Credit Glossary
Credit Terms, Explained
Plain-English definitions of the 44+ credit terms that actually affect your score and your rights — from FICO and utilization to charge-offs, the FCRA, and Metro 2.
Scores & Reports
- Credit Score
- A three-digit number (300–850 on the FICO and VantageScore models) that predicts how likely you are to repay debt. Lenders use it to decide approvals and interest rates. What is a good credit score →
- FICO Score — also: FICO
- The credit score model created by Fair Isaac Corporation, used in the large majority of lending decisions. Built from payment history (35%), amounts owed (30%), length of history (15%), credit mix (10%), and new credit (10%).
- VantageScore
- A credit score model developed jointly by the three bureaus (Equifax, Experian, TransUnion). Uses the same 300–850 range as FICO and is common in free credit-monitoring apps.
- Credit Report
- A detailed record of your credit history maintained by each bureau: personal info, accounts, collections, public records, and inquiries. Your score is calculated from it. How to read your credit report →
- AnnualCreditReport.com — also: free credit report, annual credit report
- The only federally authorized site for free Equifax, Experian, and TransUnion reports. As of 2026 the nationwide bureaus still offer weekly access there. Monitoring-app scores are not the same file. How to get your free credit report →
- Credit Freeze — also: security freeze
- A lock you place with each bureau that blocks new creditors from opening accounts in your name until you lift it. Free under federal law. Different from a credit lock (a bureau product) and from a fraud alert. How to freeze your credit →
- Fraud Alert
- A note on your credit file asking lenders to take extra steps to verify it is you. Weaker than a security freeze; an extended alert is available with an FTC identity theft report. Freeze vs fraud alert →
- Credit Lock
- A bureau-branded on/off switch that mimics a freeze but is a company product, not the federal security-freeze right. A freeze is the statutory tool; a lock is convenience software from Equifax, Experian, or TransUnion. How to freeze your credit →
- Credit Bureau — also: CRA, consumer reporting agency
- A company that collects and maintains consumer credit information and sells it to lenders. The three nationwide bureaus are Equifax, Experian, and TransUnion, and their files often differ.
- Credit Utilization — also: utilization ratio
- The percentage of your available revolving credit you are using (balances ÷ limits). Roughly 30% of a FICO score; keeping it in the 1–9% range is optimal. Utilization calculator →
- Hard Inquiry — also: hard pull
- A credit check triggered when you apply for credit. It can lower your score a few points and stays on your report for two years. Multiple inquiries for the same loan type in a short window are usually treated as one. How to remove hard inquiries →
- Soft Inquiry — also: soft pull
- A credit check that does not affect your score — such as checking your own credit, pre-approval offers, or an employer background check.
- Opt-Out of Prescreened Offers — also: opt-out prescreen, optoutprescreen
- The official way to stop most firm-offer-of-credit junk mail. Go to OptOutPrescreen.com or call 1-888-5-OPT-OUT. This does not freeze your credit; it only stops prescreened offers that use your file.
Negative Items
- Collection
- A past-due debt that has been sold to a debt buyer or assigned to a collection agency, which reports it as a separate account. A major negative item that can be disputed or negotiated. Remove collections →
- Charge-Off
- When the original creditor writes a debt off as a loss for accounting purposes (typically after ~180 days late). You still owe the debt; it is simply declared uncollectable on their books. Charge-off vs collection →
- Date of First Delinquency — also: DoFD
- The date you first fell behind with the original creditor and never caught up. It fixes the 7-year clock for how long a negative item can be reported — and does not reset when a debt is sold. How long collections stay →
- Re-Aging
- Illegally reporting a later date of first delinquency to keep a negative item on your report longer than the 7-year limit. Prohibited under the FCRA and a strong basis for dispute. How to read your credit report →
- Furnisher — also: data furnisher
- The creditor, collector, or other company that reports account information to the bureaus. Furnishers have their own FCRA duty to investigate a direct dispute — not only the bureau. How to dispute errors →
- Derogatory Mark
- Any negative entry on a credit report — late payments, charge-offs, collections, or bankruptcy — that lowers your score. Recent derogatories hurt more than older ones.
- Debt Buyer
- A company that purchases portfolios of charged-off debt for pennies on the dollar and then collects on it. Because debt is bought in bulk, account-level documentation is often incomplete.
- Statute of Limitations — also: SOL
- The state-law time limit on how long a creditor can sue you over a debt. Separate from the 7-year credit-reporting clock; a payment or written acknowledgment can restart it in some states. SOL vs the 7-year report clock →
Disputes & Rights
- FCRA — also: Fair Credit Reporting Act
- The federal law governing the accuracy, fairness, and privacy of consumer credit information. It gives you the right to dispute inaccurate items and requires bureaus to investigate, usually within 30 days.
- FDCPA — also: Fair Debt Collection Practices Act
- The federal law regulating third-party debt collectors. It gives you the right to demand debt validation and bans abusive collection practices. Debt validation letter →
- Dispute
- A formal challenge to inaccurate, incomplete, or unverifiable information on your credit report. The bureau (and the furnisher) must investigate and correct or delete unverified items. How to dispute errors →
- Debt Validation
- Your FDCPA right to require a collector to prove a debt is yours and the amount is correct. If they cannot validate, they must stop collecting and it should not keep reporting. Validation letter template →
- Method of Verification — also: MOV
- A follow-up demand, after a bureau claims it "verified" a disputed item, asking exactly how it was verified. Weak or missing verification supports escalation or a CFPB complaint. How to file a CFPB complaint →
- Goodwill Adjustment — also: goodwill deletion
- A courtesy change a creditor makes after an accurate late payment or isolated hardship — usually removing the late mark. No law requires it; a goodwill letter is the usual ask. Goodwill letter template →
- 609 Letter — also: 609 dispute
- A popular nickname for a dispute that cites FCRA § 609 (your right to your file and the sources of information). It is not a magic deletion statute. A specific, evidence-backed § 611 accuracy dispute is usually stronger. Do 609 letters work? →
- Consumer Statement
- A short note you can add to your credit file explaining a dispute or circumstance. It does not remove the item; it only appears next to it for lenders who read the report.
- Identity Theft Report — also: FTC identity theft report
- A report filed at IdentityTheft.gov after someone uses your identity. It supports blocking fraudulent tradelines and is stronger evidence than a police report alone in many bureau processes. How to file an FTC identity theft report →
- CFPB — also: Consumer Financial Protection Bureau
- The federal agency that oversees consumer finance and accepts complaints against bureaus and furnishers. A CFPB complaint gets a tracked, mandatory response and is a powerful escalation step. How to file a CFPB complaint →
- Metro 2
- The standardized data format furnishers must use to report account information to the bureaus. Fields that violate Metro 2 rules (impossible dates, inconsistent statuses) are strong grounds for dispute.
- Pay-for-Delete
- A negotiation where a collector agrees, in writing, to delete a collection from your reports in exchange for payment. Turns a payment into a removal. Pay-for-delete template →
- Goodwill Letter
- A request asking a creditor to remove an accurate late payment as a courtesy, based on loyalty and an isolated hardship. No law compels removal, but many creditors grant it. Goodwill letter template →
Accounts & Building
- Tradeline
- Any account listed on your credit report — a credit card, loan, or mortgage — including its limit, balance, and payment history.
- Revolving Credit
- Credit you can use repeatedly up to a limit, like a credit card. Its balance-to-limit ratio drives your credit utilization.
- Installment Loan
- A loan repaid in fixed payments over a set term — auto loans, student loans, mortgages. Adds "credit mix" alongside revolving accounts.
- Secured Credit Card
- A card backed by a refundable cash deposit that sets your limit. The standard starter tool for building or rebuilding credit. Build credit from scratch →
- Piggybacking — also: tradeline rental
- Being added as an authorized user so another account’s history appears on your file. Family AU on a real card is a normal issuer feature. Paying a stranger to rent a tradeline is a marketed product that issuers and scoring models often discount. Authorized-user tradelines →
- Credit-Builder Loan
- A small installment loan (often held in a locked account until you finish paying) designed to add payment history and credit mix. Useful on a thin file; it does not remove existing collections. Build credit from scratch →
- Credit Mix
- The variety of account types you hold (revolving and installment). It is about 10% of a FICO score — a small but real factor.
- Average Age of Accounts — also: AAoA
- The average age of all accounts on your report. Longer history helps your score, which is why closing old accounts can hurt.
- Payment History
- Your record of on-time versus late payments — the single largest FICO factor at 35%. One 30-day late can cost a good score 50–100 points. Remove late payments →
Put these terms to work
850ai reads your credit report across all three bureaus, explains what every item means in plain English, and fixes what’s hurting you — disputes, letters, and all.
Start Free — No Card Required