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I just wanted to let you know how pleased we are with your services. We were able to get the loan that we wanted to refinance our home and got back over $20,000 in the process. We plan on using some of that to clear some lingering issues that are still on my credit repo...read more credit repair testimonials >>
Credit Glossary
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A |
account [top] |
| An account represents a relationship between a company (the account owner) and consumer, where the consumer purchases a product or service in such a way that represents the transfer of money over time. |
account reviews [top] |
| Inquiries made into a consumer's credit history by creditors, with whom the consumer has a current relationship. |
Adjustable Rate Mortgage (ARM) [top] |
| A mortgage where the interest rate fluctuates over the life of the loan. |
adverse action [top] |
| An unfavorable action, such as the denial of credit, insurance or employment, taken by a creditor or other entity, affecting a consumer. Under the Fair Credit Reporting Act (FCRA), creditors must disclose the reasons for any adverse action. |
annual fee [top] |
| The yearly fee charged by a lender to maintain an account. |
Annual Percentage Rate (APR) [top] |
| The cost of credit at a yearly rate. Knowing the APR allows you to effectively compare loans, even when they are structured differently. |
B |
balance [top] |
| The amount of money that you owe to a particular lender. |
balance transfer [top] |
| Moving your balance from one credit card to another to take advantage of features the new card offers. |
balloon mortgage [top] |
| A mortgage where the monthly payments are based on a 30-year schedule, but the entire mortgage becomes due at the end of a set term, normally five to seven years. |
bank card [top] |
| A credit card issued through a bank. |
bankruptcy [top] |
| A proceeding that may legally release a person from repaying debts owed or re-organize the debts in a payment plan. Bankruptcies can be reported from 7-10 years. |
Beacon score [top] |
| Beacon score is the name Equifax gives to its FICO score. |
C |
Chapter 11 Bankruptcy [top] |
| The chapter of Bankruptcy that is usually used for the reorganization of a financially troubled business. Used as an alternative to liquidation under Chapter 7. |
Chapter 12 Bankruptcy [top] |
| Reserved for farming communities. |
Chapter 13 Bankruptcy [top] |
| Also referred to as “wage earners plan”. Debts are reorganized into a payment plan where the filer makes payments (at a deeply discounted rate) for 3-5 years. At the end of the payment plan period all debts included in the bankruptcy are discharged. The reporting period begins at the date of entry (3-5 years) and continues for 7 years past the time of discharge; up to 12 years total. |
Chapter 7 Bankruptcy [top] |
| When all dischargable debts are dismissed. The filer is released from paying most debts and is given a clean slate. A Chapter 7 is reported for 10 years. |
charge card [top] |
| A credit card that requires full payment of the bill each month; no interest is charged. The American Express Card is an example. |
charge-off [top] |
| The balance on a credit obligation that a lender no longer expects to be repaid and writes off as uncollectible. The debt; however, remains valid and can be sold to a third-party collector. A charge-off can be reported for 7 years from the time it was initiated. |
civil claim [top] |
| Legal disputes between two parties (individuals, groups or corporations), at least one of whom feels he or she has been wronged by the other. A "case in law" is a dispute in which monetary damages are alleged. A "case in equity" (also called chancery) is a dispute involving something other than money (such as cases about custody, divorce, estates, property ownership and wills). |
closed by grantor [top] |
| A credit account that has been closed at the grantor's request wherein a creditor cancels your charge privileges. |
collection [top] |
| Attempted recovery of a past-due credit obligation by a collection department or agency. Collection accounts can be reported for 7 years from the date of last activity (in other words, the last time you paid on the account or otherwise acknowledged that the debt was yours). |
community property [top] |
| Applicable in certain U.S. states, property and obligations acquired by a husband or wife or both, during a marriage, is consequently owned by, and the responsibility of, both. |
consolidation loan [top] |
| Where all debts are rolled into one through a loan (like a HELOC or Signature). This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan. |
Consumer Credit Counseling Service (CCCS) [top] |
| A nonprofit organization that sells itself to the American public as the last hope for consumers buried in debt. The reality is that they are actually debt collectors for the original creditors, a fact that seems to be routinely shuffled aside and not disclosed to the consumer. These counselors will negotiate a lower interest rate and will usually get all late fees waived. The consumer makes one monthly payment to the CCCS who pays all bills. |
Consumer Credit Protection Act (CCPA) [top] |
| A landmark legislation which requires creditors to state the cost of borrowing in a common language so that consumers can readily understand exactly what the charges will be, compare costs, and shop around for more favorable terms. |
Consumer Reporting Agency (CRA) [top] |
| An agency that is a clearinghouse for information on the credit payment history of individuals or firms. CRAs are private, for-profit companies that collect and sell information about a person's credit history. Typical clients include banks, mortgage lenders and credit card companies that use the information to screen applicants for loans and credit cards. There are three major credit bureaus, Equifax, Experian and TransUnion, and they are regulated by the federal Fair Credit Reporting Act (FCRA). |
credit [top] |
| A trust or promise to buy now and pay later under designated terms for goods or services. As a financial term, used in such terms as credit card, it refers to the granting of a loan and the creation of debt. Any movement of financial capital is normally quite dependent on credit, which in turn is dependent on the reputation or creditworthiness of the entity which takes responsibility for the funds. |
credit bureau [top] |
| See consumer reporting agency. |
credit card [top] |
| A card that allows a consumer to pay a minimum or the entire outstanding account balance each month and has a credit limit. Visa, MasterCard, and Discover are examples. |
credit check [top] |
| An inquiry to confirm a consumer's credit payment history. |
credit counseling [top] |
| A non-profit or for-profit company that consolidates all debt payments into one monthly payment with an average interest rate. Past interest charges and late fees are negotiated and often waived. The average payment plan lasts 4-6 years and credit counselors make a commission off of the money they save their clients during that time. Often the commission and fees charged end up being more than the amount saved trough a reduced APR and waived late fees. |
credit dispute [top] |
| A request made to the bureaus to investigate the accuracy and validity of items on a credit report. |
credit file [top] |
| A detailed account of the credit, employment and residence history of an individual used by a prospective lender to help determine creditworthiness. Credit reports also list any judgments, tax liens, bankruptcies or similar matters of public record entered against the individual. |
credit fraud [top] |
| A case when someone has stolen a consumer's identity by fraudulently using that consumer's social security number or other personal information to acquire credit in his or her name. |
credit history [top] |
| The record of a consumer's credit accounts and manner of payment. Credit history includes risk factors like late payments and bankruptcy and high credit, current balance, credit limit, and 24 months of payment history. |
credit limit [top] |
| The maximum amount you are allowed to borrow from a lender under the terms of your agreement for an account. |
credit monitoring [top] |
| A service that watches consumer’s credit and notifies them when any changes occur with their history or score. It is a good preventive measure against identity fraud. |
credit repair [top] |
| Credit repair is a general term used to describe the practice of improving or rehabilitating one's financial reputation (creditworthiness) with creditors. |
Credit Repair Organizations Act (CROA) [top] |
| A federal law that provides consumer protections from fraudulent or disreputable credit repair services as part of the Consumer Credit Protection Act. Click here to view the full Credit Repair Organizations Act. |
credit report [top] |
| Information collected by a credit reporting agency that indicates a consumer's credit standing. Reports are used by prospective lenders, employers, landlords, insurance carriers and others to help evaluate you when you apply for a loan, job, apartment or in certain other circumstances. Most credit reports include: consumer name, address, credit history, inquiries, collection records, and any public records such as bankruptcy filings and tax liens. |
credit report repair [top] |
| Credit report repair refers to a method of credit improvement whereby questionable negative items on a credit report are disputed with the three major credit bureaus in an attempt to remove these items from a consumer's credit report. |
credit risk [top] |
| An assessment of a consumer's likelihood of fulfilling the terms of a credit agreement. |
credit score [top] |
| A credit score is determined by data on your credit report and your credit history. A number is calculated based on this information. The number indicates how likely you are to repay a loan and gives lenders and other parties an idea of what kind of a risk you would be to them. Credit limits and interest rates are usually determined by credit scores. |
creditor [top] |
| A person (or institution) who extends credit. Creditors can be classified into either personal or real. Those who have lent money to friends or family are personal creditors. Real creditors (i.e. a bank or finance company) have legal contracts with the borrower granting the lender the right to claim any of the debtor's real assets (e.g. real estate or car) if he or she fails to pay back the loan. |
creditor direct (CD) letter [top] |
| A legal letter drafted by our affiliate attorney to creditors in behalf of the client. The letter requests that the creditor provide a copy of the signed contract proving the account actually belongs to the client. |
creditworthiness [top] |
| A creditor’s evaluation of an applicant’s past and future ability and willingness to re-pay debts. |
D |
date closed [top] |
| The date when a credit agreement or account was terminated. |
date opened [top] |
| The date when a credit agreement or account was established. |
debit card [top] |
| A card that allows purchase amounts to be deducted directly from a consumer's personal checking account. |
debt consolidation [top] |
| The replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. It's also called a consolidation loan. |
debt management [top] |
| A process to reduce or eliminate outstanding debt by managing assets and dealing with creditors. |
debt settlement [top] |
| A service provided by companies to reduce debt by 40-60%. The settler will negotiate with creditors and collectors to reduce the outstanding balance, as well as interest rates and late fees. It is also a strategy that consumers can use independent of a third party. Also known as debt negotiation. |
debt-to-income ratio [top] |
| Your income compared to the debt you owe. |
deceptive forms [top] |
| An illegal tactic used by some debt collectors to recover payment. These forms can take on a variety of intimidating looks from threatening (but non-binding) documents that appear to have been issued by a court of law to demanding letters that look like something issued by the IRS. |
deductible [top] |
| The portion of a loss that the insured party must pay before the insurer payment coverage begins. |
default [top] |
| Failure to fulfill an agreed-upon financial obligation, such as making a loan payment. |
Deleted Items [top] |
| Normally, when Legacy Legal Services refers to a deleted item, we are talking about a listing that no longer appears on your credit report. Once the item or items have been deleted from your report, it is not available for anyone to see, including creditors. |
delinquency [top] |
| A failure to deliver even the minimum payment on a loan or debt payment on or before the time agreed. Accounts are often referred to as 30, 60, 90 or 120 days delinquent as most lenders have monthly payment cycles. |
derogatory information [top] |
| Negative items listed on a credit report that damage credit history and lower credit scores. |
discharged [top] |
| To relieve of obligation, responsibility, etc. Common term used in bankruptcy court to describe the process of eliminating debtor obligations. |
discretionary income [top] |
| The money you have left over when all expenses and other financial obligations are paid. |
disposable income [top] |
| Money left over after taxes are deducted. |
dispute [top] |
| See credit dispute. |
E |
Electronic (E) Signature [top] |
| A computer data compilation of any symbol or series of symbols, executed, adopted, or authorized by an individual to be the legally binding equivalent of the individual's handwritten signature.
|
Electronic Fund Transfer Act (EFTA) [top] |
| A federal law which, in conjunction with Fair Credit Billing Act (FCBA), establishes procedures for resolving mistakes on credit billing and electronic fund transfer account statements. |
Emperica® score [top] |
| The name TransUnion gives to its FICO score. |
Equal Credit Opportunity Act (ECOA) [top] |
| A federal law that requires creditors and other lenders to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs. |
Equifax [top] |
| One of three major consumer reporting agencies in the United States. The others are Experian and TransUnion. |
expedited dispute [top] |
| Sometimes the bureaus do something referred to as an “expedited dispute”. They will go ahead and delete the item in dispute without contacting the furnisher of information. If they do this within 3 days of the consumer’s initial dispute, they do not have to notify the consumer of the change. They will not send an updated credit report either. |
Experian [top] |
| One of three major consumer reporting agencies in the United States. The others are Equifax and TransUnion. |
F |
Fair and Accurate Credit Transactions Act (FACTA) [top] |
| A federal law that amended the federal Fair Credit Reporting Act in many areas. The law provided, among other things, additional protections for consumers in connection with identity theft and credit reports accuracy. It includes your right to a free copy of your credit report from each of the three major credit reporting agencies every 12 months, which must be requested through the centralized source established under the FACT Act. View |
Fair Credit Billing Act (FCBA) [top] |
| This Act, amending the Truth in Lending Act, requires prompt written acknowledgment of consumer billing complaints and investigation of billing errors by creditors. The amendment prohibits creditors from taking actions that adversely affect the consumer's credit standing until an investigation is completed, and affords other protection during disputes. The amendment also requires that creditors promptly post payments to the consumer's account, and either refund overpayments or credit them to the consumer's account. View |
Fair Credit Reporting Act (FCRA) [top] |
| The Act protects information collected by consumer reporting agencies such as credit bureaus, medical information companies and tenant screening services. Anyone who obtains information from a consumer report must have permissible purpose as specified in the Act. Companies that provide information to consumer reporting agencies also have specific legal obligations, including the duty to investigate disputed information. Also, users of the information for credit, insurance, or employment purposes must notify the consumer when an adverse action is taken on the basis of such reports. Further, users must identify the company that provided the report, so that the accuracy and completeness of the report may be verified or contested by the consumer. View |
Fair Debt Collection Practices Act (FDCPA [top] |
| Under this Act (Title VIII of the Consumer Credit Protection Act), third-party debt collectors are prohibited from using deceptive or abusive means in effort to collect consumer debts incurred for personal, family, or household purposes. Such collectors may not, for example, contact debtors at odd hours, subject them to repeated telephone calls, threaten legal action that is not actually contemplated, or reveal to other persons the existence of debts. View |
Fair Isaac Corporation [top] |
| Developer of the FICO score, the worldwide standard for measuring a consumer's creditworthiness and credit risk. |
Federal Trade Commission (FTC) [top] |
| A government agency whose primary purpose is to protect consumers by investigating and prosecuting any conduct that infringes upon the rights of consumers. Among other endeavors, the Commission is responsible for overseeing credit reporting and debt collection practices. |
FICO Scores [top] |
| Credit bureau risk scores produced from models developed by Fair Isaac Corporation are commonly known as FICO scores. Fair Isaac credit bureau scores are used by lenders and others to assess the credit risk of prospective borrowers or existing customers, in order to help make credit and marketing decisions. These scores are derived solely from the information available on credit bureau reports. |
finance charges [top] |
| The amount you are charged to use credit. |
fixed-rate mortgage [top] |
| A mortgage where the interest rate of the loan remains the same over the life of the loan. |
Foreclosure [top] |
| When a home owner has become delinquent on mortgage payments, the bank who holds the mortgage can repossess the home and sell it. Foreclosures are reported for 7 years. |
fraud alert [top] |
| A fraud alert is something that the major credit bureaus attach to your credit report. When you, or someone else, tries to open up a credit account by getting a new credit card, car loan, cell phone, etc., the lender should contact you by phone to verify that you really want to open a new account. If you aren't reachable by phone, the credit account shouldn't be opened. A creditor isn't required by law to contact you; however, even if you have fraud alert in place. |
G |
garnishment [top] |
| legal proceeding whereby money or property due to a debtor, but in the possession of another, is applied to the payment of the debt owed to the plaintiff. |
grace period [top] |
| The number of days between a statement due date and the payment due date during which finance charges are not incurred. |
gross monthly income [top] |
| What you earn before taxes are deducted. |
I |
identity confirmation [top] |
| The successful verification of a consumer's identity. |
identity theft / identity fraud [top] |
| A crime that involves using another's name, Social Security Number or other personal information to acquire credit, make purchases or for other fraudulent purposes. |
Identity Theft and Assumption Deterrence Act [top] |
| This law makes identity theft a Federal crime with penalties up to 15 years imprisonment and a maximum fine of $250,000. It establishes that the person whose identity was stolen is a true victim, and allows them to seek restitution in the event of conviction. It also establishes the Federal Trade Commission (FTC) as a central agency to act as a clearinghouse for complaints, referrals, and resources for assistance for victims of identity theft. |
Inquiry [top] |
| When someone with “permissible purpose” (under FCRA rules), such as a lender, landlord, or insurer, requests a copy of the consumer's report to examine the consumer’s credit history. A soft inquiry is when a consumer, or someone who is already working with that consumer’s credit, pulls the report. Soft inquiries do not hurt credit ratings. A hard inquiry occurs when the consumer is applying for credit and the creditor pulls the report. Approximately 4-5 hard inquiries per year are allowed without hurting credit scores, beyond that each hard inquiry will decrease a score by 5-20 points. (The older the credit history, the less damage hard inquiries will do). |
installment loan [top] |
| A credit account in which the amount of the payment and the number of payments are predetermined or fixed. |
interest [top] |
| The cost of borrowing or lending money, usually a percentage of the amount borrowed or loaned. |
interest rate [top] |
| The amount charged by a lender for borrowing money. |
J |
judgment [top] |
| Record indicating that a person has been sued. The one who filed the suit is allowed to confiscate property and assets of the one who was sued. A judgment can remain on a credit report for up to 20 years due to the ability for a judgment to be renewed. |
L |
late fee [top] |
| A penalty fee charged to a delinquent account. |
late payment [top] |
| A delinquent payment; a failure to deliver a loan or debt payment on or before the time specified by the credit agreement. Late payments are reported to the credit bureaus by creditors, and appear as negative items on your credit reports for 7 years from the date of last activity. |
lien [top] |
| The right to take and hold or sell the property of a debtor as security or payment for a debt or duty. Liens can be reported for 7 years from the date of last activity. |
Limited Power of Attorney [top] |
| The permission one gives to another to legally act in his/her name and to request legal documents. |
line of credit [top] |
| Credit limit established by a creditor. |
M |
mortgage [top] |
| The use of property as security for a promise to pay a debt to a lender. |
O |
open account [top] |
| An account that is active or still being paid. |
opt-out [top] |
| The protocol to follow to reduce mail and telephone solicitation. |
P |
paid as agreed [top] |
| A designation on the credit report that indicates the consumer is repaying the credit account according to the terms of the credit agreement. |
paralegal [top] |
| Anyone who is trained under an attorney and can demonstrate thorough knowledge of legal matters. The paralegals at Legacy are trained under the guidelines set by our affiliate attorney and have a thorough knowledge on credit issues and associated legal factors. |
Payment Schedule [top] |
Assume for a moment that today is the 19th, and that you would like to make your first payment 10 days from now, on the 29th. You would thus choose "10" from the popup menu, and we would wait to transfer your initial payment until the 29th. Your subsequent payments would be automatically transferred on the 29th of each following month. |
permissible purpose [top] |
| As defined in 604 of the Fair Credit Reporting Act (FCRA), only specific reasons for requesting a credit report are deemed "permissible." Requests not meeting this criteria must be denied. |
points [top] |
| Fees paid to a lender for a loan. They are often linked to the interest rate and are generally used to lower the interest rate of the loan. |
Power of Attorney (POA) [top] |
| See Limited Power of Attorney |
preapproval [top] |
| When a mortgage lender reviews your credit and commits to a specific loan amount. |
prequalification [top] |
| When a mortgage lender reviews your credit history, income, assets and liabilities in order to determine an appropriate loan amount. |
principal [top] |
| The outstanding balance of a loan, excluding interest and other charges. |
promotional inquiry [top] |
| An inquiry made into a consumer's credit report for purposes of a promotional offer. |
Proof of Identity (POI) [top] |
| Proper documentation that verifies your identity, such as a copy of your driver’s license or social security card, and a document with your current address on it such as a utility bill. |
public record [top] |
| Public records are subject to inspection, examination, and copying by any member of the public. Indictments, paroles, unpaid child support and felonies are all examples. Public records can be reported for 7 years from the date of the incident. |
R |
recommend letters [top] |
| Legal letters written in behalf of the client to employers, landlords, creditors, military, etc., stating that the client has sought legal help regarding his/her credit issues and that derogatory items are under investigation. These letters are to persuade leniency for the client regarding decisions based on their credit status. |
repossession [top] |
| When a lender confiscates property that hasn’t been paid off from the borrower who is delinquent in payments. Repossessions are extremely negative and can be reported for 7 years. |
revolving balance [top] |
| The total balance of all revolving credit accounts. |
revolving charge account [top] |
| Credit automatically available up to a predetermined limit so long as a consumer makes regular payments. |
revolving credit [top] |
| An account that requires at least a specified minimum payment each month plus a service charge on the balance, which can fluctuate up to the credit limit. As the balance declines, the amount of the service charge, or interest, also declines. |
S |
score [top] |
| See credit score. |
Statute of Limitations (SOL) [top] |
| The period in which someone can be held liable for an account or debt. Creditors and collectors have a period of time on which they can collect on a debt. SOL also refers to how long a negative item can remain on a credit report. |
T |
tax lien [top] |
| A charge upon real or personal property for the satisfaction of debts related to taxes (either state or federal). A tax lien can be issued without your knowledge and will remain on a credit report until it is paid in full. After the tax lien is paid it shows up negatively as "paid tax lien" which can remain on a credit report for 7 years. |
term [top] |
| The amount of time in which a loan must be repaid in full. |
TransUnion [top] |
| One of three major consumer reporting agencies in the United States. The others are Equifax and Experian. |
Truth in Lending Act (TILA) [top] |
| This Act (Title I of the Consumer Credit Protection Act (CCPA)) vests the Commission with responsibility for assuring compliance by non-depository entities with a variety of statutory provisions. Specifically, the Act requires all creditors who deal with consumers to make certain written disclosures concerning all finance charges and related aspects of credit transactions (including disclosing finance charges expressed as an annual percentage rate). Furthermore, it establishes a three-day right of rescission in certain transactions involving the establishment of a security interest in the consumer's residence (with certain exclusions, such as interests taken in connection with the purchase or initial construction of a dwelling). The Act also establishes certain requirements for advertisers of credit terms. |
V |
VantageScore [top] |
| The name of the new scoring system used by the big three bureaus. Experian, Equifax and TransUnion have collaborated to design a scoring system consistent between themselves but inconsistent from FICO. VantageScore effectively serves the same purpose as FICO score which is to measure consumer creditworthiness. VantageScores range from 501 900, whereas FICO scores range from 300-900. |
variable rate [top] |
| A variable rate is an interest rate that may fluctuate over the life of a loan, typically in response to changes in the interest rate marketplace. |