Glossary of Credit and Financial Terms

Glossary of Credit and Financial Terms

Applicant – The person who applies to a creditor for credit.

Bankruptcy – The legal process under which the debtor is given a new start and the creditors receive a fair distribution of the debtor’s assets.

Bankruptcy Code – The body of a federal statutory law that governs the bankruptcy process.

Charge Off – To charge an account off to profit and loss because the debt is considered un-collectible. A debt that is no longer considered to be collectible.
Collection Agency – A company that attempts to collect bad debts for a percentage of what is collected.

Credit Bureau – A company or reporting agency that receives and reports information on a consumer’s credit reports.

Consumer Statement – A written statement by the consumer disputing the accuracy of certain information in the credit report. A statement of 100 words or less from a consumer explaining why he or she continues to dispute a credit report entry. This statement must be attached to, and sent out with credit report.

Co-signer – A person who has good credit and agrees to assume responsibility for your debts in the event you default.
Another person who applies for a loan and assumes equal liability for it.

Credit History – A record indicating your trustworthiness and ability to repay a loan.
A record of what you have borrowed and repaid.

Credit Report – A report issued by a credit reporting agency listing five types of information: (1) Identifying information (2) Account Information (3) Public Record Information (4) Credit Report Requests and (5) A Consumer Statement.

Creditor Settlement Agreement – An agreement between creditor and debtor whereby the creditor agrees to remove negative entries from the debtor’s credit reporting exchange for full or partial repayment of the debt.

Credit Scoring System – A system used to rate creditworthiness. A statistical system used to evaluate an applicant’s creditworthiness.

Creditworthiness – A creditor’s evaluation of an applicants past and future ability and willingness to repay debts.

Creditor – One who extends credit: bank, store, credit card company, etc. One to whom you owe money.
Debtor – One who owes the debts.

Default – Failure to meet the terms of a credit agreement.

Ding – A negative or neutral entry or remark on a credit report.

Excessive inquiries – Too many credit inquiries in a short period of time make lenders become suspicious of a credit applicant’s apparent sudden need for credit.

Fair Credit Reporting Act – A federal law enacted to protect consumers from credit abuses.

Federal Trade Commission – The federal agency responsible for bringing legal action against a credit bureau.

File – All of the information that the credit bureau has on a consumer which is used to compile the credit report.

Frivolous and Irrelevant – A term applied by credit bureaus to consumer dispute letters that are suspected to be part of a plan to bombard the bureau with so much work that it cannot meet deadlines.

Obsolete Information – Negative entries that remain on a credit report beyond the statutory time limit.

Reasonable Time – Federal law requires a credit bureau to respond to a consumer dispute within a reasonable period of time (usually no longer than eight weeks) or the agency is in default.

Repayment History – Creditors report your credit payments as either delinquent (negative) regular (positive) or neutral (non-rated).

Subscribers – Businesses that pay a credit reporting agency for access to files of people who bought on credit.