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Credit glossary
Short definitions of the words that show up on credit reports, loan offers and denial letters.
- Adverse action notice
- A letter a lender must send when it denies credit or offers worse terms based on your report. It names the bureau it used and tells you how to get a free copy.
- Authorized user
- Someone added to another person’s credit card. The account’s history may appear on the authorized user’s report, but they are not legally responsible for the debt.
- Charge-off
- An account the lender has written off as a loss, usually after about 180 days without payment. You still owe the debt, and it may be sold to a collector.
- Collection account
- A debt that has been passed to a collection agency. It can stay on the report for seven years from the original delinquency.
- Credit bureau
- A company that collects and sells credit information. The three nationwide bureaus are Equifax, Experian and TransUnion.
- Credit freeze
- A free block on new lenders reading your report, which stops most new accounts from being opened in your name. You lift it temporarily when you apply for credit yourself.
- Credit utilization
- The share of your available revolving credit that you are using: total card balances divided by total card limits.
- Credit-builder loan
- A small loan held in a savings account while you repay it. It exists to create a record of on-time payments.
- Furnisher
- A lender, collector or other company that sends information about you to the credit bureaus.
- Hard inquiry
- A check of your report by a lender after you apply for credit. Visible to other lenders for two years; counts toward FICO Scores for one.
- Installment loan
- A loan with a fixed number of payments, such as a car loan, mortgage or student loan.
- Revolving credit
- Credit you can borrow, repay and borrow again up to a limit, such as a credit card or line of credit.
- Secured credit card
- A card backed by a cash deposit that usually sets the credit limit. Reported like any other card.
- Soft inquiry
- A check that is not tied to a credit application — your own check, pre-screened offers, account reviews. It does not affect scores.
- Subprime
- Lender shorthand for borrowers considered higher risk, often below about 620 on the FICO scale.
- Thin file
- A credit report with too few accounts or too little history to produce a reliable score.