Credit Score Basics
Posted: May 1, 2015

FICO Scores

These are what is commonly known as ones credit scores. They are credit bureau risk scores produced from model developed by Fair Isaac Corporation. These scores are used by lenders and others to determine the potential credit risk of a prospective borrower.

Credit Bureau Risk Score

This is basicly what is commonly termed ones credit score. It is calculated by applying the credit bureaus's algorithm to the data located in the consumers credit file to rate the likelihood of whether or not the consumer will repay any future debt extended to them.

Default

An account is placed in a "default" status after it has been delinquent for several consecutive thirty day billing cycles.

Inquiry

This is an item on a consumer's credit report which shows that someone with a "permissible purpose" has at some time requested a copy of the consumer's credit report.

Installment Debt

This is debt which is to be repaid at regular intervals over a specified period. For example a mortgage with monthly payments which will repay the debt over 15, 20 or 30 years.

Insurance Bureau Score

This is an insurance rating which is based solely on credit bureau data retrieved from the major credit bureaus. It gives the insurance company a snapshot of an individual's insurance risk at a particular point in time. This rating helps insurers evaluate new and renewal homeowner and auto insurance policies and rates.

Late Payment

When a borrower fails to deliver a loan or debt payment on or before the agreed upon time the the payment is considered delinquent.

Personal Statement

A person may request that an explanation about a credit item in their credit file be included on their report. This information will normally remain in your file for two years and will be displayed to anyone reviewing your credit information.

Revolving Credit

Any debt owed on an account that the borrower can repeatedly use and pay back without have to reapply for credit each time is considered revolving credit. A common form of revolving credit is credit cards.

Revolving Debt

A credit card is the most common type of revolving debt. It is debt that is owed on an account where the borrower can repeatedly use the credit and pay back the debt without having to reapply for the credit each time it is used.

Savings Bank

A savings bank is chartered at either the state or federal level and their chief purpost is to encourage thrift by paying interest dividends on savings accounts. However, savings banks can also issue credit cards.

Secured Credit Cards

To obtain a secured credit card the borrower must provide some collateral, usually a cash deposit with the institution of the issuer, for approval. Many people with poor credit or no credit will apply for a secured credit card in order to establish a good tradeline on their credit report.

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