Topic Cluster

Credit Terms

12 terms

Credit scores determine who gets a mortgage, at what rate, and on what terms. When household financial distress rises, credit damage cascades through the system — late payments lower scores, lower scores reduce access to affordable credit, and reduced access pushes more households toward high-cost or subprime lending.

Understanding credit terminology matters because a single 30-day late payment can drop a FICO score by 60-110 points, and a foreclosure stays on a credit report for 7 years. The terms in this cluster explain how credit is scored, reported, and monitored — and how distress in one area of household finances can trigger credit damage across all others.

FICO Score Ranges and Mortgage Impact

Score Range Rating Mortgage Impact
800–850 Exceptional Best rates, easiest approval
740–799 Very Good Near-best rates available
670–739 Good Standard conventional approval
580–669 Fair FHA eligible, higher rates
Below 580 Poor Limited options, subprime territory

See Credit Card Default Statistics for current delinquency data, or browse FHA delinquency rates for how credit stress appears in mortgage performance.

Terms in This Cluster

Credit Bureau A company that collects and maintains consumer credit data. The three major U.S. bureaus are Equifax, Experian, and TransUnion. Credit Freeze A free tool that locks your credit report so no one can open new accounts in your name. Does not affect your score. Must be lifted when you apply for credit. Credit Mix The variety of credit types on your report — credit cards, mortgage, auto loan, student loans. Accounts for 10% of your FICO score. Credit Monitoring A service that watches your credit report for changes and alerts you to new accounts, inquiries, or suspicious activity. Available free through many banks and services. Credit Report A detailed record of your borrowing history maintained by Equifax, Experian, and TransUnion. Includes accounts, payment history, balances, and public records like bankruptcies. Credit Score A three-digit number (300–850) summarizing your creditworthiness. Higher scores qualify for better loan terms and lower interest rates. Credit Utilization The percentage of your available credit you're currently using. A major credit score factor — experts recommend keeping it below 30%. FICO Score The dominant credit scoring model used in 90%+ of U.S. lending decisions. Scores range 300–850, weighted across payment history, amounts owed, credit age, mix, and new credit. Hard Inquiry A credit check triggered when you apply for a loan or credit card. Temporarily lowers your score by about 5–10 points and stays on your report for 2 years. Payment History The most important credit score factor (35% of FICO). Records whether you've paid bills on time. One late payment can drop your score 60–110 points. Soft Inquiry A credit check that does not affect your score. Occurs when you check your own credit, receive pre-approved offers, or an employer runs a background check. VantageScore A credit scoring model created by the three bureaus as a FICO alternative. Ranges 300–850. Powers most free credit monitoring tools like Credit Karma.

Related Topics

Consumer Debt Terms Credit cards, auto loans, and debt management Mortgage Default Terms How delinquency and default are reported Debt Collection Terms What happens when debts go to collections Regulatory Terms ECOA, FCRA, and credit protection laws
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