- Application scoring
- The use of a statistical model to objectively
evaluate and “score” credit applications and credit bureau data in order
to assess likely future performance. Scores help businesses make decisions such as
whether to accept or decline the application.
- Bankruptcy
- A proceeding in U.S. Bankruptcy Court that may legally
release a person from repaying debts owed. Credit reports normally include
bankruptcies for up to 10 years.
- Charge-off
- The balance on a credit obligation that a lender no longer
expects to be repaid and writes off as a bad debt.
- Collection
- Attempted recovery of a past-due credit obligation by a
collection department or agency.
- Consumer credit file
- A credit bureau record on a given individual. It
may include: consumer name, address, Social Security number, credit history,
inquiries, collection records, and public records such as bankruptcy filings and
tax liens.
- Credit bureau
- A credit reporting agency that is a clearinghouse for
information on the credit rating of individuals or firms. Is often called a
“credit repository” or a “consumer reporting agency”. The
three largest credit bureaus in the U.S. are Equifax, Experian and
TransUnion.
- Credit bureau risk score
- A type of credit score based solely on data
stored at the major credit bureaus. It offers a snapshot of a consumer's credit
risk at a particular point in time, and rates the likelihood that the consumer
will repay debts as agreed.
- Credit history
- A record of how a consumer has repaid credit
obligations in the past.
- Credit obligation
- An agreement by which a person is legally bound to
pay back borrowed money or used credit.
- Credit report
- Information communicated by a credit reporting agency
that bears on a consumer's credit standing. Most credit reports include: consumer
name, address, credit history, inquiries, collection records, and any public
records such as bankruptcy filings and tax liens.
- Credit risk
- The likelihood that an individual will pay his or her
credit obligations as agreed. Borrowers who are more likely to pay as agreed pose
less risk to creditors and lenders.
- Credit score
- This term is often used to refer to credit bureau risk
scores. It broadly refers to a number generated by a statistical model which is
used to objectively evaluate information that pertains to making a credit
decision.
- Default
- A failure to make a loan or debt payment when due. Usually an
account is considered to be “in default” after being delinquent for
several consecutive 30-day billing cycles.
- Delinquent
- A failure to deliver even the minimum payment on a loan or
debt payment on or before the time agreed. Accounts are often referred to as 30,
60, 90 or 120 days delinquent because most lenders have monthly payment
cycles.
- Equal Credit Opportunity Act (ECOA)
- Federal legislation that prohibits
discrimination in credit. The ECOA originally was enacted in 1974 as Title VII of
the Consumer Credit Protection Act.
- Fair Credit Reporting Act(FCRA)
- Federal legislation that promotes the
accuracy, confidentiality and proper use of information in the files of every
“consumer reporting agency”. The FCRA was enacted in 1970.
- FICO® scores
- Credit bureau risk scores produced from models
developed by Fair Isaac Corporation are commonly known as FICO scores.
Fair Isaac credit bureau scores are used by lenders and others to assess the
credit risk of prospective borrowers or existing customers, in order to help make
credit and marketing decisions. These scores are derived solely from the
information available on credit bureau reports.
- Inquiry
- An item on a consumer's credit report that shows that someone
with a “permissible purpose” (under FCRA rules) has previously requested
a copy of the consumer's report. Fair Isaac credit bureau risk scores take into
account only inquiries resulting from a consumer's application for credit.
- Installment debt
- Debt to be paid at regular times over a specified
period. Examples of installment debt include most mortgage and auto loans.
- Insurance bureau score
- An insurance rating based solely on credit
bureau data stored at the major credit bureaus. It offers a snapshot of an
individual's insurance risk at a particular point in time, and helps insurers
evaluate new and renewal auto and homeowner insurance policies.
- Late payment
- A delinquent payment; a failure to deliver a loan or debt
payment on or before the time agreed.
- Revolving debt
- Debt owed on an account that the borrower can
repeatedly use and pay back without having to reapply every time credit is used.
Credit cards are the most common type of revolving account.
- Score
- See “credit score”.
- Scoring model
- A statistical formula that is used, usually with the
help of computers, to estimate future performance of prospective borrowers and
existing customers. A scoring model calculates scores based on data such as
information on a consumer's credit report.
|
|
 |
