Credit Education

What is credit?

Credit is money that you borrow to use towards the purchase of goods and services. This borrowed money is provided to you by a credit grantor whom you have agreed to repay. The money is repaid based on the terms you and the grantor agree to. These terms will outline your allowable limits, interest rates, finance charges, and the time you have to repay them.

Why is my credit important?

In our evolving global market, we find that credit is more important than ever. Much of today’s economy runs on credit. For most of us, having favorable access to lines of credit makes it much easier to acquire the things we want in life – new house, car, apartment, cell phones, cable, internet services, and credit cards.

Being able to purchase goods and services using lines of credit allows for greater financial flexibility. Without credit, consumers would need to purchases items in full, instead of having the option to finance them. In the case of high-value items, such as a home, car, or education costs; paying in one lump sum is simply not possible.

What is a credit score?

A consumer’s credit score typically consists of a three-digit number, ranging from 300-850, that is generated using a mathematical formula, based on the information being reported to the credit bureaus. It is meant to summarize and represent the risk involved in extending credit to a consumer. The higher your score, the less risk you pose to potential lenders.

Why is my credit score important?

Your credit score demonstrates the risk you pose to a business if they were to extend credit or services to you. It helps them determine the likelihood that you’ll make your payments on time. The higher your score, the “safer” you appear in terms of financial risk.

A consumer with a low credit score is viewed as an increased credit risk, which often means the lender will add a “risk premium” to the price of the money being borrowed. In other words, lenders will charge you more money to borrow the same amount, as someone with a higher credit score, who would appear to pose a lower risk. This “risk premium” is usually seen in the form of a higher interest rate.

Is my credit score only important if I want to apply for a loan or credit account?

No. Your credit score is very important for many reasons beyond applying for a loan or credit account. Many of the services we want and need in today’s world (e.g.: renting property, insurance, cable & internet services, cell phone service, household utilities) also take your credit score into account when you apply for service.

When you sign up for these types of services, they typically pull your credit to determine your financial risk. If your score is too low, they might require you to pay an upfront security deposit or downpayment that would not be required of someone with better credit. Some companies, might outright deny your application for service based on your credit.

How is my credit score calculated?

Over the years there have been many different models/formulas developed to calculate credit scores. Currently, the most common and widely used formula (especially for home and auto loans) is called FICO (Fair Isaac Corporation) and the end result of this calculation is called the FICO score. It is estimated that approximately 90% of the top lenders use the FICO score when considering extending a line of credit to a consumer.

The FICO score is based on five factors, each of which carries a different weight, or percentage, when calculating your final score.

  • Payment History (35%) – Your payment history is the most heavily weighted factor in determining your FICO score. This section demonstrates whether you make payments on time, how often you miss payments, and how many days past the due date you make your late payments.
  • Account Balances (30%) – This sections is based on the total amount of money you currently owe, as well as the number and types of credit accounts you have in your name. It also takes into account the proportion of money currently owed compared against the maximum amount of credit you have available.
  • Length of Credit History (15%) – This section takes into account the age of your oldest and newest credit accounts. It also factors the average age of all the accounts you have open and how long it’s been since you used them.
  • Types of Credit In Use (10%) – Your FICO score will take into account the overall mixture of the various types of accounts you have. These different types can include: retail/merchant accounts, credit cards, mortgage loans, finance company loans and installment loans.
  • New Accounts (10%) – The final 10% of your FICO score is determined by the number and frequency of credit accounts you have recently opened. It also takes into account the number and frequency of credit accounts you have recently applied for.

What is considered a “good” credit score?

Keeping in mind that your credit score is a three-digit number ranging from 300-850:

Excellent Credit 750+
Good Credit 700-749
Fair Credit 650-699
Poor Credit 600-649
Bad Credit Below 600

Are there different types of credit?

Generally speaking there are four types of credit:

  • Revolving Credit – you are given a maximum amount of credit which you are allowed to charge. Each month you repay your credit grantor a percentage of the balance you owe.
  • Charge Cards – like revolving credit accounts, you have a maximum limit that you can charge. However, unlike revolving credit, you must repay the full balance each month.
  • Service Credit – when you order services from a company, they often extend you the services on a “credit” basis. That is to say, they will provide you the service with the express understanding that you will pay for the services each month. These companies can include: utilities, gym memberships, cell phone providers, and cable companies.
  • Installment Credit – is when you borrow a predetermined amount of money with the agreement that you will repay the loan, plus interest, within a set amount of time. Home loans and auto loans are two common example of this type of credit.

Is one type of credit better or worse than another?

Not necessarily. Everyone has different needs and wants in life, along with different resources at their disposable. In short, the types of credit that might be best for you will depend on your situation and financial goals. The mixture of the various types of credit accounts is often reviewed and/or considered when applying for new credit or a new loan. Generally, it is a good idea to have a mixture of the different types of credit accounts.

Who calculates my credit score?

Your credit score is calculated by the credit bureau, based on the information listed in your credit report. The three main credit bureaus in the US include: Equifax, Experian, and TransUnion.

How do the credit bureaus determine what information to list on my reports?

It’s important to note that credit bureaus do not actually determine what information is listed on your reports. Their main functions are to collect consumer credit information, maintain reports of consumer credit histories, then generate a credit score based on reported information.

Where do the credit bureaus get their information?

Any company who engages in commerce has the ability to register with the credit bureaus and report their consumers’ activity. These organizations include banks, retail stores, cable companies, telecom providers, utility companies, and medical facilities.

What type of information gets listed on my credit report?

Each of the different credit bureaus might format and report information differently. However, their respective credit reports tend to have the same types of information listed.

  • Identifying Information – Your name, Social Security Number, current and previous addresses, date of birth, and employment information.
  • Credit Inquires – Any time you submit an application for a line of credit (e.g., credit cards, loans, etc) you are authorizing the lender to obtain a copy of your credit report. Anyone who has accessed your credit report within the last two years will be listed in this section.
  • Trade Lines – This section breaks down your credit accounts. Creditors and lenders will report the type of account you have with them, the date your account was opened, your account balance, credit limit, loan amount, and you payment history.
  • Public Record – Your credit report will contain public record information from state and county courts related to items such as: bankruptcies, foreclosures, wage garnishments, lawsuits, and judgements. They will also contain various pieces of information on overdue debt from collection agencies.

How long do negative items remain on my credit report?

As we know, having negative items on your credit report will almost always reduce your overall score. Below is a simple breakdown of how long certain negative items remain on your report:

Item Type Typical Duration
Bankruptcies (Chapter 7, 11, non-discharged, dismissed Chapter 13) 10 yrs
Bankruptcies (discharged Chapter 13)7 yrs
Charged Off Accounts 7 yrs
Child Support (overdue) 7 yrs
Collection Accounts 7 yrs
Criminal Records (general) 7 yrs
Delinquent Accounts 7 yrs
Hard Inquires 2 yrs
Judgements 7 yrs
Lawsuits 7 yrs
Paid Tax Liens 7 yrs
Repossession 7 yrs
Soft Inquiries 1 yr
Unpaid Tax Liens Indefinitely

How can I check what information is listed on my credit report?

In order to determine what information the credit bureaus are listing on your credit report, you need to request your report from them. Since the main credit bureaus format and report their information differently, it is often a good idea to request your credit report from each of the main bureaus.

You can also give us a call at 1-888-438-8755 for a FREE TransUnion credit report summary!

Will checking and requesting my credit reports impact my credit score?

No. Checking and requesting your own credit report is considered a “soft inquiry” and will not impact your score. Soft inquiries do not hurt your credit score, unlike a hard inquiry, which can effect your score.

If someone else checks and requests my credit reports, will that impact my score?

The short answer is that it depends. If an organization is checking and requesting your credit report, for the purposes of determining your creditworthiness for a line of credit; it can negatively impact your score. These types of negative checks are called “hard inquiries”.

On the other hand if an organization is checking your credit as part of a background check or identify verification, these typically fall under the category of soft inquires and should not impact your score.

If you have a specific situation in mind, the best idea is to speak with the organization who is going to check your credit as well as with the credit bureaus themselves.

What is the Truth in Lending Act (TILA)?

The Truth in Lending Act is designed to protect consumers when dealing with potential creditors. It requires credit companies and lenders to provide certain information prior to processing a credit or loan application:

  • full terms of the loan
  • total amount of money included in the loan
  • interest and finance charges
  • due dates for future repayments
  • your rights as a consumer

Not only must credit companies and lenders provide this information, they must do so using standardized language and terminology. This enables the consumer to more easily compare credit terms and make a more informed decision when considering lines of credit and/or loans.

* For more information visit the Federal Trade Commission website at:

What is the Fair Credit Billing Act (FCBA)?

The Fair Credit Billing Act is an amendment to the Truth in Lending Act. The main purpose of this act is to protect consumers from unfair billing practices engaged by credit companies and lenders. It also provides a formal procedure to address certain billing errors including:

  • charges listed in the wrong amount
  • charges for goods and services that were not delivered as specified
  • charges for goods that were not actually received by the consumer
  • under certain circumstances, charges that were delivered to incorrect addresses
  • errors in calculations of administrative or finance fees
* For more information visit the Federal Trade Commission website at:

What is the Equal Credit Opportunity Act (ECOA)?

The Equal Credit Opportunity Act protects consumers from various types of unfair business practices that some credit and loan companies willingly or unwillingly engage in. More specifically, it prevents credit discrimination on the basis of:

  • race, color, religion, national origin, gender, marital status, or age
  • the fact that an applicant receives public assistance
  • the demographics of the neighborhood you live in

Preventing these types of discrimination is important so that companies make credit available to all creditworthy applicants.

* For more information visit the Federal Trade Commission website at:

What is the Fair Credit Reporting Act (FCRA)?

The Fair Credit Reporting Act was enacted to help promote the accuracy, fairness, and privacy of the information listed within your credit reports and within the files of the consumer reporting agencies. The main rights provided and protected by this act are:

  • You must be told if information in your file has been used against you.
  • You have the right to know what is in your file.
  • You have the right to ask for your credit score.
  • You have the right to dispute incomplete or inaccurate information.
  • Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information.
  • Consumer reporting agencies may not report outdated negative information.
  • Limits who has access to your file.
  • You must give your consent for reports to be provided to employers.
  • You may limit “prescreened” offers of credit and insurance you get based on information in your credit report.
  • You may seek damages from violators.
  • Identity theft victims and active duty military personnel have additional rights.
* For more information visit the Federal Trade Commission website at:

What is the Fair Debt Collection Practices Act (FDCPA)?

The Fair Debt Collection Practices Act focuses on how debt collectors interact and treat their clients. It essentially provides debt collectors a set of rules they must follow. These rules protect consumers from general harassment and unfair practices. Some of the rules debt collectors must follow include:

  • only contacting you between 8:00am - 9:00pm
  • properly identify themselves when they call
  • clearly stating their purpose for calling you
* For more information visit the Federal Trade Commission website at:

I have checked my credit report and noticed it contains errors. Why is that?

The credit bureaus are responsible for collecting credit data for over 250,000,000 consumers. This is no easy task and mistakes can happen. Since the credit bureaus only list items that are reported to them by businesses and lenders, they are generally not to blame.

Errors on credit reports can be caused by a variety of reasons. Some of them include:

  • An application was submitted under a different name (e.g.: Robert Smith vs Bob Smith)
  • Someone made a clerical error when inputting your information into their system
  • The social security number provided might have been incorrect
  • Payments on credit cards or loans might have accidently been applied to the wrong account
  • Someone might have submitted a credit application without your consent

Fixing errors on your credit report can be difficult and very time consuming. If you need help, please contact CreditAssist at (888)-438-8755 to speak with a live highly trained credit professional today.

Am I allowed to fix errors on my credit?

Yes, absolutely! The Federal Government has written and enacted many laws to help protect consumers. Some of these laws directly relate to your rights and privileges in dealing with your credit reports, errors, credit bureaus, and creditors. Some of the laws that outline procedures, policies, timeframes, and responsibilities for both consumer and creditor can be found in:

  • The Truth in Lending Act
  • The Fair Credit Billing Act
  • The Equal Credit Opportunity Act
  • The Fair Credit Reporting Act
  • The Fair Debt Collection Practices Act

What does fixing errors on my credit actually mean?

Credit repair is the process of removing inaccurate, unverifiable, or erroneous information from your consumer credit reports. This helps ensure that your credit report will only contain true and accurate information. Since your credit score is calculated based on the information in your credit report, removing errors may significantly increase your overall score.

Do I need a lawyer to help me fix the errors on my credit report?

No, you don’t. You certainly have the right to consult a lawyer, but you do not need one to fix errors on your credit report.

Can I fix errors found on my credit report on my own?

Yes, you can. As a consumer, the federal government extends you the right to dispute items, work with creditors and bureaus, and resolve errors on your own.

How do I fix errors found on my credit report?

The general process of fixing errors on your credit report is relatively straightforward. There are however some complexities in the details when it comes to implementing your consumer rights as stated in various federal laws and statutes. The process can also be very time consuming and tedious depending on whether you get favorable or negative responses. This is why many people seek the help of trained professionals when dealing with creditors and credit bureaus.

If you need help, please contact CreditAssist at (888)-438-8755 to speak with a live, highly trained credit professional today.

Generally speaking, the first step is to request a copy of your credit reports from the three main credit bureaus: Equifax, Experian, and TransUnion. Once you have interpreted your credit report, reviewed and identified the errors you wish to correct, you inform each of the credit bureaus by drafting a letter that clearly explains your request – attaching any relevant documentation that would help prove your claim. A similar letter is then drafted and sent to the creditor who is reporting the error.

Depending on the response of the credit bureaus or creditors, additional follow-up letters might be required. Or they might request that you provide additional documentation or proof of your claim. Eventually, the credit bureau or creditor will complete their investigation into your claim and respond with their conclusion. Based on your satisfaction of their investigation, there may be further steps involved.

Am I allowed to hire a company to help me fix errors on my credit report?

Yes, absolutely! The Federal Government allows any consumer to seek the help of a Credit Repair Organization (CRO) when dealing with their credit reports. Many people prefer to have a trained professional help them with the process because of the various state and federal regulations surrounding credit repair.

If you need help, please contact CreditAssist at (888)-438-8755 to speak with a live, highly trained credit professional today.

Why use a company to fix errors on my credit report?

While the federal government has enacted many laws to help protect your consumer rights, especially when it comes to dealing with credit bureaus and creditor, these laws can be difficult to interpret. Likewise, understanding how to properly and effectively leverage these laws can be even more challenging. This is where can really help.

We have extensive in-depth knowledge of the various laws protecting your credit rights. We understand how to apply federal laws to maximize our success rates and take the guesswork out of the process. Additionally, over the years we have developed a successful track record in dealing with the time consuming and tedious process of working with creditors and credit bureaus.

If you need help, please contact CreditAssist at (888)-438-8755 to speak with a live, highly trained credit professional today.

How long does it take to fix an error on my credit report?

The answer somewhat depends on the level of effort you put into the process and the responses from the credit bureaus and creditors. If you draft strong persuasive dispute letters, provide relevant documentation, and stay on top of their investigation process; your claim might be completed faster than if you pieced together the information casually and sent it in multiple deliveries.

Generally speaking, consumer credit protection laws require that credit bureaus and creditors complete their investigations within 30 days of receiving your formal written request. However, as with other situations, just because the law outlines a process and turnaround time, that doesn’t mean it always goes smoothly.

Managing time frames, drafting tailored situational dispute letters, collecting appropriate evidence, sending necessary follow-up letters, and ensuring proper delivery with accurate documentation are some of the reasons consumers choose to hire a Credit Repair Organization (CRO) to help fix their errors.

If you need help, please contact CreditAssist at (888)-438-8755 to speak with a live, highly trained credit professional today.

Does it really matter if I have errors on my credit report?

Absolutely! It is very important to fix errors found on your credit report so that only correct and accurate information is being reported. First, your credit score can be significantly impacted by the errors found on your report. This can lead to higher interest rates when applying for new lines of credit or loans. These errors could even lead to a creditor or service provider outright denying your application for something as simple as a cell phone or television service. Secondly, you want to make sure you are not being held responsible for debt that may not be yours, or that you may not have authorized. Thirdly, maintaining an accurate and correct credit report is one of the key ways you can combat identity theft.

How can fixing errors on my credit report impact my credit score?

Your credit score is determined by a mathematical formula based on categories of varying “weights” or levels of impact. These categories include: Payment History (35%), Account Balances (30%), Length of Credit History (15%), Types of Credit In Use (10%), and New Accounts (10%). Based on this commonly used formula, any negative information in one of these categories can decrease your overall credit score. Since each category makes up a different percentage of your overall score, some errors might impact your credit score more than others.

How can fixing errors on my credit report protect my finances?

When you review your credit reports, you might notice accounts listed that do not belong to you. It is your right to have items you believe to be incorrect, updated and/or removed from your credit report.

How can fixing errors on my credit report help protect my identity?

When a criminal steals your identity, they often apply for and open lines of credit or obtain cash loans under the victim’s identity. The credit bureaus and grantors are not aware that you did not authorize this credit/loan until you inform them. As far as they are concerned, you now have a legal obligation to pay for the money that they think you borrowed.

How can fixing errors on my credit reports help in finding a new job?

Most employers today conduct a background check on their potential employees. In some cases a credit check is included as part of this background check. While most companies do not require a specific credit score (some might), a credit check might be conducted to make sure you have not committed forms of financial or credit fraud. As such, applicants with certain errors on their credit reports might be disqualified from a job.

How much can bad credit really cost me?

Having bad credit can cost you more than you think. To better understand how much it could cost you, let us take a look at two real-world scenarios.

  • Scenario One – Auto Loan for $20,000 (5 Year Term)
    • Susan’s credit score of 720 allows her to acquire the loan at a 3.3% interest rate, which means her monthly payments will be approximately $362/mo.
    • Tom’s credit score of 590 allows him to acquire the loan at a 13.6% interest rate, which means his monthly payments will be approximately $462/mo.
  • Tom will end up paying approximately $6,000 more for the same car over a 5 year period. That’s $1,200 more per year!
    * Rate and monthly repayment info provided by on 9/21/15

  • Scenario Two – Home Loan for $200,000 (30 Year Term)
    • Susan’s credit score of 720 allows her to acquire the loan at a 3.78% interest rate, which means her monthly payments will be approximately $930/mo.
    • Tom’s credit score of 620 allows him to acquire the loan at a 5.15% interest rate, which means his monthly payments will $1,093/mo.
  • Tom will end up paying approximately $58,680 more for the same house over a 30 year period. That’s $1,956 more per year!
    * Rate and monthly repayment info provided by on 9/21/15

Can a divorce impact my credit score?

Generally speaking, a divorce is a life-changing event that is often associated with strains on a person’s emotions, physical & mental health, as well as their relationships with others. It can also put a strain on your credit report. In some cases, financial hardships that arise from a divorce like judgements, bankruptcies, foreclosures, and repossessions can be more difficult to overcome than the emotional pain.

When couples get divorced, a judge may review the debts they incurred as a partnership and divide them amongst each partner. This means the burden of maintaining the account and paying the outstanding balance on say a home loan, car loan, or credit card could fall to one person.

To make matters worse, even though a judge may have legally assigned a debt to one of the divorced individuals, the creditor may not respect that fact. As the creditor tries to collect money, they may try and hold both parties responsible. This means that if your ex-spouse is assigned a credit card debt and fails to make payments on time, you might see these late payments appear on your credit report as well.

If that wasn’t bad enough, some people are forced to file for bankruptcy due to the financial hardships caused by the divorce. When a creditor is notified of the bankruptcy filing, they may try to hound the other party to pay off the debt.

5 Surprising Things That Might Impact Your Credit Score

  1. City Fines and Parking Tickets – Many cities and municipalities can send unpaid fines to collection agencies. These collection accounts could be reported to the credit bureaus. As with all collection accounts, they will ultimately reflect poorly on your credit history and reduce your overall score.
  2. Back Taxes – Generally speaking, the IRS takes a hard line when dealing with unpaid taxes. Depending on the severity, the IRS could place a lien on your home or garnish your wages. Liens and wage garnishes negatively impact your credit score.
  3. Unsettled Accounts – Any time you change a service provider (e.g., utilities, cable, cell phone company) make sure you pay any left-over fees. Some companies may have an administrative fee for closing your account. These fees can make it on your credit report as unpaid accounts. These unsettled accounts reduce your credit score.
  4. Hard Inquiries – You might be aware that having too many hard inquiries to check your credit can have a negative impact on your score. Unfortunately, you may not be aware a company is submitting these hard inquires. We all expect our credit to be checked when applying for a loan or credit card. However, you may not be aware that certain activities like order cable service, renting a car, or requesting a credit limit increase can place hard inquiries on your report.
  5. Closed or Inactive Credit – Many people plan on closing out their credit cards or store charge cards once they’re done paying off the balance. At first thought this might seem like a good idea. However, before you make a decision, consider that closing out your credit card account might reflect as less available overall credit. Since the ratio between your debt owed and your total available credit is factored into your credit score, reducing your available credit could also reduce your score. To prevent this, you might wish to keep that credit card for small purchases which you’ll pay off in full when your bill is due.

Aside from removing errors, what else can I do to improve my credit score?

While removing inaccurate, unverifiable, or erroneous information from your consumer credit report might be one of fastest ways to increase your credit score, there are other strategies you can consider. Many people also choose to add “positive” credit to their file:

  • Always pay bills on time – The most significant factor in calculating your credit score is your payment history. That makes paying your account on time, one of the most important credit practices you can engage in. While you might be tempted to skip a payment or pay late in lieu of paying for something else, keep in mind the long-term effect this might have to your credit rating.

  • Secure Credit Cards – Consumers who have difficulties getting approved for traditional (unsecured) credit cards might want to consider applying for a secured credit card. With secured credit cards, you first make make a deposit, usually into a savings account in order to secure your line of credit. You will then be allowed to purchase goods and services up to the amount you have deposited. For example, if you deposit $500, you maximum credit limit will be $500.

    Keep in mind, that even though you have secured your line of credit with your deposit, you must still make timely monthly payments as if you had a traditional credit card. The repayment history on this secured credit card gets added to your credit report. Consumers who continue to make their payments on time and maintain their balance low will generally see positive increases in their credit score.

    Make sure the company providing the secured credit card reports to all three credit bureaus to maximize your efforts.

  • Installment loan – Having a “good” mixture of the various types of credit accounts is generally a good idea. If you mainly have revolving credit accounts (i.e., credit cards), obtaining a small installment loan might be a beneficial. Many credit unions can be more forgiving towards a consumer with bad or no credit history compared to a traditional lending institution.

    Let’s say you obtain a short-term loan (1-2 years) and you make sure to repay the loan on time and without incident. This loan amount and your successful repayment, will be reflected on your credit report.

  • Retail Charge Cards – These days many retail stores offer their own lines of credit to consumers. Generally speaking, retail stores can be more lenient on issuing store charge cards than financial institutions who issue general credit cards. Nonetheless, these retail stores will report your credit account and repayment history to the credit bureaus. As such, positive maintenance of a retail credit card will likely increase your overall credit score.

  • Low Account Balances – Generally speaking, maintaining low account balances is considered a good credit practice. There are a couple of reasons for this. First, maintaining a low balance generally means your monthly payment will be lower. Lower payments places less financial burden on you each month. Also, should you experience a life changing event (e.g., health issue, divorce, job loss) lower payments and balances could mean less of an impact to your finances.

    Also, a component of your credit score is the ratio between your debt owed and your total available credit. Which means if you reduce your account balance, your ratio will become more favorable, which in turn increases your overall credit score. Many financial experts believe that maintaining a balance less than 30% of your total available credit is an optimal sweet spot.

  • Become an Authorized User on a Credit Card – If you have a trusted friend or family member who has good credit, you can “borrow” their credit history by becoming an authorized user on their account. If they decide to add you as an authorized user, you should see their account, along with their positive credit history appear on your credit report. Keep in mind, just as you both share the positive rankings, you will also share the negative effects. If they miss a payment, or rack up huge debts, those actions will also appear on your report.

  • Eliminate “nuisance balances” – Many people have very small balances or charge very small amounts on multiple credit accounts. Eliminating these small balances can be beneficial for a couple of reasons. First, you might be charging an amount on one credit when you have another available card with a lower interest rate. Using the card with the lower rate will save you money.

    Secondly, one of the factors in calculating your credit score is how many open account have a balance on them. Managing your small charges on one card might allow you to keep the balance on another account low, or even at zero, which generally looks favorably on your credit report.

  • Leave “good” old debt on your report – Many people choose to have old accounts removed from their credit report as soon as they are finished making payments. This is not necessarily a good idea. One of the factors in calculating your credit score is the age of your accounts. So, having an old account that reflects a good lengthy payment history can boost your overall score.



  • 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. Experian removes several digits of each account number on the credit report as a fraud prevention measure.

  • Accounts in Good Standing – Credit items that have a positive status and should reflect favorably on your creditworthiness.

  • Adjustment – Percentage of the debt that is to be repaid to the credit grantors in a Chapter 13 bankruptcy.

  • AKA – Also Known As

  • 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.


  • Balloon Payments – A loan with a balloon payment requires that a single, lump-sum payment be made at the end of the loan.

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


  • Capacity – Factor 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.

  • Co-maker – A creditworthy co-maker is sometimes required in situations where an applicant’s qualifications are marginal. A co-maker is legally responsible to repay the charges in the joint account agreement.

  • Consumer Credit Counseling Service – A non-profit organization that assists consumers in dealing with their credit problems. Consumer Credit Counseling Service has offices throughout the United States that can be located by calling 800 388 CCCS (2227).

  • Co-signer – Person 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 the maximum that an account can show as outstanding.

  • Credit Items – Information reported by current or past creditors.

  • Credit Report – Confidential report on a consumer’s payment habits as reported by their creditors to a consumer credit reporting agency. The agency provides the information to credit grantors who have a permissible purpose under the law to review the report.

  • Credit Scoring – Tool used by credit grantors to provide an objective means of determining risks in granting credit. Credit scoring increases efficiency and timely response in the credit granting process. Credit scoring criteria is set by the credit grantor.

  • Creditworthiness – The ability of a consumer to receive favorable consideration and approval for the use of credit from an establishment to which they applied.


  • Date Filed – The date that a public record was awarded.

  • Date of Status – On the credit report, date the creditor last reported information about the account.

  • Date Opened – On the credit report, indicates the date an account was opened.

  • Date Resolved – The completion date or satisfaction date of a public record item.

  • 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 not included in the bankruptcy – alimony, child support, liability for willful and malicious conduct and certain student loans – cannot be discharged.

  • Disclosure – Providing the consumer with his or her credit history as required by the FCRA. Experian provides consumer credit report disclosures via the Internet, by U.S. Mail or in person at our office location in Santa Ana, CA.

  • 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. Experian will investigate and correct or remove any inaccurate information or information that cannot be verified. Experian gives consumers the option of disputing online or they may call the telephone number on their credit report for assistance.


  • ECOA – Standard abbreviation for 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.


  • 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.

  • 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.


  • Generation Identifier – Generation identifiers are Jr., Sr., II, III, IV, etc.

  • Geographical Code – This information is received from the Census Bureau and represents the state, Metropolitan Statistical Area, county, tract and block group of the reported address. This code is similar to a ZIP Code™.

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

  • Guarantor – Person responsible for paying a bill.


  • High Balance – The highest amount that you have owed on an account to date.


  • 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. Experian does not provide investigative consumer reports.

  • 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 on the credit report.


  • 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.


  • 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.


  • 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.


  • Notice of Results – If your investigation results in information being updated or deleted, you may request that we send the corrected information in your credit history to eligible credit grantors and employers who reviewed your information within a specific period of time. If your investigation does not result in a change to your credit history, results will not be sent to other lenders.


  • 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, although Experian removes them after 15 years.

  • Opt In – The ability of a consumer who has opted out to have their name re-added to prescreened credit and insurance offer lists, direct marketing lists and individual reference service lists. Consumers who have previously opted out of receiving prescreened offers may have their names added to prescreened lists for credit and insurance offers by calling 1-888-5OPTOUT (1-888-567-8688).

  • 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 owed to a creditor.


  • 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 – now paying, 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.

  • 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.


  • 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.

  • Report Number – A number that uniquely identifies each personal Experian credit report. This number displays on your personal credit report and should always be referenced when you contact us.

  • Reported Since – On the credit report, the date the creditor started reporting the account to Experian.

  • Repossession – A creditor’s taking possession of property pledged as collateral on a loan contract on which a borrower has fallen significantly behind in payments.

  • Request an Investigation – If you believe that information on your report is inaccurate, we 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. Experian cannot remove accurate information. An investigation may take up to 30 days. When it is complete, we'll send you the results.

  • 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.

  • Responsibility – Indicates who is responsible for an account; can be single, joint, co-signer, etc.

  • Revolving Account – Credit automatically available up to a predetermined maximum limit so 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.


  • Satisfied Balance – 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 Experian 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.

  • Settle – Reach an agreement with a lender to repay only part of the original debt.

  • Source – The business or organization that supplied certain information that appears on the credit report.

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


  • 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; collection agency.

  • Tradeline – Entry by a credit grantor to a consumer’s credit history maintained by a credit reporting agency. 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.


  • 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.


  • 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.


  • 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.

* Glossary of terms provided by Experian
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