Frequently Used Terms:
Chargeoff (Charge Off):
A Chargeoff means that a creditor has decided to treat an account receivable (or debt) as a loss because payment is unlikely. Basically the creditor will charge off a debt when it has given up in collecting a debt. A creditor usually sells a charged off debt to a third-party collection agency to recoup some of its loss. This results in both the original creditor and the collection agency reporting negative items on a person's credit report.
Default:
A Default is the failure to pay a debt when due, or honor a contractual obligation.
Default Judgment:
A Default Judgment occurs when a judgment is entered against a defendant who has failed to plead or otherwise defend himself against a creditor's lawsuit.
Fair Credit Reporting Act (FCRA):
The Fair Credit Reporting Act is a set of laws that govern credit reporting practices.
Fair Debt Collection Practices Act (FDCPA):
The Fair Debt Collection Practices Act is a set of laws that govern collection agencies in the collection of debt.
FICO Score :
A FICO Score is a credit scoring model developed by the Fair Isaac Corporation. This is used by banks and lenders to asses a person's overall credit worthiness.
Garnishment:
Garnishment is a proceeding where a court orders a third party (e.g. bank or employer) to withhold a debtor's property in order to satisfy a debt. Garnishment can occur either before or after a creditor obtains a judgment.
Inquiry:
An Inquiry is an entry on your credit report showing that a business has requested your credit report for a "permissible purpose" e.g. for a loan, credit card, insurance, etc. "Hard" inquiries may lower your score, while "soft" inquiries have no effect on your score.
Judgment Lien :
A judicial lien, or judgment lien, arises out of a proceeding in court. A judicial lien establishes a creditor's right in a debtor's property and allows the creditor to proceed (take) a person's property to satisfy a debt.
Repossession (Repo):
A Repossession is the act of retaking property. That is, the original seller or lienholder has the right to reclaim goods when sold on credit should the buyer default on his obligation to repay the seller.. A repossession is usually associated with a bank's retaking an automobile when the buyer defaults on the auto loan.
