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Financial Literacy - Credit scores
TOOLS AND RESOURCES
Improving credit tool kit
Calculators, work sheets and lots of strategies for improving your credit.
Credit scoring, demystified

Credit scoring and credit report glossary

8. Credit reporting agency -- A company that collects and sells information about how people handle credit. It issues credit reports that list how individuals manage their debts and make payments, how much untapped credit they have available and whether they have applied for any loans. The reports are made available to individuals and to creditors who profess to have a legitimate need for the information. The three major national credit bureaus are Equifax, Experian and TransUnion. They are also referred to as consumer reporting agencies and credit bureaus.

9. Credit score -- A three-digit number that reflects the credit history detailed by a person's credit report. Lenders calculate this number with the assistance of computer systems as part of the process of assigning rates and terms to the loans they make. The higher the number, the better the terms that a lender will offer.

Credit scores are also increasingly used by others in making decisions about whether to do business with a consumer, and on what terms. For example, many auto insurance companies increase the insurance premium for people with low credit scores, in the belief that there is a relationship between credit scores and making insurance claims.

10. Credit utilization rate -- The amount of money a person has in outstanding debt, compared to the amount of credit available on all of the individual's credit cards and credit lines. The higher a person's debt relative to available credit, the more risky the individual appears to potential lenders. Also called the debt-to-available-credit ratio.

11. Debt-to-available-credit ratio -- The amount of money a person has in outstanding debt, compared to the amount of credit available on all of the individual's credit cards and credit lines. The higher a person's debt relative to available credit, the more risky the individual appears to potential lenders. Also called the credit utilization rate.

12. 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.

-- Posted: June 18, 2007
 
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