Reading a credit report whether it be a free credit report or a tri-merge received from a lender can be compared to reading a foreign language. Below find terms the credit bureaus and lenders use when describing your credit and what these terms mean for a consumer.

“Serious Delinquency” – This term can mean many different things. Usually this term is in reference to an negative account showing on your credit reports which is reflecting a late payment (or late payments) within the past six months.

“Public Record or Collection Filed” – This term can mean you are showing a collection account on the credit reports, a public record (such as a tax lien or judgment), or both a public record and collection.

“Collection” – This term refers to an account which been closed out by the creditor due to non-payment. Usually, collections are being reported by debt collectors or debt buyers. Every once in a while a collection is reported by a creditor (usually a service providing company such as Verizon or National Grid).

– If you have an account listed in collection and is being reported by a debt collector please contact Chaffin Credit Consulting. Debt collectors cannot report legally in the state of Massachusetts. We are happy to help argue for the removal of the account as well as the debt associated.

“Charge Off” – When a debt is defaulted on the original creditor usually “charges off” the debt. This means the company closes out your account and continues to hold you liable for the amount until you either pay in full or make a settlement arrangement. The company informs the government and does not have to pay tax penalties on the debt. They are also free to sell the debt into debt collection at that point in time.

“Balance to Limit Ratio” – When your FICO scores are calculated one of the major factors looked into is how much money you owe and how much money in credit you have access to. If you are showing multiple car loans and no credit cards you are showing a high amount of debt and no access to credit. If you are showing lots of credit cards with no balances and no loans you are showing an excellent balance to limit ratio.

– Balance to Limit Ratio (BtLT) is a bit confusing. How can a consumer know what to show and where? Check out Chaffin Credit Consulting’s post covering the topic for more detailed information!

“Number of Accounts with Delinquency” – lenders of all types hate to see that you paid your bills late. But, what they hate even more than late payments is multiple late payments. FICO scores calculate not only how many late payments you have for one account but how many late payments you have on each account.

– The best way to fix a delinquency is unfortunately to stop paying late. Even if you disagree with the lender about the date the balance is due please don’t let your pride get in the way. Make your payments according to what they say. Then while you are making your payments feel free to argue with them! (Chaffin Credit Consulting is happy to do this arguing for you!) On average a single late payment can drop your scores 100 points. After that score drops it takes 18 months of on time payments to recover.

– If you have to make a late payment on something pay late on the account you’ve paid late on in the past. Do not pay late on multiple accounts and NEVER pay late on your mortgage.

“Inquiries Impacted Scores” – Every time you apply for something whether it be: auto loan, credit card, mortgage, student loan, utilities, cable etc. You are allowing a “hard pull” onto your credit. This means that company will be telling the world for the next two years that you applied with them for something. Not only will this inquiry stay the credit bureaus for two years it will also knock down your scores ten points each time you apply.

– The general rule for mortgage lender underwriters is if a consumer has more than six inquiries they can be denied for a mortgage.

To find out proper ways to inquire for something you need without a hard pull check out Chaffin Credit Consulting’s post for proper pulls!