Comprehensive credit repair glossary with 100+ terms explained in plain English. Understand credit scores, disputes, tradelines, and more.
Resumen de la guía
Glosario completo de reparación de crédito con más de 100 términos explicados en inglés sencillo. Comprenda puntajes crediticios, disputas, líneas comerciales y más.
Marco
Análisis profundo
The credit industry uses specialized terminology drawn from banking regulation, statistical modeling, and consumer law. Terms that appear straightforward often have precise technical definitions that differ from colloquial usage. Understanding these definitions at the institutional level -- how regulators define them, how scoring models interpret them, and how creditors apply them -- provides a foundation for navigating credit reports, disputes, and lending decisions effectively.
Many credit terms have different meanings in different contexts. 'Default' means one thing in a credit card agreement (missed minimum payment), another in a mortgage agreement (specific contractual breach conditions), and yet another in regulatory reporting (Metro 2 Account Status codes 80-97). Similarly, 'credit limit' has a standard definition for revolving accounts but a different treatment for charge cards (which report 'high balance' instead). These contextual differences affect how information appears on credit reports and how scoring models process it.
This glossary provides institutional-level definitions for credit terms as they function within the FCRA, Metro 2 reporting standard, FICO scoring framework, and major lending regulations. Where a term has different applications across these contexts, the glossary notes the distinctions.
APR is calculated according to the methodology prescribed by the Truth in Lending Act (TILA, 15 USC 1601 et seq.) and implemented through Regulation Z (12 CFR 1026). For credit cards, APR represents the periodic interest rate multiplied by the number of periods in a year. For mortgages, APR includes both interest and certain prepaid finance charges (origination fees, mortgage insurance premiums), making it a broader cost measure than the note rate alone.
Variable APRs are typically calculated as a margin plus a benchmark index. Most credit card variable APRs use the Wall Street Journal Prime Rate as the index (currently 8.50% as of Q1 2026). When the Federal Reserve raises the federal funds rate, the Prime Rate moves correspondingly, and all variable-rate credit card APRs adjust. A card with a 'Prime + 16.49%' margin would have a current APR of 24.99%. The CARD Act of 2009 limits when issuers can increase APRs on existing balances and requires 45 days notice for rate increases.
Penalty APRs -- higher rates triggered by late payments -- are separately disclosed and can reach 29.99% or higher. Under the CARD Act, penalty APRs can only be applied to new transactions after two consecutive late payments, and the issuer must review the account every 6 months to determine if the penalty rate should be reduced. Some issuers (notably Citi and Discover) have eliminated penalty APRs entirely, while others (Capital One, Chase) maintain them but with the CARD Act review requirement.
An authorized user is a person added to a credit card account by the primary cardholder. The legal framework for AU reporting rests on Regulation B (12 CFR 1002.7), which was originally designed to ensure spousal credit access under the Equal Credit Opportunity Act. When an AU is added, the full account history (open date, limit, balance, payment record) reports to the AU's credit file at the next statement cycle.
The AU mechanism is exploited in credit building because FICO Score 8 and earlier versions treat AU tradelines similarly to primary account tradelines for scoring purposes. The entire account history -- including years of payment data from before the AU was added -- appears on the AU's report and factors into their score. FICO Score 10 and 10T include algorithms designed to detect and potentially discount AU tradelines that appear inconsistent with the consumer's overall profile.
The 'tradeline renting' industry sells AU access on strangers' accounts for $200-$1,000+ per tradeline. While not explicitly illegal under federal law, FICO has stated its models are designed to detect piggybacking. Several tradeline companies have faced FTC scrutiny. The Fannie Mae Selling Guide (B3-5.3-08) specifically addresses how mortgage underwriters should evaluate AU accounts during underwriting.
The B section of the credit glossary covers several foundational concepts including balance transfers, bankruptcy, and bureau operations. Balance transfers represent one of the most commonly used credit management tools, allowing consumers to consolidate high-interest revolving debt onto a card with a promotional 0% APR period. The economics of balance transfers depend on comparing the transfer fee (3-5% of the amount transferred) against the interest saved during the promotional period.
Bankruptcy law intersects with credit reporting through specific FCRA provisions. Chapter 7 bankruptcy (liquidation) discharges most unsecured debts but remains on credit reports for 10 years from the filing date. Chapter 13 bankruptcy (reorganization with a repayment plan) remains for 7 years from the filing date. Individual debts included in a bankruptcy should be updated to show 'included in bankruptcy' or 'discharged in bankruptcy' status and cannot be reported as delinquent after the discharge date.
The bureau operations framework is governed by the FCRA and overseen by the Consumer Financial Protection Bureau. Each bureau maintains its own independent database and uses its own matching algorithms to associate incoming data with consumer files. The bureaus compete for data furnisher relationships and lender customers, which creates both redundancy (most major furnishers report to all three) and gaps (smaller furnishers may report to only one or two).
A balance transfer moves existing credit card debt from one issuer to another, typically to take advantage of a promotional 0% APR period lasting 12-21 months. The transfer fee is typically 3-5% of the transferred amount ($150-$250 per $5,000 transferred). The economic break-even occurs when the interest saved during the promotional period exceeds the transfer fee. At a current average credit card APR of 24.99%, transferring $5,000 at a 3% fee ($150) saves approximately $1,250 in interest over 12 months -- a clear net benefit.
Balance transfer cards have specific underwriting requirements that affect credit reports. Opening a new card generates a hard inquiry and creates a new account that lowers average account age. The new card's credit limit increases total available credit, potentially improving aggregate utilization. However, if the original card is closed after the transfer, total available credit decreases and utilization may worsen. The optimal strategy is to transfer the balance, keep the original card open at $0 balance, and pay off the transfer before the promotional period expires.
FICO scoring treats balance transfer cards the same as any other revolving account. The transferred balance appears as utilization on the new card, so a $5,000 transfer to a card with a $6,000 limit produces 83% utilization on that card -- enough to significantly impact the per-card utilization component of the score. Some consumers spread transfers across multiple cards to keep per-card utilization lower, but this creates multiple inquiries and new accounts.
Bankruptcy is a federal court proceeding governed by Title 11 of the United States Code. The two types most relevant to consumer credit are Chapter 7 (liquidation of non-exempt assets to discharge debts) and Chapter 13 (reorganization through a 3-5 year repayment plan). Both types create a public record that appears on credit reports: Chapter 7 for 10 years from the filing date, Chapter 13 for 7 years from the filing date.
The credit impact of bankruptcy extends beyond the public record notation. All accounts included in the bankruptcy should be updated by data furnishers to show 'included in bankruptcy' or 'discharged' status with a $0 balance. If these accounts continue to report delinquent payment status or outstanding balances after the discharge date, this is a disputable error under the FCRA. Post-discharge reporting errors are among the most common credit report inaccuracies and produce significant score damage because the consumer appears to have both a bankruptcy and ongoing delinquent accounts.
Waiting periods after bankruptcy vary by loan product. Conventional mortgages (Fannie Mae/Freddie Mac) require 4 years from Chapter 7 discharge and 2 years from Chapter 13 discharge. FHA requires 2 years from Chapter 7 discharge and 1 year of satisfactory Chapter 13 payments. VA requires 2 years from Chapter 7 discharge. Auto loans from subprime lenders may be available within months of discharge. Credit cards (particularly secured cards) may be available immediately after discharge.
Resumen
Lista de verificación
Understand Account Status codes (11=current through 97=unpaid) to verify that your credit report accurately reflects each account's true condition.
Section 611 (disputes to bureaus), 623 (furnisher disputes), 605 (reporting periods), 612 (free reports) -- citing these in disputes adds specificity and legal weight.
Hard inquiries affect scores for 12 months and appear for 24 months. Soft inquiries have no impact and are visible only to you.
The date of first delinquency controls the 7-year removal clock. If a collector re-ages this date, it is an FCRA violation and a strong dispute ground.
FICO 8 is most common for general lending, FICO 2/4/5 for mortgages, FICO 9 ignores paid collections. Know which version your target lender uses.
Bureau disputes (FCRA 611), furnisher-direct disputes (FCRA 623), method-of-verification requests (611(a)(7)), and CFPB complaints are all available to every consumer.
Preguntas frecuentes
A charge-off is an accounting designation by the original creditor, who writes off the balance as a loss (typically after 180 days of non-payment) and reports Metro 2 Status Code 97. The debt is not forgiven. A collection is a separate tradeline opened when a debt collector (either the original creditor's collection department or a third-party buyer) reports the purchased or assigned debt. Both can appear simultaneously on a credit report -- the original charge-off and the subsequent collection. Having both causes double-damage to the score.
The date of first delinquency (DOFD) is the date you first became 30+ days past due on the account that led to its current negative status. It matters because FCRA Section 605(a) requires most negative items to be removed 7 years from the DOFD. This date cannot be legally reset by selling the debt to a collector, charging off the account, or settling the balance. If a collector reports a DOFD later than the original delinquency, they are 're-aging' the account, which violates the FCRA.
FICO Score 8 is used in 90%+ of lending decisions and requires 6 months of credit history to generate a score. VantageScore 3.0 can score with 1 month and 1 account of history but is primarily used in free consumer score products (Credit Karma, Credit Sesame) rather than actual lending decisions. Key differences: FICO 8 counts paid collections the same as unpaid; VantageScore 3.0 ignores paid collections entirely. They use different weighting structures and can differ by 20-60 points for the same consumer.
e-OSCAR (Online Solution for Complete and Accurate Reporting) is the electronic system credit bureaus use to forward consumer disputes to data furnishers. It converts your dispute into an Automated Consumer Dispute Verification (ACDV) form with standardized 2-digit reason codes and limited character fields. This compression can strip important factual context from your dispute. Certified mail disputes bypass e-OSCAR and preserve your full argument, which is why consumer advocates recommend mail-based disputes for complex cases.