Understanding Credit Terms Crucial for Financial Smarts
With the most common credit score formula getting an overhaul this month, the free online consumer portal Bills.com has compiled a list of the basic credit terms every American should know.
The three major credit reporting agencies – Equifax, Experian and TransUnion – report consumer credit scores based on the Fair Isaac Corporation’s FICO formula. This spring, Fair Isaac will unveil FICO 08, intended to help lenders better gauge actual risk by better differentiating good customers who have made one mistake from people with multiple delinquent accounts.
Must-know terms include:
* Average Daily Balance or Adjusted Balance
* Amortization
* Annual Percentage Rate (APR)
* Bankruptcy
* Credit score
* Liquidation
* Repossession
* Revolving account
For more information, visit bills.com