A B C D E F G H I J K L M N O P Q R S T U V W X Y 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.

Account Review - A review of a consumer's credit history by one his/her creditors.

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

ACH - Automated Clearing House. This is a national network that allows for transferring funds electronically between businesses, consumers and financial institutions.

Active Account - An account for which activity has been reported to a Credit Reporting Agency in the last 90 days.

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

AKA - Also Known As

Alias - A name reported in your credit file that differs from your primary or given name. This commonly occurs if you've applied for credit or loans under different variations of your name -- "Robert P. Smith" and "Bob Smith," for example.

Alternative Mortgage - Any home loan that is not a standard fixed-rate mortgage. This includes ARM’s, reverse mortgages and jumbo mortgages

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.

Application Fee - Amount a lender charges to process loan application documents. Quality lenders do not charge these fees (though they may charge many others).

Appraisal Fee - The amount charged to deliver a professional opinion about how much a property is worth. For a standard home or condominium, this fee is usually around $200-500.

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.

Appraised Value - An educated opinion of how much a property is worth. An appraiser considers the price of similar homes in the area, the condition of the home and the features of the property to estimate the value.

Back to Top

B

Back-End Ratio or Back Ratio - The sum of your monthly mortgage payment and all other monthly debts (credit cards, car payments, student loans, etc.) divided by your monthly pre-tax income. Traditionally, lenders wouldn’t give people loans that increased this ratio past 36%, but they often do now. (See Debt-to-Income Ratio)

Balance - The outstanding amount owed to a creditor on a particular account.

Balance Transfer - The transfer of one or more credit card balances onto another card, typically to take advantage of a lower annual percentage rate.

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.

Beacon Score - A specific credit score developed by Equifax. There are thousands of slightly different credit scoring formulas used by bankers, lenders, creditors, insurers and retailers. Each score can vary somewhat in how it evaluates your credit data.

Bi-Weekly Mortgage - A mortgage that schedules payments every two weeks instead of the standard monthly payment. The 26 bi-weekly payments are each equal to one-half of a monthly payment. The result is that the mortgage is paid off sooner.

Borrower - The individual who is requesting the loan and who will be responsible to pay it back.

Broker Premium - The amount a mortgage broker is paid for serving as the middleman between a lender and a borrower. This premium comes from the surcharge a broker applies to a discounted loan before offering it to a borrower.

Back to Top

C

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.

Capital - A measure of your current assets, including savings, investments, and property. Capital reassures a lender by providing a means of repaying your loan in case you default. It may also provide evidence that you've met financial obligations in the past -- a fully paid car, for example, shows that you've successfully paid off an auto loan.

Cardholder - The person who is issued a credit card and/or any authorized users.

Cash Advance - A cash loan taken out on a credit card. Interest for cash advances is usually higher than it is for purchases, a transaction fee may apply, and the grace period may be waived.

Cash-Out Refinance - A new mortgage for an existing property in which the amount borrowed is greater than the amount of the previous mortgage. The difference is given to the borrower in cash when the loan is closed.

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.

Character - In the context of a credit application, "character" is one of the three Cs, the traditional set of criteria lenders use to evaluate an application. In most cases, character is determined by your credit report and/or score.

Charge Card - A credit card, such as an American Express or Diners Club card, that requires full payment of the balance each month. Such cards nevertheless appear on your credit report, since they do extend credit to you (if only for short periods of time).

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.

ChexSystems - A credit reporting company that tracks your banking history and provides this data to banks when you apply for a new checking account. Negative records, such as bounced checks, can be kept in their database for up to five years. If there are errors on your ChexSystems record, you can contact the company to submit a dispute.

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 Account - An account that has been closed by you or your creditor. Such accounts remain on your credit report for seven years from the date of last activity.

Closing - The point at which the buyer signs the mortgage documents, pays closing costs, and becomes the owner of the property. Also called a settlement.

Closing Costs - Expenses that buyers incur in the transfer of ownership of a property. Closing costs may include taxes, origination fees, attorney's fees, and other costs.

Collateral - Property you pledge as a guarantee for a secured loan. If you fail to repay the loan, the creditor can take the property. Sometimes used in place of capital as one of the three Cs.

Collection Agency - A firm assigned by a creditor to collect overdue amounts. Some creditors have internal collection departments. Like creditors, collection agencies report account information to consumer reporting agencies.

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.

Combined Loan-to-Value Ratio - The total amount you are borrowing in mortgage debts divided by the home’s fair market value. Someone with a $50,000 first mortgage and a $20,000 equity line secured against a $100,000 house would have a CLTV ratio of 70%.

Commitment Fee - A fee paid by a borrower to a lender in exchange for a promise to lend money on certain terms for a specified period. Usually charged in order to extend a loan approval offer for longer than the 30-60 day standard period. Quality lenders don’t usually charge these fees.

Conforming Loan - A mortgage that meets the requirements for purchase by Fannie Mae and Freddie Mac. Requirements include size of the loan, type and age. Current loan size limits for single-family homes range between $200,000 and $400,000. Loans that exceed the conforming size are considered jumbo mortgages and usually have higher interest rates.

Consolidation Loan - A loan obtained in order to combine multiple debts into one, typically at a lower interest rate.

Consumer - An individual who purchases products and services.

Consumer Debt - Debt incurred for items that aren't considered tangible investments such as credit card debt, car loans, and personal loans made by family members.

Consumer Statement - Under the Fair Credit Reporting Act, you have the right to add a consumer statement to your credit file to explain disputed information about your accounts.

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.

Convenience Check - Checks provided by your credit card company that you can use to access your available credit. These checks often have different rates and terms than your standard credit card charges.

Convertible ARM - An adjustable rate mortgage that can be converted to a fixed-rate mortgage under specified conditions.

Credit - A trust or promise to buy now and pay later under designated terms for goods or services.

Credit Balance - The amount owed on a credit card. Not to be confused with a minimum payment.

Credit Bureau - See credit reporting company.

Credit Card - A card used to make purchases or take out cash loans that requires the user to pay some or all of the outstanding amount each month. Credit cards are differentiated mainly by their terms.

Credit Card Issuer - A bank or other institution that extends consumers credit through a credit card.

Credit File - The collection of an individual's credit history, identifying information, and other records maintained by a credit reporting company. "Credit file" is sometimes used interchangeably with credit report, but technically a credit file is the source from which a credit report is generated.

Credit Fraud/Identity Theft - A crime that involves using another person's identity (e.g. name, Social Security Number or other personal information) to acquire credit or make purchases.

Credit History - A record of how a consumer has paid credit accounts in the past. It is used as a guide to determine whether or not the consumer is likely to pay future accounts on time.

Credit items - Information reported by current or past creditors.

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 Obligation - An agreement where a person becomes legally responsible for paying back borrowed money.

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 Reporting Agency - Commonly known as credit bureaus, credit reporting agencies are companies that receive, maintain, and provide information about consumers' credit history. Three national agencies -- Equifax, Experian, and TransUnion -- dominate credit reporting. There are many smaller agencies, but almost all of them get information from one or more of the three major agencies.

Credit Risk - The likelihood of a consumer to pay back an outstanding debt.

Credit Score - A numerical estimation of the likelihood that you'll meet debt obligations. A creditor gets your information from a credit reporting company and applies a credit scoring model to calculate your credit score.

Creditor - A company that enables consumers to make purchases on credit and/or lends consumers money. Sometimes used interchangeably with lender.

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

Back to Top

D

Daily Periodic Rate - A credit card's annual percentage rate divided by 365 days.

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.

Debit Card - A card that allows purchases to be deducted directly from a consumer's personal checking account.

Debt - The amount of money owed.

Debt-to-Income Ratio - Your income compared to the debt you owe.

Debtor - One who owes a debt.

Default - Failure to fulfill an agreed-upon financial obligation, such as making a loan payment.

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.

Demand Draft Checks - A type of electronic check that can be created online by entering account numbers listed on the bottom of a personal check and that can be cashed without a signature. This system was originally designed to help telemarketers take check payments over the phone. Now it is one of the fastest growing fraud tools.

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.

Discretionary Income - The money you have left over when all expenses and other financial obligations are paid.

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.

Disposable Income - Money left over after taxes are deducted.

Dispute - The process of submitting a request to the credit bureaus to have an error on your credit report corrected. Disputes are investigated and updates made to your credit report over a 30 day period. If your correction is made, you will receive a letter from the credit bureaus and a copy of your updated credit report. If your dispute is rejected, you will receive a letter explaining why the credit bureau could not verify the correction.

Divorce Decree - A court order that grants a divorce and outlines terms for child support, alimony and the separation of assets. While a divorce decree may define responsibility for shared debts (your spouse pays the car loan, you pay the mortgage) it does not legally separate responsibility for these accounts. In order to stop double responsibility and credit reporting of shared accounts, the debts must be closed or refinanced directly with the lender.

Downpayment - The initial amount paid in cash toward the total price of a home or car. A large down payment may help you get a more favorable interest rate and let you avoid having to buying mortgage insurance.

Back to Top

E

Empirica Score - A specific credit score developed by TransUnion. There are thousands of slightly different credit scoring formulas used by bankers, lenders, creditors, insurers and retailers. Each score can vary somewhat in how it evaluates your credit data

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.

Equity - The fair market value of a home minus the unpaid mortgage principal and liens. You build up equity in a home as you pay down your mortgage and as the property value increases. Also called the lendable value or net value.

Expiration Term - The set number of years that a record will remain on your credit report as mandated by the FCRA. Most negative records stay on your credit report for 7-10 years. The shortest expiration term is two years for inquiry records. The longest expiration term is 15 years for paid tax liens or indefinitely for unpaid tax liens. Positive information can also stay on your credit report indefinitely.

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

Back to Top

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.

Fair, Isaac Company - The developer of the FICO® score, a credit scoring model used by many creditors.

Fannie Mae - The largest mortgage investor. A government-sponsored enterprise that buys mortgages from lenders, bundles them into investments and sells them on the secondary mortgage market. Formerly known as the Federal National Mortgage Association.

Federal Housing Administration (FHA) - A division of the Department of Housing and Urban Development (HUD) that provides mortgage insurance and sets construction and underwriting standards.

FICO® Score - A credit score derived from the application of a credit scoring model created by the Fair, Isaac Company to a consumer's credit file held by a credit reporting company. FICO® scores range from the 300s to the 900s, but almost all consumers have a score between 500 and 850.

File Freeze - Residents of select states (currently California, Louisiana, Texas, Vermont and Washington) can request that the credit bureaus freeze their credit reports. This freeze stops new credit from being issued in your name by blocking creditors, lenders, insurers and other companies from accessing your credit data. In some cases, a $10 fee for each credit bureau is required to process the file freeze. The freeze can also be temporarily or permanently undone for an additional fee.

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

Finance Company - A company that mainly lends money to consumers who cannot qualify for credit at a credit union or bank. Finance companies generally charge higher rates than other creditors.

First Mortgage - The primary loan on a real estate property. This loan has priority over all other “secondary” loans.

Fixed Rate - An annual percentage rate that does not change

Fixed-Rate Option - A home equity line of credit financing option that allows borrowers to specify the payments and interest on a portion of their balance. This can be done a few times during the life of the loan, usually for an additional fee.

Fixed Rate Mortgage (FRM) - A mortgage with an interest rate that remains constant for the entire duration of the loan. FRM’s have longer terms (15-30 years) and higher interest rates than adjustable rate mortgages but are not at risk for changing interest rates.

Foreclosure - The legal process by which a creditor may sell mortgaged property to recover a defaulted mortgage.

Fraud Alert - If you suspect that you're the victim of identity theft or credit fraud, you may contact the credit reporting agencies and place a fraud alert on your credit file. Such an alert will prevent new credit accounts from being opened without your express permission.

Freddie Mac - Formerly known as the Federal Home Loan Mortgage Corporation, this is a government-sponsored firm that buys mortgages from lenders, pools them with other loans and sells them to investors.

Front-End Ratio or Front Ratio - A calculation of the percentage of your monthly pre-tax income that goes toward a house payment. The general rule is that your front ratio shouldn’t exceed 28%.

Back to Top

G

Garnishment - A legal process whereby a creditor has obtained judgment on a debt allowing him to receive full or partial payment by seizure of a portion of the debtor's assets (wages, bank account, etc.).

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 CodeTM.

Ginnie Mae - Also known as the Government National Mortgage Association. A part of the Department of Housing and Urban Development that buys mortgages from lending institutions and pools them to form securities, which it then sells to investors.

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

Guarantor - Person responsible for paying a bill.

Back to Top

H

Hard Inquiry - An indication on your credit file that a lender has obtained a copy of the report in order to evaluate your loan or credit application. An excess of hard inquiries within a six-month period may lower your credit rating.

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

High-LTV Equity Loan - A specific kind of home loan that causes your loan-to-value ratio to be 125% or more. When the total principal of a loan leaves the borrower with debt that exceeds the fair market value of the home, the interest paid on the portion of the loan above that value may not be tax deductible.

Home Equity - The part of your home you actually own, or the home's current market value minus the amount you still owe. See also home equity loan.

Home Equity Loan - A loan secured by a primary residence or second home to the extent of the excess of fair market value over the debt incurred in the purchase. Interest on a home equity loan may be tax deductible, but if you fail to pay your home equity loan, your home could be sold to pay off the debt.

Home Ownership and Equity Protection Act - A law designed to discourage predatory lending in mortgages and home equity loans.

Housing Expense Ratio - The percentage of your monthly pre-tax income that goes toward your house payment. The general rule is that this ratio shouldn’t exceed 28%. This is also known as the “front ratio.”

Back to Top

I

Identity Theft - A fast-growing crime that occurs when someone uses your personal information to fraudulently obtain credit.

Income Verification - Loan applications may require fully documented proof of an applicant’s income. Loans of this type usually offer lower interest rates than no-income or “no-doc” verification loans.

Individual Taxpayer Identification Number (ITIN) - This nine digit identification number is issued by the Internal Revenue Service to taxpayers who don’t have a Social Security number, such as people who are not US citizens. This number can be used to apply for credit and loans or to access credit reports.

Interest - The cost of borrowing or lending money, usually a percentage of the amount borrowed or loaned.

Interest Rate - The amount charged by a lender for borrowing money.

Interest-Only Loan - A type of loan where the repayment only covers the interest that accumulates on the loan balance and not the actual price of the property. The principal does not decrease with the payments. Interest-only loans usually have a term of 1-5 years.

Interest Rate Cap - A limit on how much a borrower’s percentage rate can increase or decrease at rate adjustment periods and over the life of the loan. Interest rate caps are used for ARM loans where the rates can vary at certain points.

Installment Loan - a credit account in which the amount of the payment and the number of payments are predetermined or fixed.

Introductory Rate - A temporary, low interest rate offered on a credit card in order to attract customers. This low rate usually lasts for about six months before converting to a normal fixed or variable rate. With some offers, the introductory rate can be revoked or terminated early if you make a late payment or violate some other terms of the account.

Inquiry - An instance in which all or part of your credit file is accessed by a company or individual. There are different types of inquiries. Inquiries stay on your credit report for not more than two years. See also hard inquiry, promotional inquiry, and soft inquiry.

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 on the credit report.

Back to Top

J

Joint Account - A credit or loan account held by two or more people. All account holders assume legal responsibility for the repayment of the account.

Joint Credit Report - A combined report created by merging the credit files of joint applicants and used by creditors to assess a joint application for credit, usually involving a mortgage. Note that the credit files remain separate.

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.

Jumbo Mortgage - A loan that exceeds the limits set by Fannie Mae and Freddie Mac (usually when the loan amount is more than $200,000-400,000). Also known as a non-conventional or non-conforming loan, these mortgages usually have higher interest rates than standard loans.

Back to Top

L

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

Late Fee - A fee attached to a delinquent account.

Late Payment - A payment delivered after its due date. Payments that are late by 30 days or more may be reported to credit reporting agencies and added to your credit report.

Lease - A contract that allows you the right to use or occupy property (a car or apartment, for example) over a specific length of time, during which you make regular payments and after which you do not own the property.

Lender - A company that lends money to consumers or enables them to make purchases on credit. Sometimes used interchangeably with creditor.

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 - A credit limit established by a creditor.

Loan - An extension of money that is to be repaid.

Loan Processing Fee - A fee charged by a lender for accepting a loan application and gathering the supporting paperwork, usually about $300.

Loan-to-Value Ratio (LTV) - The ratio of the amount of a home loan to the appraised value of the home. For example, if you borrow $75,000 to buy a $100,000 house, the LTV is 75%. As a general rule, the lower the LTV, the more favorable the terms of the loan will be.

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

Low-Documentation Loan - A mortgage that requires less income and/or assets verification than a conventional loan. Low-documentation loans are designed for entrepreneurs or self-employed borrowers - or for borrowers who cannot or choose not to reveal information about their incomes.

Low-Down Mortgages - Secured loans that require a small down payment, usually less than 10%. Often, low-down mortgages are offered to special kinds of borrowers such as first-time buyers, police officers, veterans, etc. These kinds of loans sometimes require that mortgage insurance is purchased by the borrower.

Back to Top

M

Maxed Out - A slang term for using up the entire credit limit on a credit card or a line of credit. Borrowing the maximum limit on cards or equity lines hurts your credit score.

Merged Credit Report - A comprehensive credit report containing credit information from all three of the major credit reporting agencies, also referred to as tri-merge.

Minimum Payment - The smallest payment you can make on a revolving credit account to maintain your account status as being paid as agreed.

Mortgage - A loan designed to facilitate the purchase of a home, in which the home itself serves as security for the loan. If the borrower doesn't make the required payments, the lender may through a legal process known as foreclosure, sell the home in order to recover the amount owed on the mortgage. "Mortgage" can also refer to the legal document detailing the borrower's responsibilities, including the payment schedule and terms.

Mortgage Broker - A person or company that matches lenders with borrowers who meet their criteria. A mortgage broker does not make the loan directly like a mortgage banker, but receives payment for their services. (See Broker Premium)

Mortgage Debts - Includes first mortgages, home equity loans, and any other loans secured by any real estate you own.

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.

Mortgage Interest Expense - A tax term for the interest paid on a loan that is fully deductible, up to certain limits, when you itemize income taxes.

Mortgage Refinance - The process of paying off and replacing an old loan with a new mortgage. Borrowers usually choose to refinance a mortgage to get a lower interest rate, lower their monthly payments, and avoid a balloon payment or to take cash out of their equity.

Most Recent Date - The date of the recent account condition or payment status. This date is also the balance date.

Back to Top

N

Negative Amortization - When you’re minimum payment toward a debt is not enough to cover the interest charges. When this occurs, your debt balance continues to increase despite your payments.

Net Income - Your total income from employment and other sources, minus taxes.

No-Documentation Loan - A mortgage in which the applicant provides only the minimum information - name, address and Social Security number. The underwriter decides on the loan based only on the applicant’s credit history, the appraised value of the house and size of down payment. This type of loan usually has higher interest rates than a standard loan.

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.

Back to Top

O

Obsolete Information - After seven years, negative information on your credit report is considered "obsolete" and should automatically fall off your credit report. The exception is a Chapter 7 bankruptcy, which remains on your report for 10 years.

Open Account - An account that is still active or still is being paid.

Origination Fee - The fee a lender charges to process a home loan. It may include the costs to check the applicant's credit report, prepare documents, inspect the property, and conduct an appraisal.

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.

Over-Limit Fee - A fee charged by a creditor when you’re spending exceeds the credit limit set on your card, usually $10-50.

Periodic Rate an interest rate expressed in daily or monthly terms, calculated by dividing the annual percentage rate by 365 or by 12.

Back to Top

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 – now paying, etc.)

Penalty Rate - A higher interest rate applied to your credit card account if you are late making payments.

Permissible Purpose - A purpose for which a credit reporting company may furnish a credit report on you to a third party. Credit reports cannot be furnished unless there is a permissible purpose for the report as defined in Section 604 of the Fair Credit Reporting Act.

Person to Person Loan - Usually applied to auto loans; this loan is a request for direct financing for a vehicle rather than a loan through a dealership.

Personal line of credit - The maximum amount one can owe at any time, based on income, debt and credit history.

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.

PITI - An acronym representing the main components of a monthly mortgage payment: principal, interest, taxes, and insurance.

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

Points - Charges levied by a mortgage lender, usually paid at closing. One point equals 1% of the value of the loan.

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

Pre-Approval Letter - A document from a lender or broker that estimates how much a potential homebuyer could borrow based on current interest rates and a preliminary look at credit history. The letter is a not a binding agreement with a lender. Having a pre-approval letter can make it easier to shop for home and negotiate with sellers. It is better to have a pre-approval letter than an informal pre-qualification letter.

Prepayment Penalty - A fee assessed by a lender when you pay off your loan ahead of schedule. The penalty compensates the lender for interest payments it would have received based on the loan's payment schedule.

Pre-Qualification Letter - A non-binding evaluation of a prospective borrower’s finances to determine how much he or she can borrow and on what terms. A pre-qualification letter is a less formal version of a pre-approval letter.

Prime Rate - The interest rate charged by banks on loans to the largest and highest-rated customers. This economic indicator often serves as the basis for variable interest rates.

Principal - The outstanding balance of a loan, exclusive of interest and other charges.

Primary User - The person under whose name a credit card account is listed. A primary user can authorize other people to use the account, but the primary user is ultimately responsible for repaying all charges.

Private Mortgage Insurance (PMI) - A form of insurance that protects the lender by paying the costs of foreclosing on a house if the borrower stops paying the loan. Private mortgage insurance usually is required if the down payment is less than 20% of the sale price.

Promotional Inquiry - A type of soft inquiry made to your credit report for the purpose of disclosing that a credit report was furnished in connection with a pre-approved offer. If your credit history matches a creditor's criteria, that creditor gets only limited information -- not your full credit report.

Public Record - Information obtained from court records about such things as state or federal tax liens, bankruptcy filings and judgments against you in civil actions.

Back to Top

Q

Qualifying Ratio - The ratio of your monthly expenses to your gross monthly income. Creditors use qualifying ratios to evaluate loan applications.

Back to Top

R

Rate Shopping - Applying for credit with several lenders to find the best interest rate, usually for a mortgage or a car loan. If done within a short period of time, such as two weeks, it should have little impact on a person’s credit score.

Reaffirmation Agreement - An agreement by a bankrupt debtor to continue paying a dischargeable debt after the bankruptcy, usually to keep collateral or a mortgaged property that would otherwise be repossessed.

Re-aging Accounts - A process where a creditor can roll-back an account record with the credit bureaus. This is commonly used when cardholders request that late payment records are removed because they are incorrect or resulting from a special circumstance. However, re-aging can also be used illegally by collections agencies to make a debt account appear much younger than it actually is. Some collections agencies use this tactic to keep an account from expiring from your credit report in order to try to get you to pay the debt.

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.

Refinancing - Restructuring your home loan to get a lower interest rate or to borrow money from the amount you've already paid on a loan.

Released - This means that a lien has been satisfied in full.

Repayment Period - The period of a loan when a borrower is required to make payments. Usually applies to home equity lines of credit. During the repayment period, the borrower cannot take out any more money and must pay down the loan.

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

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.

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 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.

Reverse Mortgage - A mortgage that allows elderly borrowers to access their equity without selling their home. The lender makes payments to the borrower with a reverse mortgage. The loan is repaid from the proceeds of the estate when the borrower moves or passes away.

Repossession - When a loan is significantly overdue, a creditor can claim property (cars, boats, equipment, etc.) that was used as collateral for the debt.

Revolving Account - An account where your balance and monthly payment can fluctuate. Most credit cards are revolving accounts.

Revolving Balance - The total balance of all revolving credit accounts.

Revolving Charge Account - An account that requires at least a specified minimum payment each month plus a service charge on the balance. As the balance declines, the amount owed for the service charge, or interest, also declines.

Rewards Card - A credit card that rewards spending with points, cash back programs or airline miles. These types of cards usually require that borrowers have good credit and commonly involve an annual fee.

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.

Back to Top

S

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

Schumer Box - An easy to use chart that explains the rates, fees, terms and conditions of a credit account. Creditors are required to provide this on credit applications by the U.S. Truth in Lending Act and it usually appears on statements and other documents.

Second Mortgage - A loan using a home’s equity as collateral. A first mortgage must be repaid before a second mortgage in a sale.

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

Secured Credit Card - A credit card secured by a savings account.

Secured Debt - A loan that requires a piece of property (such as a house or car) to be used as collateral. This collateral provides security for the lender, since the property can be seized and sold if you don’t repay the debt.

Secured Loan - A loan for which an item of property has been pledged in case of default. A mortgage is an example of a secured loan.

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 Charge - Additional services applied to an account.

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

Smart Card - An electronic prepaid cash card, usually sold at banks and exchanged at face value

Social Security Number (SSN) - The unique nine-digit number assigned to every legal resident of the United States by the Social Security Administration. Because no two people are assigned the same number, the SSN is usually the main identifying factor in a person's records, including credit reports.

Soft Inquiry - An instance in which your credit report is accessed without affecting your credit rating. Soft inquiries include your own requests for your credit report, promotional inquiries by credit card companies, and "checkup" inquiries by your existing creditors.

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.

Sub prime Borrower - A borrower who does not meet the qualifications for standard credit and loan offers. Usually a sub prime borrower has poor credit (a score under 650) due to late payments, collection accounts or public records. Lenders often grade them based on the severity of past credit problems, with categories ranging from “A-” to “D” or lower. Sub prime borrowers can qualify for loans and credit, but usually at a higher interest rate or with special terms.

Back to Top

T

Tax Lien - A charge upon real or personal property for the satisfaction of debts related to taxes

Teletrack - A credit reporting system that specifically tracks sub prime borrowers or borrowers with no official credit. Data about payday loan payments, rent payments and non-standard lenders is collected to develop accurate risk predictions for borrowers who may not be included in the standard credit reporting system.

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.

Three C's - Name for the traditional trio of basic criteria lenders consider when deciding whether to approve a loan: character, capacity, and capital (or collateral).

Trade line - Entry by a credit grantor to a consumer's credit history maintained by a credit reporting agency. A trade line describes the consumer's account status and activity. Trade line 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.

TRW - A former credit reporting agency that is now part of Experian.

Back to Top

U

Universal Default Clause - A credit card policy that allows a creditor to increase your interest rates if you make a late payment on any account, not just on their account. For example, your rates could increase dramatically on your credit card if you make a late payment on an unrelated loan. Your creditors track your payment history with other accounts by checking your credit report.

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.

Utilization Ratio - The ratio between the credit limits on your accounts and the outstanding balances. This ratio shows lenders how much of your available credit you are using overall.

Back to Top

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.

Back to Top

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.

Wage-Earner Plan - The three to five year repayment schedule in a Chapter 13 bankruptcy. The consumer must turn over disposable income to a bankruptcy trustee, who in turn repays creditors.

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.

Back to Top