Wage garnishments occur when you owe a creditor a debt and they take you to court and the court rules in their favor. The creditor does not actually add the wage garnishment to your credit report–the court does via a public record entry. Wage garnishments are a serious matter and should be taken care of as soon as possible. They also can have a very big impact on your credit score.

A tax lien appears on your credit report when you owe taxes to a government entity.

A repossession occurs when a creditor takes back an item, usually tangible, that you still owe money on and have not been making payments on. More often than not, this happens with vehicles. As you may have guessed: this lowers your credit score.

A late payment is exactly what it sounds like. You paid your bill late and the creditor that added to your credit report. Creditors will typically give you some sort of grace period before adding a late payment indicator to your credit report. If you pay your bills late by a few days, it probably will not appear on your credit report. If you are a few weeks late on your payment, it will likely be reported. A late payment will lower your credit score.

A judgment on your credit report is an indication that a court had determined that you are legally liable for a debt. This will typically occur if you owe another party money, they take you to court, and you lose the case.

Judgments usually only occur if the creditor feels you owe enough to make it worth their time taking you to court. For small debts, the creditor will typically charge them off (write off as a loss) and sell it to a collection company.

Types of judgments can include: back child support, money still owed on a repossessed car, medical bills.

An inquiry is something that appears on your credit report each time it is viewed by a person or a company. There are two types of inquiries: hard inquiries and soft inquiries.

Hard inquiries occur when somebody views your credit report for the purpose of deciding whether they should approve your application for a loan. These types of inquiries will often lower your credit score for a temporary amount of time.

Soft inquiries occur when somebody views your credit report for reasons other than extending your credit, such as a potential employer doing a background check on you.

Whether an inquiry will be a hard inquiry or a soft inquiry will not always be apparent. If in doubt, you should ask the party that is going to view your credit report what type of inquiry will be made.

Identity theft is the crime of using another person’s information to impersonate them. There are many things that identity thieves will do with this information. A few are:

– Opening new credit cards as the other person.
– Obtaining a job as the other person.
– Committing crimes as the other person.

The list goes on. The issue this creates for the victim is that they have to put in many hours of work to “clean up” their identity once they discovered it has been compromised.

A closed account is one that is no longer active or in use. Accounts may be closed for many reasons, some of which are:

– It was closed by the creditor, due to inactivity.
– You requested that it be closed.
– It was transferred to a new account. This can happen if you refinance the loan. In doing so, the old account is closed and the balance transferred to the new account.
– You paid it off. This would apply to loans, such as a car loan.
– Your creditor closed it because you had not been making payments on it. In these cases, unless you contact the creditor to make payment arrangements, it may go to collections.

The Consumer Credit Protection Act was created in 1968 to help guarantee American consumers fair and honest credit practices. This federal legislation standardized practices to ensure that lenders throughout the country followed the same sets of regulations.

 
As banking and credit reporting evolved, additional laws were developed and put into place under the Consumer Credit Protection Act. Although each has a special niche among the financial guidelines, they share a common trait. They were put in place to protect consumers.
 
Now the CCPA is an overarching law that contains several acts with more precise scopes. Among these specific laws are the Truth in Lending Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act and the Electronic Fund Transfer Act.

The Fair Credit Billing Act is a United States federal law enacted in 1974 as an amendment to the Truth in Lending Act (TILA). Its purpose is to protect consumers from unfair billing practices and to provide a mechanism for addressing billing errors in “open end” credit accounts, such as credit card or charge card accounts.

The Fair & Accurate Credit Transactions Act is an amendment to the FCRA that allows for consumers to obtain a free credit report from each of the three major bureaus (Experian, Equifax, and TransUnion) once every 12 months. The act also contains provisions to help reduce identity theft, such as the ability for individuals to place alerts on their credit histories if identity theft is suspected, or if deploying overseas in the military, thereby making fraudulent applications for credit more difficult. Further, it requires secure disposal of consumer information.

A short-term loan in which the borrower’s car title is used as collateral. The borrower must be the lien holder (i.e. own the car outright). Loans are usually for less than 30 days. If the loan is not repaid, the lender can take ownership of the car and sell it to recoup the loan amount.

These loans are also known as “auto title loans” or just “title loans”.

A regulatory agency charged with overseeing financial products and services that are offered to consumers. The Consumer Financial Protection Bureau is divided into several units, including: research, community affairs, consumer complaints, the Office of Fair Lending and the Office of Financial Opportunity. These units work together to protect and educate consumers about the various types of financial products and services that are available.

A mortgage loan program established by the United States Department of Veterans Affairs to help veterans and their families obtain home financing. The Department of Veterans Affairs does not directly originate VA loans; instead, they establish the rules for those who may qualify, dictate the terms of the mortgages offered and insure VA loans against default.

A mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for low to moderate income borrowers who are unable to make a large down payment. FHA loans allow the borrower to borrow up to 97% of the value of the home. The 3% down payment requirement can come from a gift or a grant, which makes FHA loans popular with first-time buyers.

Just as it sounds, short sale is selling real estate property short of the loan balance. Short sale is an alternative to foreclosure. Once a foreclosure judgement has been made, the homeowner no longer has options. But if he falls on hard times and contacts the lender before the foreclosure is complete, he and the lender can agree to sell the property short of the loan amount owed and part company.

The law’s purpose is to: eliminate abusive practices in the collection of consumer debts, to promote fair debt collection, and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information’s accuracy. It is often used in conjunction with the Fair Credit Reporting Act.

The Fair Credit Reporting Act is a United States federal law that regulates the collection, dissemination, and use of consumer information, including consumer credit information. Along with the Fair Debt Collection Practices Act (FDCPA), it forms the base of consumer credit rights in the United States.

A debt that is considered settled in return for a negotiated payment amount less than the actual balance of the debt. In these scenarios, the borrower is already very delinquent on the account. Lenders will generally try to negotiate a settlement amount prior to considering the debt a total loss and selling it to a collection company.

An account that is settled is technically less derogatory than one that was a charge-off. However, both items are seen as negative in the eyes of a potential lender.

A method of borrowing in which a homeowner may borrow against their home’s equity as needed using a checkbook or credit card. It differs from a standard loan in that the borrowing may be done over a period of time, as needed, preventing excess borrowing and limiting interest costs.