| Credit scoring and credit report glossary |
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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.
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