Credit Repair Glossary
A-Z definitions of every term you'll encounter in credit repair. Bookmark this page and come back whenever you hit a term you don't recognize.
A
Adverse Action
A decision by a lender or creditor that negatively impacts you — like denying a loan, closing an account, or increasing your interest rate — based on information in your credit report. Under the FCRA, you're entitled to an adverse action notice explaining why the decision was made and which credit reporting agency supplied the information.
Age of Accounts (Account Age)
How long your credit accounts have been open. FICO considers both the age of your oldest account and the average age of all your accounts. Older accounts generally help your score. This is why closing old accounts (even paid-off ones) can hurt you — it reduces the average age of your credit history.
Annual Credit Report
The free credit report you're legally entitled to from each of the three major bureaus once per year (now weekly at AnnualCreditReport.com). This is the only official government-mandated free report — not the paid services some sites push.
Authorized User
A person added to someone else's credit card account with permission to use the card. Being added as an authorized user can add the account's history to your credit report — one of the fastest legal ways to build credit when the primary account holder has a long, positive history.
B
Balance
The current amount owed on a credit account. On credit cards, carrying a high balance relative to your limit raises your utilization ratio and hurts your score. On installment loans, the balance decreases as you make payments.
Bankruptcy
A legal process that eliminates or restructures debt under federal law. Chapter 7 (liquidation) stays on your credit report for 10 years. Chapter 13 (repayment plan) stays for 7 years. Bankruptcy is one of the most damaging items on a credit report, but recovery is possible — some clients rebuild to 650+ within 2 years of filing.
Bureau (Credit Bureau)
A company that collects and maintains consumer credit information and sells credit reports to lenders. The three major bureaus in the US are Equifax, Experian, and TransUnion. Each maintains its own independent database, which is why your score can vary between bureaus.
C
Charge-Off
When a creditor writes an unpaid debt off their books as a loss — typically after 120–180 days of non-payment. Despite the name, a charge-off doesn't mean you no longer owe the debt. The creditor can still pursue collection or sell the debt to a collection agency. A charge-off stays on your report for 7 years from the original delinquency date.
CFPB (Consumer Financial Protection Bureau)
A federal agency that regulates consumer financial products and services, including credit reporting. The CFPB accepts consumer complaints against credit bureaus and creditors, and has enforcement authority to act on systemic violations. Filing a CFPB complaint can accelerate action on stubborn dispute cases.
Collection (Collection Account)
When a debt is sent to a collection agency after the original creditor gives up trying to collect. Collection accounts are major negative items on a credit report. In some cases both the original creditor and the collection agency report the same debt — resulting in two negative items.
Consumer Statement
A 100-word statement you can add to your credit report to explain a disputed item or provide context. Available under the FCRA. While consumer statements don't directly affect your score, they can sometimes influence a lender's manual review decision.
CPN (Credit Privacy Number)
A fraudulent 9-digit number sold by scammers as an alternative to your Social Security Number for credit applications. Using a CPN is federal fraud. Legitimate credit repair never involves CPNs.
Credit Builder Loan
A type of loan designed to help people build credit. Rather than receiving money upfront, the lender holds the funds in a secured account while you make monthly payments. After the loan term ends, you receive the funds. All on-time payments are reported to the bureaus.
Credit Freeze (Security Freeze)
A restriction you place on your credit file that prevents new creditors from accessing your report — making it nearly impossible for fraudsters to open accounts in your name. Free under federal law at all three bureaus. Must be temporarily lifted when you apply for new credit.
Credit Limit
The maximum amount you're authorized to borrow on a revolving credit account. Your credit limit is a key input in your utilization ratio calculation.
Credit Mix
The variety of credit account types on your report — revolving accounts (credit cards), installment loans (auto, mortgage, personal), and open accounts. Having a diverse mix accounts for about 10% of your FICO score.
Credit Report
A detailed record of your credit history compiled by a credit bureau. It includes personal identifying information, a list of all your credit accounts (open and closed), payment history, public records (bankruptcies), and inquiries. You have three credit reports — one from each major bureau — and they may differ.
Credit Score
A three-digit number (typically 300–850) calculated from your credit report using a scoring model. The most widely used model is FICO. Your credit score predicts how likely you are to repay debt — higher scores mean lower risk to lenders, which means better terms for you.
Credit Utilization
The ratio of your current revolving balances to your total revolving credit limits. This is the second most important factor in your FICO score (after payment history) and accounts for roughly 30%. Keep it below 30%; ideally below 10% for maximum scoring benefit.
CROA (Credit Repair Organizations Act)
A federal law that governs credit repair companies. Under CROA, credit repair organizations must give you a written contract, allow you to cancel within 3 days, not charge upfront before services are performed, and not make untrue or misleading claims.
D
Date of First Delinquency (DOFD)
The date you first missed a payment that led to a negative item — this is the clock that starts the 7-year reporting period. This date is fixed regardless of whether the debt is sold, charged off, or re-assigned. Some collectors illegally try to re-age debts by reporting a newer date.
Debt Validation
Under the FDCPA, you have the right to request written proof from a collection agency that a debt is yours and the amount is accurate. If you send a debt validation letter within 30 days of their first contact, they must stop collection activities until they verify the debt.
Delinquency
A missed or late payment on a credit account. Payments 30+ days late are typically reported to the bureaus. The more severe the delinquency and the more recent it is, the more it damages your score. Payment history accounts for 35% of your FICO score.
Dispute
A formal challenge to an item on your credit report that you believe is inaccurate, outdated, or unverifiable. Disputes can be filed with the credit bureau or with the original creditor (furnisher). The bureau has 30–45 days to investigate. Your right to dispute is guaranteed under the FCRA.
Duplicate Account
When the same account appears more than once on your credit report — a common reporting error that artificially inflates negative items. For example, a single collection account being reported by both the original creditor and a third-party collector. Duplicate entries are strong dispute targets.
E
Equifax
One of the three major US credit bureaus, headquartered in Atlanta, GA. Equifax collects credit data from lenders and other sources, compiles credit reports, and sells them to creditors, employers, and others with permissible purpose. Notable for a major 2017 data breach affecting 147 million Americans.
Experian
One of the three major US credit bureaus, headquartered in Dublin, Ireland (US operations in Costa Mesa, CA). Experian offers consumer credit monitoring services and Experian Boost, which allows you to add utility and telecom payment history to your Experian report.
F
Fair Credit Reporting Act (FCRA)
The primary federal law governing credit reporting. Enacted in 1970, the FCRA gives consumers the right to access their credit reports, dispute inaccurate information, know when their credit has been used against them, limit who can access their credit report, and seek damages for violations.
Fair Debt Collection Practices Act (FDCPA)
A federal law that limits how third-party debt collectors can behave. Key provisions: they can't call before 8am or after 9pm, can't use abusive language, and must cease contact if you request it in writing. Violations can result in $1,000 statutory damages per violation.
FICO Score
The credit score model created by Fair Isaac Corporation — the most widely used score in lending decisions. FICO scores range from 300 to 850. The five factors: Payment History (35%), Amounts Owed/Utilization (30%), Length of Credit History (15%), New Credit (10%), Credit Mix (10%).
Foreclosure
The legal process by which a lender takes possession of a property after the borrower defaults on mortgage payments. Foreclosure is a severe negative item that stays on your credit report for 7 years from the date of first delinquency.
Fraud Alert
A notice placed on your credit file that tells lenders to take extra steps to verify your identity before extending credit. Fraud alerts are free and available for 1 year (extended if you're a victim of identity theft).
Furnisher
Any company or organization that provides information to the credit bureaus — banks, credit card companies, collection agencies, landlords, utilities. Furnishers are legally required under the FCRA to report accurate information and to investigate disputes within 30 days.
G
Grace Period
The time between the end of a billing cycle and the payment due date — typically 21–25 days on credit cards. If you pay your full balance before the due date, no interest is charged. A grace period is NOT permission to pay late without penalty.
H
Hard Inquiry (Hard Pull)
When a lender or creditor pulls your credit report as part of evaluating a credit application. Hard inquiries can lower your score by 2–5 points. Multiple hard inquiries for the same type of loan (mortgage, auto) within a short window are usually treated as a single inquiry by FICO. Hard inquiries stay on your report for 2 years but typically only affect your score for 12 months.
I
Identity Theft
When someone uses your personal information to open accounts, take out loans, or commit fraud in your name. Identity theft can result in fraudulent accounts appearing on your credit report. Resolution involves filing a police report, placing a fraud alert or credit freeze, and disputing fraudulent accounts under the FCRA's identity theft provisions.
Installment Loan
A loan with a fixed amount borrowed and a set repayment schedule — mortgages, auto loans, student loans, and personal loans are all installment loans. Having an installment loan helps your credit mix. Consistent on-time payments build strong payment history.
J
Judgment
A court ruling that you owe a specific amount to a creditor. As of 2018, the major bureaus removed most civil judgments from credit reports due to data accuracy concerns — but judgments still give creditors legal tools to collect (wage garnishment, bank levies) regardless of whether they're on your report.
L
Late Payment
A payment made after the due date. Payments 30+ days late can be reported to credit bureaus. The more recent and more severe the late payment, the more it impacts your score. A single 30-day late from 5 years ago has minimal impact. A 90-day late from last month is devastating.
Length of Credit History
How long you've had credit accounts open. Accounts for 15% of your FICO score. FICO considers the age of your oldest account, the average age of all accounts, and how long specific accounts have been open. This is why it's important not to close old accounts.
Lien
A legal claim against property as security for a debt. Tax liens (filed by the IRS for unpaid taxes) were once common negative items on credit reports, but as of 2018, the three major bureaus removed most tax liens from credit reports due to accuracy issues.
M
Medical Debt
Debt arising from medical bills. Recent regulatory changes: paid medical collections are removed immediately; medical collections under $500 are no longer included on reports; and new medical debt must wait 12 months before appearing on your report. Large, unpaid medical collections still significantly impact scores.
Method of Verification
When you dispute an item and it's 'verified' by the bureau, you can request the method of verification — exactly what evidence was used. If their process was inadequate or the evidence doesn't support the item, you can challenge the verification itself.
N
Negative Item
Any entry on your credit report that reflects unfavorably on your credit history — late payments, collections, charge-offs, bankruptcies, foreclosures, repossessions, etc. Most stay on your report for 7 years; bankruptcies for 7–10 years.
New Credit
One of the five FICO score factors, accounting for about 10% of your score. It considers how many new accounts you've recently opened and the number of recent hard inquiries. Opening multiple new accounts in a short period can signal risk to lenders and temporarily lower your score.
P
Pay for Delete
An agreement with a collection agency to remove a collection account from your credit report in exchange for payment. Pay for delete is not legally required of creditors, but some — especially smaller debt buyers — will agree to it. Always get the agreement in writing before paying.
Payment History
The single most important factor in your FICO score — accounting for 35%. It reflects whether you pay your accounts on time. A record of on-time payments is the most powerful builder of good credit.
Permissible Purpose
A legal reason for accessing someone's credit report under the FCRA. Permissible purposes include: credit applications, employment (with consent), insurance underwriting, account review, and court orders. Accessing a credit report without permissible purpose is illegal.
Public Records
Court-related financial information that can appear on your credit report — historically including bankruptcies, civil judgments, and tax liens. Since 2018, the three bureaus have removed most civil judgments and tax liens. Bankruptcies are the primary public record still consistently reported.
R
Re-Aging
An illegal practice where a debt collector resets the date of first delinquency to make an old debt appear newer — effectively extending how long it shows on your credit report. Re-aging violates the FCRA. If you suspect a collector has re-aged your debt, that's a strong dispute ground and a potential FCRA violation you can pursue legally.
Repossession
When a lender takes back collateral — usually a vehicle — after loan default. A repossession is a severe negative item that stays on your report for 7 years. After a repossession, lenders typically sell the vehicle and may pursue you for any remaining deficiency balance.
Revolving Account
A credit account with a variable balance and credit limit — credit cards and home equity lines of credit are revolving accounts. The balance you carry each month is reported to the bureaus and directly impacts your utilization ratio.
S
Secured Credit Card
A credit card backed by a cash deposit that serves as your credit limit. Secured cards are reported to the bureaus like regular credit cards and are one of the best tools for building or rebuilding credit. Look for cards with no annual fee that graduate to unsecured status over time.
Soft Inquiry (Soft Pull)
When your credit report is accessed for purposes other than a lending decision — like checking your own credit, a pre-approval offer, or an employer background check. Soft inquiries do NOT affect your credit score and are not visible to other lenders.
Statute of Limitations (on Debt)
The time window in which a creditor can successfully sue you for an unpaid debt — typically 3–7 years depending on the state and type of debt. Important: the statute of limitations on debt is different from the 7-year credit reporting period. Making a payment on a time-barred debt can restart the clock.
T
Thin File
A credit history with very few accounts — typically fewer than 5 accounts. People with thin files may have difficulty getting a FICO score generated or may receive lower scores than their behavior warrants. Building from a thin file is about adding positive accounts rather than removing negatives.
TransUnion
One of the three major US credit bureaus, headquartered in Chicago, IL. TransUnion maintains data on over 1 billion consumers worldwide and is known for detailed employment and fraud detection reporting.
V
VantageScore
A credit scoring model created jointly by the three major bureaus as an alternative to FICO. VantageScore also uses a 300–850 scale. It's the score used by Credit Karma, Credit Sesame, and many free monitoring tools. Most mortgage lenders use FICO, not VantageScore.
Verification
When a credit bureau contacts the furnisher who reported an item to confirm the information is accurate during a dispute investigation. If the furnisher can't verify the item — or doesn't respond within the required timeframe — the bureau must delete or correct it.
W
Written Dispute
A formal written challenge to an item on your credit report sent to a credit bureau or furnisher. Written disputes — especially certified mail — create a paper trail and trigger specific legal obligations under the FCRA. For complex or high-value disputes, written certified mail disputes are often preferred.
Z
Zero Balance
When a credit account has no outstanding balance. Maintaining zero or near-zero balances on credit cards while keeping the accounts open is a key strategy for optimizing your utilization ratio and credit score.
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