Credit Report Glossary

Bankruptcy

A proceeding in U.S. Federal Court that may legally release a person from repaying debts owed. The law contains several chapters which relate to different methods of relief:

• Chapter 7 - Straight Bankruptcy (total liquidation of assets)
• Chapter 11 - Business Reorganizations
• Chapter 12 - Farm Debt Bankruptcy
• Chapter 13 - Wage Earner Repayment Plan

Budget

A balanced financial plan, for saving and spending money.

C

CONSOLIDATION LOAN
A loan usually obtained for the purpose of reducing the amount of the payments of bills owing by consolidating the bills into one loan payment. The consumer pays off several bills with the proceeds from one loan and is left with one consolidated monthly payment.

CREDIT BUREAUS
These are the private, for profit companies that gather information about a consumer's credit history and sell it to banks, credit card companies, landlords, employers, and other interested parties.

CREDIT CARD
A rectangular piece of plastic used instead of cash or checks authorizing payment for goods and services.

CREDIT REPAIR COMPANIES
Those Companies that promise to,"clean-up" or "erase" your bad credit and give you a fresh start. Also know as Credit Clinics.

Credit Report

A fact based record of an individual's credit payment history. A report designed to indicate your existing debts and how well you've repaid past debts. Its main purpose is to help a lender quickly and objectively decide whether to grant a consumer credit. It also lists the companies that have inquired about your credit recently, and public records such as bankruptcies, judgments, and foreclosures. A credit report is used to develop a consumer's credit score, but does not contain a score. It includes current and prior addresses, employment and identification information such as date of birth and social security number. It is also called Consumer Report.

Credit Score

Credit scores provide a numerical representation of a consumer's credit at a given point in time. A credit score is based on the contents of your Equifax, Experian, or Trans Union credit report. It is expressed as a number. Credit scores are calculated using data contained in a consumer's credit report. The score assesses the likelihood that a borrower will repay a loan or credit card. Lenders establish their own "cut-off" points for good scores vs. bad, and they may factor-in non-credit report items, such as income and bank balance

Credit History

A record of how a consumer has paid credit accounts in the past, used as a guide to determine whether the consumer is likely to pay accounts on time in the future

E

EQUIFAX Equifax is one of the three nationwide credit reporting companies. It is headquartered in Atlanta , Georgia , and employs 5,000 people in 13 countries, with $1.1 billion in annual sales.

EXPERIAN Experian is one of the three nationwide credit reporting companies, created in 1996 when TRW sold-off its credit reporting business. Headquarters in Nottingham , UK and Costa Mesa , California . Employs more than 12,000 people, and has annual sales of $1.5 billion.

F

FAIR CREDIT REPORTING ACT A federal law, established in 1971, and revised in 1997, which governs credit reporting agencies and establishes consumer rights involving credit reports. It also establishes specific permissible purposes for which credit reports may be requested, and places time limits on how long adverse information may be reported.

FTC The Federal Trade Commission (FTC) is the U.S. Government agency most responsible for regulating the credit reporting agencies. It is also maintains a national database of identity theft complaints, and is active in educating consumers

I

IDENTITY THEFT A crime in which an impostor uses the name, social security number, and/or other personal information of a victim to open credit accounts, use existing credit accounts, or otherwise acquire benefits using the victim's identity. Identity thieves sometimes change the address and phone number on a victim's accounts, ruining their credit before the theft has been discovered. A credit report is often the best way to discover identity theft, and a security alert on one's credit report is often the best way to prevent further occurrences when fraud has been discovered.

IDENTITY THEFT DETECTION A tri-merge credit report is the best, for early identity theft detection.

• Look for inquiries by companies with whom you are unfamiliar, or with whom you did not authorize your credit is checked.
• Look for accounts you don't recognize - these could be accounts that were fraudulently opened in your name.
• Look for incorrect address or employment information. An identity thief may have opened an account, or got a job your name at a different address.
• Look for activity in accounts you had thought to be inactive.
• Look for public record items that clearly are not yours.

P

PUBLIC RECORD
Public Record is the information obtained by the Credit Reporting Agency from court records, such as liens, bankruptcy filings and judgments. Public records are open to any person who requests to see them.

S

SECURED CREDIT CARD A credit card secured by a savings account that has been established in advance by the borrower. The amount in the account usually determines the limit on the credit card. These accounts present no real risk factor for creditors and are therefore much easier to obtain.

SECURED DEBT Debts linked to collateral. The collateral guarantees payment of the debts or the creditor has a right to take the collateral. Secured debt is most commonly used when purchasing homes or cars.

T

TRI-MERGE A tri-merge is a credit report that combines the credit reports from all three bureaus (Equifax, Experian, and Trans Union.) Trade lines are arranged so that the same accounts, as reported by the three bureaus, can be viewed next to one another, and differences noted. Tri-merged credit reports are commonly used in mortgage lending decisions.

TRANSUNION Trans Union is one of the three nationwide credit reporting agencies. It is headquartered in Chicago , Illinois , and employs 3,600 people in more than 24 countries. It is a privately held corporation.

TRW TRW was one of the original nationwide credit reporting agencies. It exited the field in 1996, and a new company, Experian, took over TRW's credit reporting business.

U

UNSECURED DEBT Debts with no collateral. Commonly used with credit cards, doctors' bills, student loans, personal loans from friends or relatives, or rent.