Glossary

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 some 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.

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".

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.

Credit score - It broadly refers to a number generated by a statistical model that is used to objectively evaluate information that pertains to making a credit decision.

Default - A failure to deliver even the minimum payment on a loan or debt payment on or before the time agreed.

Equal Credit Opportunity Act (ECOA) - Federal legislation that prohibits dicrimination 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 or prospective borrowers or existing customers, in order to help make credit and marketing decisions.

Installment debt - Debt to be paid at regular times over a specified period.

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.