Learn Credit Scoring Lingo
Below you’ll find a glossary of terms commonly found in credit score reason codes.
Active account: An account for which activity has been reported to a credit reporting company in the last 24 months.
Adverse action code: A two-digit numerical code that corresponds with a factor that impacts a credit score. Another term for “reason code.”
Adverse action code description: A short description that corresponds with the adverse action code.
Balance: The total amount owed as of the date reported by the credit grantor.
Bankcard: The industry term for credit cards, charge cards, etc. This usually refers to a revolving credit account.
Bankruptcy: Legal protection from your creditors. A bankruptcy can appear on your credit reports for up to 10 years and is considered highly derogatory.
Charge card: Similar to a credit card, except a charge card does not have a predefined credit limit, and the balance must be paid in full each month.
Collection accounts: Accounts that have become 90 or more days past due and have been turned over to a special internal department with the lender or to an outside professional firm that specializes in collecting money owed that is seriously overdue.
Collection accounts (or collection agency accounts): Accounts that have become 90 or more days past due and have been turned over to a special internal department with the lender or to an outside professional firm that specializes in collecting money owed that is seriously overdue.
Credit: The ability to purchase goods or services and pay for them later. Also can be defined as your “financial trustworthiness.”
Credit file: The information reported about you by lenders and other creditors and includes your personal identifying information, payment history, and other credit attributes stored by a credit reporting company. “Credit file” is sometimes used interchangeably with credit report.
Credit history: The record of your behavior managing credit accounts in the past.
Credit inquiries: The more formal term for “inquiries.”
Credit limit: The highest amount that a credit grantor allows you to charge on a revolving account.
Credit reporting company: A firm that receives, maintains, and provides information about a consumer’s credit history. There are three national credit reporting companies — Equifax, Experian, and TransUnion. There are also many smaller agencies. National credit reporting companies adhere to the requirements of the Fair Credit Reporting Act (FCRA).
Credit score: Your credit score is a three-digit number generated by a mathematical formula using information in your credit file to indicate the likelihood of whether you will become 90 days or more past due on your accounts at some point in the two years following the score being calculated. There are many credit scores available in the marketplace, including the VantageScore credit score, used by numerous auto lenders, mortgage lenders, and credit card issuers.
Creditor: The lender or other business that extends credit to you.
Current: A payment status showing that a consumer is not late with payments at the time that the lender reported to the credit reporting company.
Data furnisher: A company that reports information to the credit reporting agencies. That information appears on consumer credit reports.
Date opened: A field on a credit report meant to indicate the date a creditor opened an account in the name of a consumer/applicant.
Date reported: A field on a credit report meant to indicate the most recent update made to an account or other credit report entry.
Debt buyer: A company that purchases large amounts of defaulted debt from credit card issuers and other lenders and service providers.
Debt-to-limit percentage: The relationship between your credit card balance and the credit card’s credit limit, expressed as a percentage. The debt-to-limit percentage is calculated by dividing your credit card balance by the card’s credit limit.
Delinquency: Delinquency typically refers to payments that are between 30 and 90 days late and that have been reported to one or more of the national credit reporting companies (CRCs). The extent of the payment tardiness is normally expressed in 30-day increments, e.g., 30-days late, 60-days late, etc.
Derogatory: Information in the credit files that may be considered negative by lenders. Examples of derogatory information are a payment status that is 90 days or more late, public records, and collections.
Hard inquiries: Credit inquiries made in response to a consumer applying for some form of credit. Hard inquiries can be considered by credit scoring models and can lower your credit scores.
HELOC: The acronym for a home equity line of credit, which is a credit line
secured by the equity in your home.
High balance: The field on a credit report that indicates the historical highest balance, normally on a credit card account. For example, if you have a credit card and the largest balance you’ve ever had on that card was $7,750, that figure will be listed on your credit report as the “High Balance.”
Inquiry (inquiries): A piece of information reported to one or more of the three national CRCs that consumer credit information has been accessed by a lender.
Installment account: A credit account with a fixed term and even monthly payments. Examples of installment accounts are auto loans, furniture and appliance-related loans, and student loans.
Late payment: A record on a credit report indicating the delinquency of an account. Late
payment can be reported at 30, 60, 90, 120, 150, and 180 days past due.
Open account:A credit account that is currently active and available to a borrower.
Open account type: An account where the balance must be paid in full each month, such as cell phone and public utility accounts.
Public record judgment/tax lien: Public records include information filed or recorded by local, state, federal, or other government agencies that is available to the general public. The types of public records that can affect your credit score include judgments against you from collections agencies or in small claims court, or tax liens levied by a government authority.
Rated account: An account that shows a payment status, which can be “current” or “delinquent.”
Real estate account: Refers to a mortgage-related credit account, such as a first mortgage or home equity line of credit (HELOC).
Retail revolving account: An account issued by a retail outlet or store that allows the balance to be carried over from month to month.
Revolving account: An account, usually a credit card that allows the balance to be carried over from month to month.
Revolving utilization: Another term for the “Debt-to-limit percentage.”
Score factors: Another term for “adverse action code” and “reason codes.”
Secured account: A credit account that is backed by collateral, such as a house or car. In the case of a secured revolving account such as a credit card, the collateral is typically a cash deposit.
Status: The current information reported to one or more of the national CRCs on a particular credit account. For example, an account’s status could be “delinquent” if a payment was missed.
Tax lien: A report in your credit file related to owed taxes or failure to pay taxes.
Unsecured account: A credit account that is not backed by collateral, such as a cash deposit, a home, or a car.
Utilization: The percentage of the credit limit on a revolving account, such as a credit card, that has been used.
Worst status: The identification of the most negative payment information associated with a credit account. For example, an account’s worst status could be “delinquent” if a payment was missed.