Credit Score Terms - Part 2
Delinquent
A designation on a credit report that a person hasn't made the minimum payment
on a loan or a credit card on time. On credit reports, delinquencies are usually
shown as being 30, 60, 90 or 120 days delinquent. Delinquencies are a serious
negative item on a credit report.
Equifax
One of the three major credit-reporting agencies.
Experian
One of the three major credit-reporting agencies.
FICO scores
The most commonly used credit score. The name comes from the Fair Isaac
Corporation, which developed the scoring model. They are used to predict the
likelihood that a person will pay his or her debts. The scores use only
information from credit reports.
Hard inquiry
An item on a person's credit report that indicates that someone has asked for a
copy of the individual's report. Hard inquiries are requests that result from a
person applying for credit, such as a mortgage, a car loan, a credit card or a
rental application. They are included in the formula for determining a person's
credit score.
Installment credit
A type of credit in which the monthly payment is the same every month and the
loan has a set time period. The most common forms of installment credit are
mortgages and car loans.
Judgment
A decision from a judge on a civil action or lawsuit; usually an amount of money
a person is required to pay to satisfy a debt or as a penalty.
Lien
A legal claim placed on a person's property, such as a car or a house, as
security for a debt. A lien may be placed by a contractor who did work on your
house or a mechanic who repaired your car and didn't get paid. The property
cannot be sold without paying the lien.
Public record
Information on your credit report that has been obtained from court records,
such as bankruptcies, judgments, and liens. These are never good.
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.
Revolving credit
An account that requires a minimum payment each month plus service charges on
the remaining balance. As the balance declines, so does the service charge.
Soft inquiry
An item on a person's credit report that indicates that someone has asked for a
copy of his or her report. Soft inquiries can be from current creditors
reviewing the file, prospective creditors who want to send out an offer such as
a pre-approved credit card, or a person's own review of their file. They are not
included in the formula for determining a person's credit score.
Trade line
An account listed on a credit report. Each separate account is a different trade
line.
Trans Union
One of the three major credit-reporting agencies.
Previous: Credit Score Terms Explained