Credit glossary

Reports and bureaus

Credit report #: A record of your credit accounts and how you’ve paid them — card and loan balances, limits, payment history, collections and bankruptcies — kept by the credit bureaus. Stories
Credit bureau (credit reporting company) #: A company that collects credit information and sells reports. The three nationwide bureaus are Equifax, Experian and TransUnion, and each keeps its own report on you. Stories
AnnualCreditReport.com #: The only website authorized to give out the free credit reports federal law guarantees. All three bureaus now let you check each report free every week. Stories
Furnisher #: A company that sends information about you to the bureaus — a bank, card issuer, lender or debt collector. You can dispute errors with the furnisher as well as the bureau. Stories
Hard inquiry #: A check of your credit when you apply for a loan or card. It shows on your report and can lower some scores a little for a while. Stories
Soft inquiry #: A check that doesn’t affect your scores — when you check your own credit, or a company checks it for a preapproved offer. Stories
Mixed file #: When a bureau mixes another person’s information into your report, often because of similar names or Social Security numbers. You can dispute it. Stories
Public record #: On today’s credit reports, mainly bankruptcies. Most civil judgments and tax liens no longer appear. Stories
Adverse action notice #: The notice you must get when a lender turns you down, or offers worse terms, because of your credit report. It names the bureau and gives you the right to a free copy of that report. Stories

Scores

Credit score #: A three-digit number, worked out from a credit report, that predicts how likely you are to pay as agreed. You have many scores, not one. Stories
FICO Score #: The most widely used family of credit scores, made by the company FICO. Lenders use many versions (such as FICO Score 8 and FICO Score 10), and they can differ. Stories
VantageScore #: A family of credit scores created by the three bureaus together, also used by many lenders and free score apps. Stories
Score range #: The base FICO Score and VantageScore both run from 300 to 850; higher is better. Some industry scores, such as FICO’s auto and card scores, run from 250 to 900. Stories
Payment history #: Whether you’ve paid on time. It’s the biggest single factor in FICO Scores. Stories
Credit utilization #: How much of your available revolving credit you’re using — a $300 balance on a $1,000 limit is 30%. Lower usually helps scores. Stories
Length of credit history #: How long your accounts have been open, on average and for the oldest one. Stories
Credit mix #: The kinds of credit you have — cards, which are revolving, and installment loans such as car loans and mortgages. Stories
Rate shopping #: Scoring models count several applications for the same kind of loan — a mortgage, a car loan or a student loan — within a short window as one inquiry, so you can compare offers. The window depends on the model. Stories
Scoring model version #: Each score is updated from time to time (FICO Score 8, 9, 10 and 10 T; VantageScore 3.0 and 4.0). The lender, not you, picks which version it uses. Stories

Fixing your credit

Dispute #: A request to a credit bureau or a furnisher to correct or remove information that’s wrong, incomplete or can’t be verified. Disputing is free. Stories
Investigation (reinvestigation) #: What a bureau must do after you dispute: check with the furnisher and tell you the result, usually within 30 days. Stories
Statement of dispute #: A short statement you can ask a bureau to add to your file when a dispute doesn’t go your way. Stories
Goodwill letter #: A letter asking a creditor to remove an accurate late payment as a courtesy. Creditors don’t have to agree. Stories
Credit repair company #: A company that charges to try to improve your credit. By law it can’t charge before it has done the work, must give you a written contract, and must let you cancel within three business days. It can’t remove accurate information. Stories
Seven-year rule #: Most negative information, such as late payments and collections, can stay on a report for up to seven years. Some bankruptcies can stay for up to ten. Stories
Rapid rescore #: A quick update to your credit report that a mortgage lender can ask for during an application, after you’ve fixed an error or paid down a balance. You can’t order one yourself. Stories
CPN (credit privacy number) #: A number sold as a way to get a “new credit identity”. It’s a scam: using one to apply for credit is illegal, and many are stolen Social Security numbers. Stories
File segregation #: A scam that promises a “clean” credit file by getting a new identification number to use instead of your Social Security number. It’s illegal. Stories

Debt and collections

Charge-off #: When a lender writes off a debt as unlikely to be paid, usually after months of missed payments. You still owe it, and it often goes to a collector. Stories
Collection account #: A debt that has been sent to a debt collector. It can appear on your report as a separate account. Stories
Debt collector #: A company that collects debts for others, or buys old debts and collects them itself. Stories
Fair Debt Collection Practices Act (FDCPA) #: The federal law that limits what debt collectors can do — no harassment, no lies, no calls at unusual hours — and gives you the right to dispute a debt. Stories
Validation notice #: The information a debt collector must send you early on: who the debt is owed to, how much, and how to dispute it. Stories
Statute of limitations #: The time limit for suing you over a debt. It varies by state and kind of debt, and in some states a payment can restart it. It’s separate from how long a debt can stay on your report. Stories
Time-barred debt #: A debt too old to sue over. A collector can still ask you to pay it, but can’t sue or threaten to. Stories
Debt settlement #: Paying less than you owe to close a debt, often through a company that negotiates for you. It can hurt your credit, and companies that sell it by phone can’t charge you before they’ve settled a debt. Stories
Debt management plan #: A plan, usually set up by a nonprofit credit counselor, in which you make one monthly payment that is divided among your creditors, often at lower interest rates. Stories
Medical debt on credit reports #: The three bureaus say they don’t report medical collections that have been paid, or that are under $500, and wait a year before reporting new ones. Rules are still changing; check What’s Changing. Stories
Wage garnishment #: A court order that lets a creditor take part of your paycheck to pay a debt, after it wins a lawsuit. Stories
Pay for delete #: Asking a collector to remove an account from your report in exchange for payment. Collectors don’t have to agree, and many won’t. Stories

Building credit

Credit invisible (thin file) #: Having no credit record at the bureaus, or too little for a score — common for young people and people new to the country. Stories
Secured credit card #: A card backed by a cash deposit, which usually becomes your credit limit. Used well, it can build a credit history. Stories
Credit-builder loan #: A small loan, often from a credit union or community bank, where the money is held in an account while you make payments and released at the end. The payments are reported to the bureaus. Stories
Authorized user #: Someone added to another person’s card account. The account’s history can show on the authorized user’s report — good or bad. Stories
Cosigner #: A person who agrees to pay a loan if the main borrower doesn’t. The loan shows on both people’s reports. Stories
Rent reporting #: Getting on-time rent payments added to your credit reports, through a landlord or a service. Not every score counts rent. Stories
Alternative data #: Information beyond a credit report — such as rent, utilities or bank-account cash flow — that some lenders and scores use. Stories

Cards and loans

APR (annual percentage rate) #: The yearly cost of borrowing, as a percentage. On credit cards it’s the interest rate charged on balances you don’t pay off. Stories
Grace period #: The time between the end of a card’s billing cycle and the due date. Pay the full statement balance by then and you usually pay no interest on purchases. Stories
Minimum payment #: The least you can pay on a card to stay current. Paying only the minimum keeps you in debt longer and costs more interest. Stories
Penalty APR #: A higher rate a card issuer can charge after a late payment. Stories
Balance transfer #: Moving a balance from one card to another, often at a low introductory rate and with a fee. Stories
Credit limit #: The most you can borrow on a card or line of credit. Stories
Revolving credit #: Credit you can use, repay and use again, like a credit card. Stories
Installment loan #: A loan you repay in fixed payments over a set time, such as a car loan, a mortgage or a student loan. Stories
Debt-to-income ratio (DTI) #: Your monthly debt payments divided by your monthly income before taxes. Mortgage lenders weigh it heavily. Stories
Prequalification and preapproval #: A lender’s early estimate of what you might borrow. Prequalification usually uses a soft inquiry; a mortgage preapproval usually checks your credit fully. Stories
Buy now, pay later (BNPL) #: Splitting a purchase into a few payments, often with no interest. Some BNPL loans now show up on credit reports. Stories
Payday loan #: A small, short-term loan due on your next payday, usually with very high fees. Stories
Cash advance #: Borrowing cash against a credit card. It usually has a fee, a higher APR and no grace period. Stories
Credit CARD Act #: A 2009 federal law that, among other things, requires card issuers to give 45 days’ notice before raising your rate on new purchases and limits cards for people under 21. Stories

Protecting yourself

Credit freeze #: A block on access to your credit report, so most lenders can’t open new credit in your name. It’s free at each bureau, and you can lift it when you apply. Stories
Fraud alert #: A note on your report telling lenders to verify your identity before opening credit. An initial alert lasts one year; identity theft victims can get one that lasts seven years. Stories
Credit lock #: A bureau product similar to a freeze, sometimes with a fee. It isn’t covered by the same law as a freeze. Stories
Identity theft report #: A report you make to the FTC at IdentityTheft.gov. It gives you a recovery plan and helps you prove the theft to companies and bureaus. Stories
Data breach #: When a company’s information about people is stolen or exposed. A breach notice usually says what was taken and what the company is offering, such as free monitoring. Stories
Synthetic identity fraud #: Fraud using a made-up identity built from real and fake details, such as a real Social Security number with a different name. Stories
Prescreened offers #: Card and insurance offers based on a soft check of your credit. You can opt out of them for five years or permanently through the bureaus’ official opt-out service. Stories

Rules and agencies

CFPB (Consumer Financial Protection Bureau) #: The federal agency that writes and enforces many rules for credit reports, cards, loans and debt collection, and takes consumer complaints. Stories
FTC (Federal Trade Commission) #: The federal agency that fights scams and enforces consumer-protection laws, including the rules for credit repair companies. It runs IdentityTheft.gov. Stories
Fair Credit Reporting Act (FCRA) #: The federal law that governs credit reports: who can see them, your right to free reports, and your right to dispute errors. Stories
Equal Credit Opportunity Act (ECOA) #: The federal law that bans lenders from discriminating because of race, color, religion, national origin, sex, marital status, age or receiving public assistance. Stories
Proposed rule and final rule #: An agency first proposes a rule and takes comments; only a final rule has the force of law, and it takes effect on its effective date unless a court or Congress stops it. Stories