Glossary of Key Terms
Algorithm: A set of rules or calculations used to determine a credit score based on credit data.
Credit Age (Average Credit Age): The average length of time all of your credit accounts have been open. Closing older accounts can lower this average.
Credit Report: A detailed summary of an individual's credit history, including information about loans, credit cards, payment history, and public records.
Credit Score: A numerical representation of an individual's creditworthiness, used by lenders to assess risk.
Credit Utilization Ratio: The amount of credit you are using compared to your total available credit. Calculated by dividing your outstanding credit balances by your total credit limits.
Equifax: One of the three major credit bureaus in the United States.
Experian: One of the three major credit bureaus in the United States.
FICO: A commonly used credit scoring model. Different versions exist (e.g., FICO 2, 4, 5, 8).
Installment Debt: A type of debt with fixed payments over a set period, such as a car loan or mortgage.
Payment History: The record of how consistently and timely you have made payments on your credit obligations. It is a major factor in credit scoring.
Revolving Debt: A type of debt that allows you to borrow repeatedly up to a certain limit and pay it back over time, such as a credit card.
Soft Inquiry: An inquiry into your credit report that does not affect your credit score, such as checking your own credit score or a pre-approved credit offer.
TransUnion: One of the three major credit bureaus in the United States.
VantageScore: Another credit scoring model, developed by the three major credit bureaus.
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