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Credit Scoring Terms

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In connection with your Credit Score, you shall encounter a number of terms and they may be called Credit Scoring Terms.

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Some TermsEdit

It is interesting to note that there are many special terms which are used while doing a Credit Score. Most of these terms are also used with different meanings in different contexts but in the context of Credit Scoring, they have a particular meaning and significance. Some of the widely used Credit Scoring Terms are:

Algorithm
a complex mathematical model which takes into account millions of credit reports and other relevant data, and attempts to predict the credit worthiness of a particular person.
Collection
If a creditor finds than recovery is difficult, the creditor may hand over the recovery to a collection agency. In case, this happen to anyone, the Credit Score of that person gets negatively impacted.
Credit history
It is historical record of credits availed and used by a person.
Credit report
It is comprehensive document which contains financial information about a person like outstanding debts and details of assets, history of repayments of mortgage loans, auto loans, clearing of dues of credit cards, payment of utilities and other bills, and several similar items. Credit report attempts to asses a persons credit worthiness.
Credit risk
It is measure of measure of credit worthiness. A person with higher credit worthiness is generally charged a lower rate of interest whereas a person with higher credit risk is required to pay higher rate of interest.
Debt-to-available-Credit ratio
Outstanding debts compared to the available credit in credit cards and other types of credits available to a person.
Default
A person is said to default if he/she does not repays his dues in time. defaulting persons are considered risky.
Delinquent
A person is considered a delinquent if he/she defaults on payment of the dues. It is considered in a time frame of days, usually, 30, 60, 90, or 120 days of delinquency depending on the period of the default.
Equifax
It is the name of the one of the three major credit reporting agencies.
Experian
It is the name of the one of the three major credit reporting agencies.
FICO scores
the term is derived from the Fair Isaac Corporation, a company which developed a particular type of Credit Scoring Model.
Hard inquiry
In case, someone asks a person Credit report, it is called Hard inquiry. A number of hard inquiries do not speak well.
Installment credit
If the loan is repayable by an equal installment, it is termed as Installment credit. The installments for all the months of credit period remain same until the loan is liquidated. Installment credit is also called credit repayable by Equated Monthly Installment.
Judgment
This is the order of a court to the borrower to repay an amount to the borrower to satisfy all claims and liabilities.
Lien
It is a legal lien, a right on a person's asset (like a car) placed by the creditor as a security of the loan.
Public record
If a Credit report is obtained from public records like court judgments, bankruptcies related judgments, it is called public record.
Rate shopping
If you are smart to apply to many lenders for the same loan to obtain a better rate of interest and other terms like repayment schedule, it is called rate shopping.
Revolving credit
A credit which requires a minimum repayment per month plus service charge. As the outstanding dues decline, the service charge continues to get reduced.
Soft inquiry
A Soft inquiry is said to happen when someone requests for a person's Credit report. It may be from current creditors, prospective creditors, or a person's self-review of his Credit report.;Trade line: An account mentioned in the Credit report. each credit constitutes a seaprate trade line.
TransUnion
It is the name of the one of the three major credit reporting agencies

External resourcesEdit

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