Credit has its own vocabulary, and a few words, such as “charge-off,” “inquiry” and “validation,” have specific legal meanings that affect what you can do. Each definition below is one to three sentences. Rules and numbers come from federal statute and regulation, FICO, VantageScore, the CFPB, the FTC and the bureaus, checked October 22, 2026. Sources are at the bottom.

Jump to: A · B · C · D · E · F · G · H · I · L · M · O · P · R · S · T · U · V

A

Adverse action notice

The notice you get when a lender denies you or offers worse terms. Under the Equal Credit Opportunity Act you are entitled to the specific reasons. If a credit report was used, the Fair Credit Reporting Act requires the notice to name the bureau, give the score used and tell you that you can get a free copy of that report within 60 days.

AnnualCreditReport.com

The official site for free credit reports from Equifax, Experian and TransUnion. The FTC says the three bureaus have permanently extended free weekly reports there. The phone line is 1-877-322-8228. See free credit reports.

APR (annual percentage rate)

The yearly cost of borrowing expressed as a rate. On a credit card it is the interest rate charged on balances you carry past the grace period. Cards often have separate APRs for purchases, balance transfers and cash advances.

Authorized user

A person added to someone else's credit card who can use it but is not legally responsible for the debt. If the issuer reports authorized users, the account can appear on that person's credit report. FICO says these accounts have less impact than primary accounts in recent score versions. See the authorized-user strategy.

Average age of accounts

The mean age of the accounts on your report. FICO's length-of-history category uses it along with the ages of your oldest and newest accounts. Use the average age of accounts calculator.

B

Balance transfer

Moving a balance from one credit card to another, usually to get a lower promotional rate. Transfers commonly carry a fee, and the promotional rate ends on a date stated in the card agreement.

Bankruptcy

A federal court process that eliminates or restructures debts. The Fair Credit Reporting Act allows a bankruptcy to be reported for up to 10 years. FICO says bankruptcies stay 7 to 10 years depending on the type. See rebuilding credit after bankruptcy.

C

CARD Act

The Credit CARD Act of 2009, carried out through Regulation Z. Among other things, issuers must consider your ability to pay before opening a card. Applicants under 21 need independent income or a co-signer aged 21 or older. Statements must arrive at least 21 days before the payment due date.

Charge-off

An accounting step in which a lender writes off a debt it does not expect to collect. Under federal bank regulators' policy, open-end accounts like credit cards are generally charged off at 180 days past due. You still owe the debt, and it is often sold to a collector. See charge-off vs collection.

Closing date (statement date)

The last day of a card's billing cycle. The balance on that date is what usually gets reported to the bureaus, so it is the balance that sets your utilization. See credit utilization.

Co-signer

A person who signs a loan or card agreement with you and becomes legally responsible for repaying it if you do not. That is a different role from an authorized user, who owes nothing.

Collection account

A debt that the original creditor has passed to a collection agency or sold to a debt buyer. It can be reported for seven years, counted from 180 days after the original delinquency began. See removing collections.

Credit bureau (consumer reporting agency)

A company that collects and sells information about how you use credit. The three nationwide bureaus are Equifax, Experian and TransUnion, and each keeps its own separate file on you.

Credit-builder loan

A small loan where the lender holds the money in a locked account while you make payments, then releases it at the end. The CFPB says payments usually run 6 to 24 months and are reported as an installment loan. See credit-builder loans and the calculator.

Credit freeze (security freeze)

A block that stops a bureau from releasing your report to most new lenders. By federal law it is free to place and lift. A request by phone or online must be honored within one business day, and a lift within one hour. See freeze vs lock vs fraud alert.

Credit invisible

The CFPB's term for adults with no credit record at any of the three nationwide bureaus. It estimated about 26 million, roughly one adult in ten. See building credit from scratch.

Credit limit

The most you can owe on a card or line of credit at one time. On a secured card it is usually equal to your deposit.

Credit mix

The variety of account types on your report, such as cards, retail accounts, installment loans and mortgages. FICO says you do not need one of each and should not open accounts just to add types.

Credit repair organization

A company that charges to improve your credit record. Under the Credit Repair Organizations Act, it may not take payment for a service until that service is fully performed. It cannot do anything you cannot do yourself for free, such as disputing errors.

Credit report

The record a bureau keeps of your accounts, payment history, inquiries, collections and bankruptcies. Lenders and scoring models read it. See how to get yours free.

Credit score

A number, usually from 300 to 850, that a model calculates from one bureau's report to predict how likely you are to repay. FICO and VantageScore are the two main families, and each has several versions. See score ranges.

Credit utilization

Revolving balances divided by revolving limits, overall and per card. $300 owed on $1,000 of limits is 30 percent. It sits in FICO's amounts-owed category. Use the utilization calculator.

D

Date of first delinquency

The date an account first went past due and was never brought current. It starts the seven-year reporting clock for collections and charge-offs, so re-selling a debt does not reset it. Use the removal date calculator.

Debt-to-income ratio (DTI)

Monthly debt payments divided by gross monthly income. The CFPB's example is $2,000 in payments on $6,000 of income, a DTI of 33 percent. It is not part of a credit score, but lenders use it to decide.

Debt validation

The information a debt collector must send about a debt: the creditor, amount and your rights. Under Regulation F you have a validation period, about 30 days after you receive it, to dispute the debt in writing. See debt collection rights.

Delinquency

A payment that is past due. Experian says creditors generally report a payment as late once it is 30 days past due.

Dispute

A request that a bureau investigate information you believe is inaccurate or incomplete. The bureau generally has 30 days, extendable to 45 if you send more information during that time. Unverifiable items must be deleted or corrected. See how to dispute.

E

Equal Credit Opportunity Act (ECOA)

The federal law that bars lenders from discriminating based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance income. It also requires a creditor to tell you its decision within 30 days of a completed application.

Equifax, Experian, TransUnion

The three nationwide credit bureaus. Lenders do not always report to all three, so your three reports, and the scores built on them, can differ.

F

Fair Credit Reporting Act (FCRA)

The federal law, 15 U.S.C. 1681 and following, that governs credit reports. It sets who may see your report, how long negative items can stay, and your right to dispute errors.

Fair Debt Collection Practices Act (FDCPA)

The federal law that limits how third-party debt collectors may contact you and bars harassment and false statements. The CFPB's Regulation F implements it. See debt collection rights.

FICO Score

The scores made by Fair Isaac, built from five categories: payment history, amounts owed, length of history, new credit and credit mix. To be scored, you need an account open six months or more and one reported in the past six months. See how scores are calculated.

Fraud alert

A note on your file asking lenders to verify your identity before opening credit. An initial alert lasts at least one year. An extended alert, which requires an identity theft report, lasts seven years.

G

Goodwill letter

A letter asking a creditor to remove an accurate late payment as a courtesy, usually after a single slip on an otherwise good account. The creditor is not required to agree. See the goodwill letter guide.

Grace period

The time between the end of a billing cycle and the due date during which you can pay a card's purchase balance in full and avoid interest. If a card offers one, Regulation Z requires the statement to arrive at least 21 days before the grace period ends.

H

Hard inquiry

A credit check made because you applied for credit. FICO says it stays on your report up to two years, counts in the score for 12 months and usually costs fewer than five points. See hard vs soft inquiries.

I

Installment loan

A loan repaid in fixed payments over a set term, such as an auto, student, personal or credit-builder loan. FICO compares how much is still owed with the original amount.

L

Late payment

A payment made after its due date. It can cost a late fee right away, but it is generally reported to the bureaus only once it reaches 30 days past due, and can then stay up to seven years. See late payments on a credit report.

M

Medical collections

Unpaid medical bills sent to collection. The three bureaus stopped reporting paid medical collections on July 1, 2022, now wait one year before unpaid ones can appear, and in April 2023 removed those with an initial balance under $500.

Minimum payment

The smallest amount due on a card each month to keep the account current. Paying only the minimum avoids a late mark but leaves the rest of the balance accruing interest. Use the payoff calculator to see the cost.

O

Opt-out (prescreened offers)

Removing your name from the lists bureaus sell for prescreened offers, at optoutprescreen.com or 1-888-5-OPT-OUT. By law it lasts five years, or permanently if you return a signed form, and it does not affect your score.

P

Pay-for-delete

An offer to pay a collection in exchange for the collector deleting it from your reports. No law requires a collector to agree. Get any agreement in writing before you pay. See removing collections.

Payment history

FICO's largest category: whether you paid as agreed, and for any lapses how late, how much, how often and how recently. See how scores are calculated.

Permissible purpose

A reason the Fair Credit Reporting Act allows someone to get your report. Examples include a credit application, review of an existing account, or employment screening with your permission. A pull without one can be disputed.

Prequalification

A lender's early estimate of whether you may qualify. The CFPB says lenders use the term differently and may check your credit, so ask whether it is a soft or hard pull. A denial still requires an adverse action notice.

Prescreened offer

A firm offer of credit sent to people a bureau selected from a lender's criteria. The CFPB says being prescreened does not affect your score. Applying for the offer usually does.

R

Rate-shopping window

The period in which FICO counts several mortgage, auto or student loan inquiries as one. It is 45 days in newer FICO versions and 14 days in older ones. Credit card applications are not included.

Rent reporting

A service that sends your rent payments to one or more bureaus. Rent counts only if it is actually reported and the score version in use reads it. See rent and utility reporting.

Revolving credit

Credit you can borrow, repay and borrow again up to a limit, such as a credit card or line of credit. It drives your utilization ratio.

S

Secured credit card

A card backed by a refundable cash deposit that usually sets the limit. FICO treats it like any other card on your report. See secured cards and graduation.

Share-secured loan

A loan, usually from a credit union, backed by money in your own savings or certificate account. It is an installment loan for reporting purposes. See share-secured loans.

Soft inquiry

A credit check that is not tied to a new application. Examples are checking your own credit, prescreened offers and reviews by your existing lenders. It does not affect your score and only you can see it.

Statement balance

The amount you owe as of the statement closing date. Paying it in full by the due date generally avoids purchase interest, and it is usually the balance reported to the bureaus.

Statute of limitations

A state-law deadline for suing to collect a debt. The CFPB says that in some states a partial payment, or acknowledging the debt, may restart it. It is separate from the federal seven-year credit reporting limit.

T

Thin file

A credit report with too few accounts, or too little recent activity, to produce a reliable score, or any score. FICO needs an account open six months or more and one reported within the past six months.

Time-barred debt

A debt past the statute of limitations. The CFPB says collectors generally cannot sue or threaten to sue on it but can still contact you, and the debt can still appear on your report until its reporting period ends.

Tradeline

Industry shorthand for one account as it appears on your credit report, with its limit, balance and payment history. Buying a spot on a stranger's card, sometimes sold as “tradelines,” is a practice the FTC has sued over.

Trended data

Balance and payment history over months instead of a single snapshot. VantageScore says its 4.0 model looks at utilization for up to two years.

U

UltraFICO

A FICO Score that also uses checking, savings or money market data you choose to share. It is the one exception FICO names to the rule that its scores use only credit report data.

V

VantageScore

A scoring model family on the same 300 to 850 scale as FICO with different bands and weights. VantageScore says version 4.0 can score a file with one month of history. See score ranges.

FAQ

Sources

Only primary sources. Every rule and figure above comes from one of these pages, checked October 22, 2026.

1. 15 U.S.C. 1681b, 1681c, 1681c-1, 1681i and 1681m (Fair Credit Reporting Act) — law.cornell.edu/uscode/text/15/1681c and neighboring sections. Reporting time limits, 180-day rule, fraud alerts, freezes, disputes, adverse action, prescreen opt-out.
2. 15 U.S.C. 1691 (Equal Credit Opportunity Act) — law.cornell.edu/uscode/text/15/1691. Prohibited bases, 30-day decision, statement of reasons.
3. 15 U.S.C. 1679b (Credit Repair Organizations Act) — law.cornell.edu/uscode/text/15/1679b. No advance payment.
4. 12 CFR 1026.5 and 1026.51 (Regulation Z) — 1026.5, 1026.51. 21-day statement rule; ability to pay; under-21 rule.
5. 12 CFR 1006.34 (Regulation F) — law.cornell.edu/cfr/text/12/1006.34. Validation information and period.
6. Federal Reserve, “Uniform Retail-Credit Classification and Account-Management Policy” — federalreserve.gov. 180-day charge-off for open-end credit.
7. myFICO pages: What's in my FICO Scores, Payment History, Credit Mix, Credit Checks, minimum requirements, authorized users.
8. VantageScore, “The Complete Guide to Your VantageScore 4.0 Credit Score,” June 26, 2025, and “The Credit Score Wars,” January 15, 2026 — guide, article.
9. CFPB: debt-to-income ratio; statute of limitations (reviewed December 9, 2024); ways to start a credit history; prequalification vs preapproval; who are the credit invisibles.
10. FTC, “Free Credit Reports,” June 2026, and “What To Know About Prescreened Offers” — free reports, prescreened offers. FTC Business Blog on piggybacking, March 9, 2020 — ftc.gov.
11. TransUnion newsroom, medical collections announcement, April 11, 2023 — newsroom.transunion.com.
12. Experian, “How Long Do Late Payments Stay on a Credit Report?” — experian.com. 30-day reporting threshold.

Educational information, not legal or financial advice. Laws, regulations and scoring models change; if a definition here no longer matches the source, tell us. · Advertiser disclosure

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