section 2

Question 1

Credit:

Answer 1

An agreement that a person will borrow money and repay it to the lender over time.

Question 2

Credit Bureau:

Answer 2

An agency that provides financial information and payment history to lenders or creditors about
potential borrowers. Also known as a national credit repository or a credit reporting agency.

Question 3

Credit Report

Answer 3

A report generated by a credit reporting agency that contains the borrower’s credit history for
approximately the past seven years. Lenders can use this information to determine if a loan will be granted.

Question 4

Credit History

Answer 4

A record of an individual that lists their debts and the payment history. The report that is generated
is called a credit report. Lenders use this information to gauge a potential borrower’s credit worthiness.

Question 5

Credit Grantor/Creditor:

Answer 5

The lending institution providing a loan or credit.

Question 6

Debtor:

Answer 6

The person or entity that borrows money. This term may be used interchangeably with the term “borrower.”

Question 7

Tradeline:

Answer 7

Entry by a credit grantor to a consumer’s credit history maintained by a credit reporting agency., and
describes the consumer’s account status and activity. Information includes names of companies where the applicant
has accounts, dates accounts were opened, credit limits, types of accounts, balances owed and payment histories.

Question 8

Revolving Account

Answer 8

A type of loan, such as a credit card, where credit is replenished up to a maximum credit limit as
the borrower pays down the existing balance.

Question 9

Credit Union:

Answer 9

A non-profit financial organization federally regulated and owned by the members who use their
services. Credit unions serve groups that hold a common interest or are part of a distinct common geographic area
and you have to become a member to use the available services.

Question 10

Settlement

Answer 10

An agreement a lender makes with a borrower to repay only part of the outstanding debt in exchange
for the lender forgiving the remaining balance

Question 11

Charge-Off

Answer 11

Action of transferring accounts deemed uncollectible to a category such as bad debt or loss. Collectors
usually continue to solicit payments, but the accounts are no longer considered part of a company’s receivable or
profit picture.

Question 12

FICO® Credit Score:

Answer 12

A FICO® Credit Score is a type of credit score calculated by using a person’s credit report to
determine the likelihood of a loan being repaid on time. FICO® Credit Scores range from 300 – 850, with a lower
score indicating higher risk, while a higher score may indicate less risk.

Question 13

Responsibility

Answer 13

Indicates who is responsible for an account; can be single, joint, co-signer, etc

Question 14

Co-signer

Answer 14

Person who pledges in writing, as part of a credit contract, to repay the debt if the borrower fails to do
so. The account displays on both the borrower’s and the co-signer’s credit reports.

Question 15

Authorized User

Answer 15

Person permitted by the primary cardmember to charge goods and services on the cardmember’s
account. The authorized user isn’t responsible for repayment of the debt. The account may be reported on the
authorized user’s credit report. The authorized user’s bureau will not be pulled or used as part of a credit decision.

Question 16

Maker

Answer 16

Primary person on an account who also has a co-signer.

Question 17

Dispute

Answer 17

If a consumer believes an item of information on their credit report is inaccurate or incomplete, they may
challenge, or dispute, the item. Credit Bureaus will investigate and correct, or remove, any inaccurate information or
information that cannot be verified. The Credit Bureau gives consumers the option of disputing online or they may
call the telephone number on their credit report for assistance. In addition, consumers may dispute credit reporting
information directly with their lending institution.

Question 18

High Balance:

Answer 18

The highest amount that a consumer has owed on an account to date.

Question 19

Original Amount

Answer 19

The original amount owed to a creditor

Question 20

Inquiry

Answer 20

: An inquiry represents a lending institution’s request to a credit reporting agency for a potential borrower’s
credit bureau report. Each time a credit application is completed or more credit is requested, an inquiry is generated
on their credit report. A large number of inquiries on a credit report can impact a credit score.

Question 21

Variable Rate

Answer 21

A rate calculated by adding a margin to an index, such as the Prime Rate. Variable rates change over
time as the index moves up or down, as described in the Cardmember Agreement.

Question 22

Fixed Rate

Answer 22

A rate that does not fluctuate during the fixed rate period of the loan.

Question 23

Interest

Answer 23

Sums owed a lender in exchange for the right to borrow the money

Question 24

Interest Rate

Answer 24

The percentage rate of interest charged on a loan or extension of credit. Interest rates are often
expressed as daily periodic rates (interest calculated on a day’s worth of borrowing) or annual periodic rates (interest
calculated on an annualized basis).

Question 25

Public Record Information

Answer 25

Court records of events that are a matter of public interest such as credit, bankruptcy,
foreclosure and tax liens. The presence of public record information on a credit report is regarded negatively by
creditors

Question 26

Closed-ended Credit

Answer 26

: Closed-end credit has a definitive balance, term and payment amount. They are generally used
to secure big-ticket items such as vehicles and homes, and often have interest rates that are more favorable than
those of open-ended credit. Closed-end credit could be a loan or an extension of credit. Smaller closed-ended
personal loans are sometimes considered for debt consolidation or to pay off medical expenses.

Question 27

Installment Credit

Answer 27

Credit accounts in which the debt is divided into amounts to be paid successively at specified
intervals. Usually used for secured loans, such as mortgages, auto loans, personal loans, and student loans.
Installment loans can also be used for credit card debt consolidation. These will typically be shown with an ‘I’ in the
Manner of Payment (MOP) field. For example: I01 – Paid as agreed.

Question 28

Line of Credit

Answer 28

The maximum amount a borrower can draw upon or the maximum that an account can show as
outstanding. Secured lines are usually held against a home as collateral, known as Home Equity lines of credit
(HELOC). Unsecured lines of credit do not have collateral and can be used for credit card consolidation, overdraft
protection, home improvements or other purposes. These may be shown with a ‘C’ in the Manner of Payment (MOP)
field. For example: C01 – Paid as agreed.

Question 29

Unsecured Credit

Answer 29

: Credit for which no collateral has been pledged. Extensions of credit made under this arrangement
are sometimes called signature loans; in other words, a loan is granted based only on the customer’s word, through
signing an agreement that the loan amount will be repaid.

Question 30

Secured Credit

Answer 30

Extension of credit for which some form of acceptable collateral, such as a house or automobile has
been pledged

Question 31

Open-ended Credit

Answer 31

Credit cards and other revolving credit accounts are considered open-ended. They enable the
borrower to make repeated purchases or advances up to the credit limit. Credit availability is generally replenished,
as balances are repaid. While their payment due dates may be regular, the amount due can vary based on the balance
of the account. Home equity lines of credit (HELOC) are also considered open-ended credit, though they are secured
by the home.

Question 32

In File Date

Answer 32

The date that the applicant originally applied for credit.

Question 33

On File Date

Answer 33

Date the oldest trade is reporting on the credit file. This date may be close to the in-file date

Question 34

Employment:

Answer 34

Indicates the most recent reported employer, as well as previous employers and the dates of
employment. This does not indicate the hire date, and this is also not necessarily where the applicant is currently
employed.

Question 35

Open/Report/Close Dates

Answer 35

These dates show the open date of the account, last updated date, and the date the
account was closed

Question 36

Permissible Purpose:

Answer 36

 Credit Application.
 Credit Line Increase.
 PCU - Account monitoring/maintenance.
 Change in Liability Request.

Question 37

Reasons to Pull a Cross Bureau

Answer 37

Gap in File: When there is a gap on the credit report of using credit within the past 5-10 years. This may indicate
prior financial stress.
 Lack of File: Minimal trades reporting on the credit report, which may indicate prior financial stress, or no use of
credit in the past.
 Split/Mixed File: May occur with juniors, seniors, or individuals with similar names in which some trades on the
credit report may belong to another party. This is indicated where the credit report contains two or more social
security numbers.
 References on application not found: For example, applicant lists that they own and include a monthly mortgage
payment and mortgage is not found on the credit report.
 References on application not updating: For example, mortgage is found on the credit report but is not updating