoid interest charges.

Guarantor

The person or party responsible for payment of a bill.

H

High balance

The highest amount that you have owed on an account to date.

I

Initial Notice & Verification

A written notice from a debt collector or collection agency advising the consumer of the amount of money owed; the name of the creditor to whom the money is owed; and the actions which the consumer may take if the consumer believes that he, or she, does not owe the money.

Installment Credit

Credit accounts in which the debt is divided into amounts to be paid successively at specified intervals.

Investigation

The process a consumer credit reporting agency goes through in order to verify credit report information disputed by a consumer. The credit grantor who supplied the information is contacted and asked to review the information and report back; they will tell the credit reporting agency that the information is accurate as it appears, or they will give us corrected information to update the report.

Investigative Consumer Reports

These are consumer reports that are usually done for background checks, security clearances and other sensitive jobs. An investigative consumer report might contain information obtained from a credit report, but it is more comprehensive than a credit report. It contains subjective material on an individual’s character, habits and mode of living, which is obtained through interviews of associates.

Involuntary Bankruptcy

A petition filed by certain credit grantors to have a debtor judged bankrupt. If the bankruptcy is granted, it is known as an involuntary bankruptcy.

Item-specific Statement

Offers an explanation about a particular trade or public record item on your report, and it displays with that item is on the credit report.

J

Judgment Granted

The determination of a court upon matters submitted to it; a final determination of the rights of the parties involved in the lawsuit at hand.

Judgment Proof

If you have no source of income and insufficient assets to satisfy a money judgment at the present time  you may be considered “Judgment Proof.” This would include periods of unemployment or while drawing disability pay or disability retired pay. Additionally you may fall under “Judgment Proof” status if you do not have any assets to speak of, such as home, vehicle or property. However a more accurate term is execution-proof because the collector was awarded a judgment but still has to collect the money (the court does not collect money) and if the debtor has no money then the judgment is useless, but the collector can keep trying.

Junk Debt Buyer

A junk debt buyer is a collection agency who has purchased a large portfolio of delinquent or charged off accounts. Also known as “bad debt buyers”, “zombie debt collectors”, or simply “debt buyers”, these companies fall under the Fair Debt Collection Practices Act definition of Collection Agency (“CA”).

L

Last Reported

On the credit report, the date the creditor last reported information about the account.

Liability amount

Amount for which you are legally obligated to a creditor.

Lien

Legal document used to create a security interest in another’s property. A lien is often given as a security for the payment of a debt. A lien can be placed against a consumer for failure to pay the city, county, state or federal government money that is owed. It means that the consumer’s property is being used as collateral during repayment of the money that is owed.

Line of Credit

In open-end credit, the maximum amount a borrower can draw upon or the maximum that an account can show as outstanding.

Location number

The book and page number on which the item is filed in the court records.

M

Mini-Miranda Requirement

The Fair Debt Collection Practices Act provides that a debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of debt. This includes the failure to disclose in the initial oral or written communication with the consumer that “the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose”, and the failure to disclose in subsequent communications that “the communication is from a debt collector”. This is referred to as the “Mini-Miranda” requirement, as modified effective December 30, 1996. The Mini-Miranda should be worded as; “This is an attempt to collect a debt. Any information obtained will be used for that purpose. Unless within 30 days of your receipt of this notice, you notify us in writing that you dispute the validity of this debt, it will be assumed to be correct. If you notify this office within thirty days that you dispute the validity of the debt, we will obtain verification of the debt or a copy of the judgment. If you request it within 30 days, we will provide you with the name and address of the original creditor (if different from the current creditor).”

Minimum payment — The minimum amount a cardholder can pay to keep the account from going into default. Some card issuers will set a high minimum if they are uncertain of the cardholder’s ability to pay. Most card issuers require a minimum payment of 2 percent of the outstanding balance

Mortgage Identification Number (MIN)

Indicates that a loan is registered with Mortgage Electronic Registration Systems Inc., which tracks the ownership of mortgage rights. This number will follow the homeowner throughout the mortgage.

Most Recent Date

The date of the recent account condition or payment status. This date is also the balance date.

O

Obsolescence

A term used to describe how long negative information should stay in a credit file before it’s not relevant to the credit granting decision. The FCRA has determined the obsolescence period to be 10 years in the case of bankruptcy and 7 years in all other instances. Unpaid tax liens may remain indefinitely.

Opt In

The ability of a consumer who has previously opted out to have their name re-added to prescreened credit and insurance offer lists, direct marketing lists and individual reference service lists.

Opt Out

The ability of the consumer to notify credit reporting agencies, direct marketers and list compilers to remove their name from all future lists. Consumers may opt out of prescreened credit and insurance offer lists by calling 1 888 5OPTOUT (1 888 567 8688).

Original amount

The original amount of a purchase or loan, owed to a creditor.

P

Payment Status

Reflects the previous history of the account, including any delinquencies or derogatory conditions occurring during the previous seven years (i.e., Current account, delinquent 30, current was 60, redeemed repossession, charge-off , etc.)

Permissible Purposes

There are legally defined permissible purposes for a credit report to be issued to a third party. Permissible purposes include credit transactions, employment purposes, insurance underwriting, government financial responsibility laws, court orders, subpoenas, written instructions of the consumer, legitimate business needs, etc.

Personal Information

Information on your personal credit report associated with your records that has been reported to us by you, your creditors and other sources. It may include name variations, your driver’s license number, Social Security number variations, your date or year of birth, your spouse’s name, your employers, your telephone numbers, and information about your residence. This information is typically considered “confidential”.

Personal Statement

You may request that a general explanation about the information on your report be added to your report. The statement remains for two years and displays to anyone who reviews your credit information.

Petition

If a consumer files a bankruptcy, but a judge has not yet ruled that it can proceed, it is known as bankruptcy petitioned.

Plaintiff

One who initially brings legal action against another (defendant) seeking a court decision.

Potentially Negative Items

Any potentially negative credit items or public records that may have an effect on your creditworthiness as viewed by creditors.

Public Record Data

Included as part of the credit report, this information is limited to tax liens, lawsuits and judgments that relate to the consumer’s debt obligations.

R

Recent balance

The most recent balance owed on an account as reported by the creditor.

Recent payment

The most recent amount paid on an account as reported by the creditor.

Released

This means that a lien has been satisfied in full.

Repossession

Forced, or voluntary surrender of merchandise as a result of the customer’s failure to pay according to the terms set forth in an agreement. There are several types and descriptions of repossession actions.

Request an Investigation

If you believe that information on your report is inaccurate, a credit bureau or creditor will ask the sources of the information to check their records at no cost to you. Incorrect information will be corrected; information that cannot be verified will be deleted. An investigation may take up to 30 days. The information will either be deleted or verified at that point.

Request for Your Credit History

When a credit grantor, direct marketer or potential employer makes a request for information from a consumer’s credit report, an inquiry is shown on the report. Grantors only see credit inquiries generated by other grantors as a result of an application of some kind, while consumers see all listed inquiries including prescreened and direct marketing offers, as well as employment inquiries. According to the Fair Credit Reporting Act, credit grantors with a permissible purpose may inquire about your credit information prior to your consent. This section also includes the date of the inquiry and how long the inquiry will remain on your report.

Revolving Account

Credit automatically available up to a predetermined maximum limit which stays in effect as long as a customer makes regular payments.

Risk Scoring Models

A numerical determination of a consumer’s creditworthiness. Tool used by credit grantors to predict future payment behavior of a consumer.

S

Satisfied

If the consumer has paid all of the money the court says he owes, the public record item is satisfied.

Secured Credit

Loan for which some form of acceptable collateral, such as a house or automobile has been pledged.

Security

Real or personal property that a borrower pledges for the term of a loan. Should the borrower fail to repay, the creditor may take ownership of the property by following legally mandated procedures.

Security Alert

Statement that is added once a credit reporting agency is notified that a consumer may be a victim of fraud. It remains on file for 90 days and requests that a creditor request proof of identification before granting credit in that person’s name.

Service Credit

Agreements with service providers. You receive goods, such as electricity, and services, such as apartment rental and health club memberships, with the agreement that you will pay for them each month. Your contract may require payments for a specific number of months, even if you stop the service.

Settlement

An agreement between a lender and a debtor to repay only part of the original debt

Status

On the credit report, this indicates the current status or state of the account.

T

Terms

This refers to the debt repayment terms of your agreement with a creditor, such as 60 months, 48 months, etc.

Third-Party Collectors

Collectors who are under contract to collect debts for a credit department or credit company; aka collection agency.

Time-Barred Debt

“Time-barred” debts are debts so old they are beyond the point at which a creditor or debt collector may sue you to collect. State law varies as to when a creditor or debt collector may no longer sue to collect: in most states, the statute of limitations period on debts is between 3 and 10 years; in some states, the period is longer.

Tradeline

An entry appearing on a credit report, as furnished by a credit grantor to a consumer’s credit history. A tradeline describes the consumer’s account status and activity. Tradeline information includes names of companies where the applicant has accounts, dates accounts were opened, credit limits, types of accounts, balances owed and payment histories.

Transaction fees

Fees charged for certain use of your credit line – for example, to get a cash advance from an ATM.

TransUnion

One of three national credit reporting agencies. The other two are Experian and Equifax.

Truth in Lending Act

Title I of the Consumer Protection Act. Requires that most categories of lenders disclose the annual interest rate, the total dollar cost and other terms of loans and credit sales.

Type

This refers to the type of credit agreement made with a creditor; for example, a revolving account or installment loan.

U

Unsecured Credit

Credit for which no collateral has been pledged. Loans made under this arrangement are sometimes called signature loans; in other words, a loan is granted based only on the customer’s words, through signing an agreement that the loan amount will be paid.

V

Vacated

Indicates a judgment that was rendered void or set aside.

Variable Rate

An annual percentage rate that may change over time as the prime lending rate varies or according to your contract with the lender.

Verification

Verifying whether data in a credit report is correct or not. Initiated by consumers when they question some information in their file. Credit reporting agencies will accept authentic documentation from the consumer that will help in the verification.

Victim Statement

A statement that can be added to a consumer’s credit report to alert credit grantors that a consumer’s identification has been used fraudulently to obtain credit. The statement requests the credit grantor to contact the consumer by telephone before issuing credit. It remains on file for 7 years unless the consumer requests that it be removed.

Voluntary Bankruptcy

If a consumer files the bankruptcy on his own, it is known as voluntary bankruptcy.

W

Wage assignment

A signed agreement by a buyer or borrower, permitting a creditor to collect a certain portion of the debtor’s wages from an employer in the event of default.

Withdrawn

This means a decision was made not to pursue a bankruptcy, a lien, etc. after court documents have been filed.

Writ of Replevin

Legal document issued by a court authorizing repossession of security.

Z

Zombie Debt

“Zombie debt” refers to old debt purchased by debt collectors hoping to intimidate consumers into paying the debt, even though it is outside of the statute of limitations in most instances.