Important Credit Reporting Terms to Understand
If you are working on improving your credit or just want to understand your credit reports, you may come across terms that you do not understand. Below is a list of some of the industry terminology that you may run across along with their common meanings.
Fair Credit Reporting Act or FCRA
This is the primary federal legislation that governs credit reporting. Congress passed this statute in 1970 in response to the increasing use of computers in assembling credit reports that contained contained significant errors and had no standards for accuracy or mechanism to correct those errors. The FCRA provides for accuracy, fairness, privacy and mechanisms to correct credit reports. Later amendments in 2003 (the Fair and Accurate Credit Transactions Act or FACTA) provided significant provisions for protecting consumers against identity theft.
Your credit score is a numeric representation of the data in your credit report and reflects the risk that a creditor takes when providing credit. Think of it like a composite grade based on payment history, outstanding balances and types of credit accounts and accounts statuses.
The FICO score ranges between 300 and 850 based on the information available from the credit bureaus. Because the score is a grade, changes to the content of your credit report will change the score. This is also the reason why your credit score may vary between credit bureaus; each bureau has its own data and that that data reflects a different score. This also explains why your score changes over time, to reflect changes in your credit history.
The most common provider of credit scores is FICO. Even though this is the dominant credit scoring company, FICO maintains many scoring models, including specialized models that reflect the risk associated with extending certain types of credit, like
- Credit Cards
- Auto Loans
- Second Mortgages
- Personal loans
Each of these models uses different scoring equations that weigh accounts differently based on the types of accounts in consumer's credit history.
In addition to the FICO scores, the credit bureaus have their own scoring models that are less popular among creditors, the Vantage score. Finally, many creditors have their own scoring models that they use to analyze credit reporting data.
In the credit reporting world, accounts are referred to as "trade lines." Each trade line will normally include information about the creditor, balances, payment history, account status, and credit limits. Creditors report this information about their entire portfolio of credit in a standardized format known as "Metro 2." Credit bureaus who receive this data, match up this account information with the consumers to prepare reports that are sold to subscribers of the credit bureau.
Credit reports track the collection history of accounts in data fields known as the "account status." This field reflects whether the account is being paid or is late. This field may also track the reasons why an account was not paid, such as a charge off or repossession. Credit reports also track the status of accounts in the monthly status of accounts. This is usually represented on reports as a grid. Some creditors do not publish the monthly history of accounts, and only report the current account status.
Federal law requires credit bureaus to record and disclose the identity of anyone who accesses a consumer's credit report. The list of those companies who have received that credit report is know as an "inquiry log." Credit bureaus typically divide this log into two parts, those inquiries that can be seen only by consumers and those that can be seen by anyone who accesses the consumer's report. These are referred to as soft and hard inquiries respectively.
Typically, hard inquiries, (“hard pulls”), happen when a consumer applies for new credit. Soft inquiries, (“soft pulls”) happen when a current creditor or the consumer themself accesses the report.
Credit Bureau | Credit Reporting Agency | Consumer Reporting Agency
Equal Credit Opportunity Act or ECOA
What Additional Resources Are Available to Help?
- Want to see a list of the credit bureaus who keep data on you? Check out our Credit Bureau List.
- If you need help deciding which reports you need, you can read our article on Credit Reports to Order.
- Need help getting your credit report, see our article on How to Get Your Credit Report.
You may have a case under the Fair Credit Reporting Act if you notice the following things on your background report:
- Fraudulent identity theft accounts on your credit credit report.
- Someone else's Information on your credit report.
- Paid accounts still showing a balance due.
- Reporting your accounts in good standing as charged off or in collections.
- Discharged debts still reporting as owed.
- Paid tax lies showing as still owed.
- Derogatory accounts more than 7 years old still on your report.
- Previously deleted accounts that have been reinserted on your report.
- Duplicate reporting of the same account.
If you would like help with one of these problems, call (888) 400-CREDIT | (888) 400-2733 or contact us through this site.
Credit Restoration and Compensation
If you have completed the dispute process and you still can't get the credit bureaus to correct your report, the FCRA allows you to sue agencies. In most cases we are able to remove the false information, correct the report and get compensation for any credit denials, job loss, or emotional harm caused by the other side's violation of the law.
Your Fees Paid for You
We only charge a fee if we are able to recover for you, and The Fair Credit Reporting Act requires the other side to pay your attorney's fees if you win. You pay nothing up front and we take our fee from the other side.
Help with Your Dispute
If you would like help with your credit report dispute, you can call our office at (888) 400-CREDIT or simply send us an email through this site. If you prefer, you can visit our resource page for credit report request letters and sample disputes
Follow Up and Monitoring
After your case is done, we will help you to regularly check and monitor your background checks with free annual reviews of your background checks and credit reports to insure that you stay free of false conviction information.
Work with an Experienced Credit Report Attorney
If you have been the subject of an inaccurate credit report, you may have be able to seek a correction and compensation for any harm. Our firm can help. For more than 25 years, the attorneys of Lyngklip & Associates have represented victims of bogus credit reports credit reports and been a resource for Michigan consumers who need the help of an experienced lawyer.
To learn more or to schedule a free initial consultation with a credit report lawyer, contact our law firm today or call (888) 400-CREDIT | (888) 400-2733 or contact us through this site. In Michigan, you can reach our office at (248) 208-8864.