It wasn't all that long ago that
American's faced great financial crisis. As a nation, we struggle
with debt, and it keeps us from achieving a better life. Debt
Education is here to help you change all that ... just ask!
REAL PEOPLE ... CARING ABOUT REAL
ISSUES
Debt Education Glossary of Terms
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 United
States 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.
There's a lot of information to read through on the Debt Education
website, but we feel this is extremely important material. We
strongly recommend that you bookmark
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The Debt Education website was built for you. Please explore
our website. You'll find resources and information on virtually
every aspect of financial planning and money management. These
debt delp resources are designed to help you get out of debt
and stay out of debt. You can achieve financial independence.
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Debt Education PO Box 5156, Santa Cruz, CA 95063
