| 25 need-to-know credit-scoring terms |
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| 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.
Equifax: One
of the three major credit-reporting agencies. Experian:
One of the three major credit-reporting agencies. FICO
scores: The most commonly used credit score. The name
comes from the Fair Isaac Corporation, which developed the scoring model. They
are used to predict the likelihood that a person will pay his or her debts. The
scores use only information from credit reports. Hard
inquiry: An item on a person's credit report that indicates
that someone has asked for a copy of the individual's report. Hard inquiries are
requests that result from a person applying for credit, such as a mortgage, a
car loan, a credit card or a rental application. They are included in the formula
for determining a person's credit score. Installment
credit: A type of credit in which the monthly payment
is the same every month and the loan has a set time period. The most common forms
of installment credit are mortgages and car loans. Judgment:
A decision from a judge on a civil action or lawsuit; usually an amount of money
a person is required to pay to satisfy a debt or as a penalty. Lien:
A legal claim placed on a person's property, such as a car or a house, as security
for a debt. A lien may be placed by a contractor who did work on your house or
a mechanic who repaired your car and didn't get paid. The property cannot be sold
without paying the lien. Public record:
Information on your credit report that has been obtained from court records, such
as bankruptcies, judgments, and liens. These are never good. Rate
shopping: Applying for credit with several lenders to
find the best interest rate, usually for a mortgage or a car loan. If done within
a short period of time, such as two weeks, it should have little impact on a person's
credit score. Revolving credit:
An account that requires a minimum payment each month plus service charges on
the remaining balance. As the balance declines, so does the service charge. Soft
inquiry: An item on a person's credit report that indicates
that someone has asked for a copy of his or her report. Soft inquiries can be
from current creditors reviewing the file, prospective creditors who want to send
out an offer such as a pre-approved credit card, or a person's own review of their
file. They are not included in the formula for determining a person's credit score. Trade
line: An account listed on a credit report. Each separate
account is a different trade line. Trans
Union: One of the three major credit-reporting agencies. | 
