# Credit and Funding Glossary | Lynden Weddas > Plain-English definitions for the credit, bureau and business funding terms that appear on your reports, your disputes and every funding application. Canonical page: https://800clubhub.com/glossary # The language, decoded Access follows understanding, and understanding starts with the words. Here is every term you will meet on a credit report, a dispute letter or a funding application, defined the way it should have been taught to you. [A](#gl-A)[B](#gl-B)[C](#gl-C)[D](#gl-D)[E](#gl-E)[F](#gl-F)[H](#gl-H)[I](#gl-I)[L](#gl-L)[M](#gl-M)[N](#gl-N)[P](#gl-P)[R](#gl-R)[S](#gl-S)[T](#gl-T)[U](#gl-U)[V](#gl-V)[W](#gl-W) ## A ### Adverse Action Notice The letter a lender must send when it denies your application, and it has to tell you the main reasons why. It will name the credit bureau it pulled and the specific factors that hurt you. It is the single most useful free document in credit, because it tells you exactly what to fix first. ### Annual Percentage Rate (APR) The yearly cost of borrowing, expressed as a percentage that includes both the interest rate and most required fees. It is the only number that lets you compare two offers honestly, because one lender's low rate can hide high fees. On business funding, always ask for the APR, not the 'factor rate'. ### Authorized User Someone added to another person's credit card who can use the account but is not legally responsible for the debt. The account history can appear on the authorized user's report and may help their profile. Not every lender counts authorized user accounts when they make a decision, so it is a supplement, never a strategy on its own. ### Average Age of Accounts The mean age of every account on your report, and one of the quieter factors in your score. Opening several new accounts at once drags this number down even when everything else is healthy. It is the main reason patience outperforms tactics in credit building. ## B ### Bank Statement Funding Business funding underwritten on your recent deposit history rather than your credit score, usually the most recent three months. The lender is asking one question: does money reliably come into this business. It is the route for owners whose revenue is solid but whose credit is still being rebuilt. ### Bureau One of the three national credit reporting companies, Equifax, Experian and TransUnion, that collect and sell your credit history. They do not share data with each other, which is why the same account can appear on one report and not another. Every dispute has to be filed with each bureau separately. ### Business Credit A credit file in your business's name, tied to its EIN rather than your Social Security number. It is built by opening accounts with vendors and lenders that actually report to the business bureaus. Done properly it lets the business borrow on its own strength instead of on a personal guarantee. ## C ### Charge-Off An account a creditor has written off as a loss after months of non-payment, usually around 180 days late. The debt does not disappear; it is still owed and is often sold to a collection agency. A charge-off is one of the heaviest negative marks a report can carry. ### Collection Account A debt that has been handed or sold to a third-party agency to pursue. It appears as a separate entry from the original account, which is why one unpaid bill can show up twice on a report. Collections are a common and frequently successful dispute target when the agency cannot verify the debt. ### Credit Builder Loan A small loan where the money sits in a locked savings account while you make the payments, and you receive the funds at the end. You are effectively paying to build a payment history. It is one of the few honest ways to add positive installment history to a thin file. ### Credit Mix The variety of account types on your report, such as credit cards, an auto loan, a mortgage and a personal loan. Lenders like to see you can handle more than one kind of obligation. It is a small slice of the score and never a reason to borrow money you do not need. ### Credit Repair Organizations Act (CROA) The federal law that governs companies that help consumers improve their credit for a fee. It bans charging before services are fully performed, bans guaranteeing results, and requires a written contract with a three-day right to cancel. It also guarantees your right to dispute anything on your own report yourself, for free. ### Credit Utilization The percentage of your available revolving credit you are currently using, calculated per card and across all cards. It is the second-largest factor in most scoring models and, unlike age or payment history, it can change within one billing cycle. Bringing it down is the fastest legitimate lever most people have. ## D ### Debt Service Coverage Ratio (DSCR) A lender's measure of whether your business income comfortably covers its debt payments, found by dividing net operating income by total debt service. Above 1.25 is generally considered healthy. It is the number that decides most real business lending decisions. ### Debt-to-Income Ratio (DTI) Your total monthly debt payments divided by your gross monthly income. Most consumer lenders want to see 43 percent or lower, and the best terms usually go to people well under that. It is not part of your credit score, but it is very much part of the decision. ### Dispute A formal challenge to information on your credit report that you believe is inaccurate, incomplete or unverifiable. The bureau generally has 30 days to investigate and must delete anything it cannot verify. You have this right for free under federal law, whether you do it yourself or have help. ### DUNS Number A nine-digit identifier issued free by Dun & Bradstreet that identifies your business in their system. It is the starting point for a business credit file with D&B, though it is not required by every lender. Getting one costs nothing, so be careful with anyone who wants to sell you one. ## E ### Employer Identification Number (EIN) A federal tax ID for your business, issued free by the IRS in minutes. It lets the business open bank accounts, file taxes and build credit in its own name. Any funding route that qualifies you on business credit will require it. ### Equifax One of the three national credit bureaus. It maintains its own version of your file and its own scores, which is why your Equifax number often differs from the other two. Disputes filed with Experian or TransUnion do not touch your Equifax report. ### Experian One of the three national credit bureaus, and the one most often pulled by auto lenders. Like the others, it maintains a separate file and must be disputed separately. Its business arm also maintains business credit files. ## F ### Factor Rate A pricing method used in some business funding where the amount owed is the advance multiplied by a figure like 1.3, rather than an interest rate. It looks cheaper than it is because it ignores the repayment term. Always convert a factor rate to an APR before you compare offers. ### Fair Credit Reporting Act (FCRA) The federal law that sets the rules for what can appear on your credit report, how long it can stay, and how you challenge it. It gives you a free report from each bureau, the right to dispute, and the right to know who pulled your file. It is the legal foundation under every legitimate credit restoration process. ### FICO Score The credit score model most lenders actually use, running from 300 to 850. There are many FICO versions, and the auto and mortgage industries use different ones than a free app will show you. This is why your 'real' score can differ from the number on your phone. ## H ### Hard Inquiry A record that a lender pulled your credit because you applied for something. It usually costs a handful of points and stays visible for two years, though it only affects scoring for one. Rate-shopping for a single mortgage or auto loan within a short window typically counts as one inquiry. ## I ### Installment Account A loan with a fixed amount, a fixed payment and an end date, such as a car loan, a mortgage or a personal loan. It behaves differently in scoring than a credit card. Paying one off on time is one of the strongest positive marks a file can build. ## L ### Line of Credit A revolving facility that lets a business draw funds up to a limit, repay, and draw again, paying interest only on what is drawn. It is more flexible than a term loan and better suited to uneven cash flow. Approval usually depends on both time in business and credit strength. ## M ### Merchant Cash Advance (MCA) An advance against future sales, repaid by taking a slice of daily or weekly receipts. It funds fast and approves on revenue rather than credit, but it is among the most expensive money a business can take. Convert the factor rate to an APR before signing anything. ### Method of Verification A follow-up request asking a bureau to explain exactly how it verified a disputed item. It is a legitimate step under the FCRA when a dispute comes back 'verified' with no detail. Used properly it forces a real investigation rather than an automated rubber stamp. ## N ### Net 30 Account A vendor account where you receive goods or services now and pay the full invoice within 30 days. The ones that report to business bureaus are how most business credit files get their first tradelines. Always confirm a vendor reports before you count on it for credit building. ## P ### Pay for Delete An arrangement where a collector agrees to remove an entry in exchange for payment. It is not guaranteed, not all collectors will do it, and any agreement should be in writing before money moves. Paying a collection without this agreement often leaves the mark exactly where it was. ### Paydex Score Dun & Bradstreet's business credit score, from 0 to 100, based almost entirely on whether your business pays its vendors on time. A score of 80 means you pay on the due date; above 80 means you pay early. Most lenders who use it want to see 75 to 80 or better. ### Payment History The record of whether you have paid your accounts on time, and the single largest factor in your credit score. One 30-day late payment can cost a strong file a significant number of points. It is also the factor that rewards consistency more than any clever tactic. ### Personal Guarantee A promise that you will personally repay a business debt if the business cannot. It puts your own assets and credit behind the loan, which is why most new businesses are asked for one. Building real business credit is how owners eventually stop signing them. ## R ### Repossession The lender taking back financed property, usually a vehicle, after missed payments. It leaves a severe mark, and if the sale does not cover the balance you can still owe the difference. It stays on a report for seven years from the first missed payment. ### Revolving Account An account with a credit limit you can borrow against, repay and borrow again, like a credit card. Your balance relative to the limit drives your utilization. Revolving accounts move a credit score faster, in both directions, than any other account type. ## S ### Secured Credit Card A card backed by a refundable cash deposit that usually sets your credit limit. It is designed for people building or rebuilding, and the good ones report to all three bureaus. Used lightly and paid in full each month, it is one of the most reliable rebuilding tools there is. ### Small Business Administration (SBA) Loan A loan from a regular lender that carries a partial federal guarantee, which lets the lender offer longer terms and lower rates. Approval is slower and the paperwork is heavier than with alternative funding. For businesses that qualify, the terms are usually the best available. ### Soft Inquiry A credit check that does not affect your score, such as your own check, a pre-qualification, or an existing lender reviewing your account. You can run as many as you like with no consequence. Any tool that claims to check your real score without a soft pull should be treated with suspicion. ### Statute of Limitations The window during which a creditor can sue you over a debt, set by state law and separate from how long the debt appears on your report. Making a payment on an old debt can restart the clock in some states. Know your state's rule before you respond to an old collection. ## T ### Thin File A credit report with too few accounts or too little history for a scoring model to rate you confidently. It is not the same as bad credit; it is an absence of evidence. The fix is adding real, reporting accounts and then letting time do its work. ### Time in Business How long your business has been operating, usually measured from the date of formation or the date of its first revenue. Many funding products set a hard floor, commonly six months or two years. It is the one qualification you cannot accelerate. ### Tradeline Any individual account listed on a credit report, whether a card, a loan or a vendor line. Business credit is built by adding tradelines that actually report to the business bureaus. The word applies to both legitimate accounts you open and the ones sold in ways that are worth being very careful about. ### TransUnion One of the three national credit bureaus, maintaining its own file and its own scores. As with the others, an item removed here can still sit on the other two. Every dispute strategy has to account for all three separately. ## U ### Utilization Threshold The points at which scoring models start treating a balance as a warning sign, commonly noticed around 30, 50 and 90 percent of a limit. Dropping below a threshold before the statement closes is often worth more than paying the same money a week later. It is timing, not magic. ## V ### Validation of Debt A written request that a collector prove the debt is real and that it has the right to collect it, made under the Fair Debt Collection Practices Act. Sent within 30 days of first contact, it requires the collector to pause collection until it responds. Many collection entries do not survive this step. ## W ### Working Capital The money a business has available for day-to-day operating costs, found by subtracting current liabilities from current assets. Most short-term business funding exists to cover a working capital gap. Lenders look at it to judge whether the business can carry a new payment. ## Still translating something? Send the line from your report or your funding application that is not making sense, and Lynden will decode it. No charge. [Book a free call](/book) [Ask a question](/contact) --- Powered by [Launch Automation](https://launchautomation.ai/custom)