Glossary of Terms
Common credit repair, financial, and legal terms defined.
Account Status
The current state of an account (e.g., Open, Closed, Paid, Collection, Charge-off). In Metro 2® format, this is a specific code (e.g., 11 for Current, 93 for Collection) that determines how the account affects your score.
Bankruptcy
A legal proceeding involving a person or business that is unable to repay their outstanding debts. Chapter 7 remains on credit reports for 10 years; Chapter 13 for 7 years.
Charge-off
A declaration by a creditor (usually after 180 days of non-payment) that a debt is unlikely to be collected. The debt is written off as a loss but is still owed and can be sold to a collection agency.
Collection
An account that has been transferred to a third-party agency to collect a past-due debt. Collections have a significant negative impact on credit scores.
Credit Bureau
A company that collects information about consumer credit behavior and sells it to lenders. The three major bureaus are Experian, Equifax, and TransUnion. Also called a Consumer Reporting Agency (CRA).
Credit Utilization
The ratio of your credit card balances to your credit limits. It accounts for 30% of your FICO score. Keeping this under 30% (ideally under 10%) helps your score.
Creditor
A person or company to whom money is owed. In credit reporting, often referred to as the 'Furnisher' of information.
Date of First Delinquency (DOFD)
The date an account first became past due and was never brought current. This date determines when negative items must be removed from your credit report (usually 7 years from this date).
Dispute
A formal request to a credit bureau to investigate the accuracy or completeness of an item on your credit report. Under the FCRA, bureaus must investigate within 30 days.
Fair Credit Reporting Act (FCRA)
A federal law that regulates how consumer credit information is collected, used, and shared. It gives consumers the right to view their report, dispute inaccuracies, and have outdated info removed.
Fair Debt Collection Practices Act (FDCPA)
A federal law that limits the behavior of third-party debt collectors, prohibiting harassment, false statements, and unfair practices.
FICO Score
The most widely used credit scoring model, created by the Fair Isaac Corporation. Scores range from 300 to 850.
Furnisher
An entity (bank, credit card issuer, collection agency) that provides information about a consumer to a credit bureau.
Hard Inquiry
A record of a lender checking your credit report when you apply for a loan or credit card. Can lower your score by a few points and stays on your report for 2 years.
Judgment
A formal decision by a court. While civil judgments and tax liens were removed from credit reports in 2017/2018 due to data standards (NCAP), they are still public records.
Metro 2® Format
The standard data format used by furnishers to report consumer credit history to credit bureaus. It is designed to be accurate and complete; deviations from this format can be grounds for a dispute.
Negative Item
Any information on a credit report that lowers your score, such as late payments, collections, charge-offs, bankruptcies, or foreclosures.
Pay for Delete
A negotiation strategy where you offer to pay a collection account in full or part in exchange for the collector removing the account from your credit report entirely.
Secured Credit Card
A credit card backed by a cash deposit. Often used to build or rebuild credit history.
Soft Inquiry
A credit check that does not affect your credit score. Examples include checking your own credit, employer background checks, or pre-approved offers.
Statute of Limitations
The time period during which a creditor can legally sue you to collect a debt. This varies by state and debt type. It is different from the credit reporting time limit (7 years).
Tradeline
An industry term for a credit account listed on your credit report. Each credit card, loan, or mortgage is a separate tradeline.
Validation (Debt Validation)
A consumer right under the FDCPA to request proof that a debt is valid. If a collector cannot validate the debt within 30 days of the request, they must stop collection activity.
VantageScore
A credit scoring model developed jointly by the three major bureaus to compete with FICO. It is often used for free credit scores online but less commonly used by lenders.
