Definitions Page in Alphabetical Order
Bankruptcy- is a legal status of an insolvent person who cannot repay the debts they owe to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. Most common Bankruptcies are Chapter 7- basic liquidation for individuals and businesses; also known as straight bankruptcy; it is the simplest and quickest form of bankruptcy available. Chapter 13-rehabilitation with a payment plan for individuals with a regular source of income; enables individuals with regular income to develop a plan to repay all or part of their debts; also known as Wage Earner Bankruptcy. Bankruptcies remain on your credit file for up to ten years from the date of discharge.
Charge off – A charge-off is a debt that has been determined uncollectible by the original creditor, typically charge-offs occur after six months of non-payment. Charge offs can remain on your credit file up to seven years from the date of first delinquency.
Credit History – A record of your ability to repay debts, it consists of loans, leases, mortgages, credit cards, collection accounts, payment history and various details about each account.
Credit Reporting Agencies/Credit Bureaus –An agency or bureau that collects and maintains your credit information and sells it in the form of a credit report based on your credit worthiness. The three major Credit Bureau are Equifax, Experian, Transunion.
Collection – an account goes into collection when a debt has not been paid it, it typically gets sold to Collection Company to collect the debt. Collections can remain on your credit file up to seven years from the date of first delinquency.
Date of Last Activity -This is the date that is used to start the 7-year reporting clock for the statute of limitations
Date Last Reported - This is the last date that the creditor supplied an update to the CRA. It has no bearing on the statue of limitations.
Derogatory- This is negative information being reported on your credit report, the term derogatory can be used for delinquencies or late pays on an account. Derogatory accounts can remain on your credit file up to 7 years from the date of first delinquency.
E-Oscar- E-OSCAR is a web-based, automated system that enables Data Furnishers, and Credit Reporting Agencies to create and respond to consumer credit history disputes. The e-Oscar (Online Solution for Complete and Accurate Reporting) system is utilized even when consumers send in detailed disputes, with supporting documents. The dispute is broken down into a two or three digit code and sent to the original creditor to verify a simple code, failing the duty to investigate.
FICO Score: Your FICO score (pronounced FY-koh) is a branded version of your credit score developed by and named after FICO (formerly known as Fair Isaac). According to FICO, the FICO score is the score most widely used by the nation's largest banks to make credit and loan approval decisions for applicants. FICO scores range from 300-850 and are calculated based on information in all three major credit bureaus' individual reports. Therefore, you have three FICO scores, one for each of the three credit bureaus. Your FICO score is based on five key pieces of information: the timeliness of your bill payments, your level of debt, the types of accounts you have, the length of time you've had credit, and the number of recent credit applications. You can check your Equifax and TransUnion FICO scores by visiting myFICO.com. Unfortunately, you cannot purchase your FICO score based on Experian credit report data. FICO is also the name of the company formerly known as Fair Isaac who developed the FICO scoring model.
Foreclosure: The legal process by which an owner's right to a property is terminated, usually due to default. Typically involves a forced sale of the property at public auction, with the proceeds being applied to the mortgage debt.
Free Consumer Credit Report: If you don’t wish to know your credit score and you don’t want to pay anything, we suggest utilizing your free credit report at AnnualCreditReport.com. It’s a government backed program that ensures consumers receive a credit report from each of the three main bureaus every 12 months upon request. It’s important to note that these credit reports are not tri-merge, and you must order all three separately to create your own version of a tri-merge credit report. You will not receive a credit score with these free credit reports. These credit reports are very limiting and do not offer any tools to dispute your credit. We strongly advise utilizing your own letter writing skills or an extremely low cost automated system such as www.freecreditfixletters.com when attempting to fix items in your credit that you deem inaccurate, outdated, misleading, or unverifiable in a timely manner. This also includes the countless victims of Identity Theft. Sending written correspondence to all three of the major credit bureaus will aide in your efforts to ensure you receive the proper consumer protections allotted by the Fair Credit Reporting Act of 1970, the FACTA Laws of 2003 and all updated amendments to these powerful consumer protection laws. Please refer to quick links for details.
Hard Inquiry: Your credit score and credit rating are very important factors when a credit card company determines your credit worthiness, or likeliness of default, for a credit card. A “hard inquiry” (also called a “hard pull”) on your credit report takes place when you apply for a credit card. A hard inquiry lowers your overall score and is a full inquiry in to your credit history. It is not a good idea to have more than one or two hard inquiries on your credit file a month. Your credit limit on your card as well as your interest rate can be changed at any time based on your credit rating, and too many hard inquiries can have a negative effect on your rating. If you are going to apply for a credit card and are considering multiple credit card offers then it makes sense to apply for the various cards at roughly the same time since multiple hard credit inquiries will be treated as just one inquiry if they are done at or around the same time frame. A hard inquiry counts for 10 percent of your credit score so that does affect your credit score for up to one year. . Inquiries remain on your credit report for up to two years, the last six months are the ones that count against you
Identity Theft: Illegally obtaining a person(s) personal and financial information through criminal means. A thief uses this information for illegal purposes, such as to make purchases using the victim's name. These criminals may find information via discarded credit card or bank statements that are not properly destroyed, by stealing ones mail and criminals may also find the information online in customer databases.
How to properly make a claim of Identity Theft: To ensure you receive the maximum potential for having incidents of identity theft removed from your personal credit file we recommend the following steps:
Place a fraud alert with the credit reporting agencies.
Immediately report the credit cards to the issuing agencies as stolen.
Get a copy of all the fraudulent charges.
Contact your local law enforcement agency to file a police report.
Obtain a copy of your police report.
Obtain a copy of your credit report. You are authorized additional annual credit reports if victimized by Identity Theft.
Create a letter to all three credit bureaus and or applicable agencies to request for the immediate removal of any fraudulent information in your credit file.
Make copies of all reports to accompany your letters. We recommend that you keep the originals.
Mail letters via USPS and we suggest that you send all letters as registered. Keep good records.
Keep good records. If you are a FCFL “paid service” member and are using the auto generated letter system we also recommend utilizing the message board and the alert system to create periodical reminders.
Inquiry: An attempt to seek information concerning interest rates and the availability of funds without disclosing your identity, or specifying the need or purpose of the proposed borrowing, or the specifics concerning your creditworthiness. Inquiries remain on your credit report for up to two years, the last six months are the ones that count against you.
Judgment- This is a court order to pay a certain amount of money to someone who has filed a lawsuit against you. If a creditor, lender, debt collector, attorney, or some other party files a lawsuit against you and wins, a judgment is made against you. The judgment goes on your credit report and can stay seven years from the date the lawsuit was filed. Judgments can result in garnishment of wages. State Laws may vary.
Late Pays 30/60/90/120 – A late pay is reported on your credit file if you have missed a payment on an account that you make monthly payments to. It can range from 30 days up to 120 days late. Late pays can remain on your credit file up to 7 years from the date of first payment.
Method of Verification –request for verification to confirm that he/she does owe the debt, find out who the debt is owed to and find out when the debt was incurred. This is used in order to weed out collection accounts based on false information or inaccurate collection accounts, and junk debt collectors trying to collect on debts that aren't yours, or that have been paid off some time ago or reached statute of limitations.
Original Creditors- This is the original bank, loan, or company that you owe money to.
Public Records- Anything that is a public court record, which include bankruptcies, tax liens, judgments, garnishments.
Re-aging debt -Consumers should be aware of a practice called re-aging of old debts. The clock on the statute of limitations may start anew if a consumer makes a payment -- even a small amount -- on a debt that has exceeded or is approaching the end of the statute of limitations. Any new activity on it could re-age it and make it more collectable.
Repossession: The taking back of property such as an automobile or home by a lender or seller from the borrower or buyer, usually due to default.
Short sale: A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed.
Soft Inquiry: A soft inquiry also known as a soft pull is located in a specific location on an individual’s credit report. You will receive a soft inquiry on your credit report whenever you check your credit report, a business you have an account with checks your credit report, or if a business decides to check your credit report. The good thing about soft inquires are that they do not affect your credit score and personal lenders are not able to view your soft inquires. However, when you apply for a credit card, loan, or anything else that involves a credit base service then that is considered a hard inquiry.
Statute of Limitations - an expiration date that keeps debt collectors, and even the original creditor, from pursuing the debt indefinitely. Typically its seven years from the date of last activity, or ten years for public records filed.
Tax Lien- tax lien is the right, usually by the county, state, or federal government, to take possession of property due to a delinquency on property taxes, or even income taxes. If the property is sold because of an unpaid tax lien, you may also default on your mortgage loan. Tax liens can remain on your credit report for up to ten years for paid tax liens, fifteen years for unpaid tax liens and in some cases can remain indefinitely.
Tri Merge: This refers to a set of three separate credit reports obtained from the three big credit bureaus (TransUnion, Experian, and Equifax) and is used by banks and mortgage brokers to evaluate a loan borrower's credit potential. The average of these three credit scores is often used as the basis of the loan rejection or acceptance. Even if you think that you have a clean credit history and never even been in debt, it is still better to check before setting an appointment for a mortgage loan. This is because there is a chance for operator errors which causes negative entries to show up in your records due to mistaken identities or even identity theft.
Wage Garnishment- wage garnishment is a court order for an employer to withhold a certain amount of your wages as repayment for debt. No one can garnish your wages without first filing a lawsuit against you and then winning the lawsuit. If a lawsuit is filed against you and you don't show up to court, there's a greater likelihood that your wages will be garnished