Credit Reports and Credit Scores

Credit Inquiry

An item on a person's credit report that indicates that someone has asked for a copy of the individual's report.

APR

Annual Percentage Rate, or the interest rate a credit card user will be charged on the unpaid portion of their balance.

Collections

Attempted recovery of a past-due credit obligation (or debt) by a collection department or agency.

Equifax, Experian, and TransUnion

The three credit reporting agencies.

Credit History

A record of a person's use of credit over time.

Credit Score

A three-digit number (from 300-850) that reflects the credit history detailed by a person's credit report.

Installment Plan

A way of paying of your credit in which the monthly payment is the same every month and the loan has a set time period.

Credit Bureau

A company that collects and sells information about how people handle credit. The three major national credit bureaus are Equifax, Experian and TransUnion.

Credit

A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some date in the future, generally with interest.

Credit Report

A document containing financial information about a person, focusing on his or her history of paying obligations, such as mortgages, car payments, utility bills and credit cards.

Paying bills consistently and on time is

A great way to build a good credit score.

Revolving Credit

Debt owed on an account that the borrower can repeatedly use and pay back without having to reapply every time credit is used. Also known as "open end credit"

Tax Lien

Shows up on the "Public Record" section of a credit report. When a borrowers property is seized because they couldn't pay their taxes.

Credit Risk

The measure of a person's creditworthiness. People who are more likely to repay their debts on time are considered a better risk by lenders, and will be charged lower interest rates for borrowing money.

FICO Score

The most commonly used credit score. The name comes from the Fair Isaac Corporation, which developed the scoring model. The score is used to predict the likelihood that a person will pay his or her debts. The scores use only information from credit reports.