Glossary

Glossary

APR

Annual percentage rate: the yearly cost of borrowing, including interest and certain fees, expressed as a percentage. Compare APRs alongside fees and repayment terms.

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authorized user

Someone permitted to use another person’s credit card account. The account may appear on the user’s credit report, but reporting and scoring effects vary; the primary account holder remains responsible for payment.

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bankruptcy

A legal process for people or businesses unable to repay debts. It can provide court-supervised relief, but may have significant credit and financial consequences.

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charge off

A creditor’s accounting designation that a debt is unlikely to be collected after prolonged nonpayment. It does not erase the debt or necessarily stop collection efforts.

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collection

An unpaid debt a creditor or collection agency is trying to recover. A collection account may be reported to credit bureaus, subject to applicable reporting rules.

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credit builder account

A product designed to help establish payment history, often by holding loan proceeds until payments are made. Check fees, reporting practices, and whether payments are reported to the bureaus you care about.

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credit limit

The maximum amount a lender allows you to borrow on a credit account. Using a large share of the limit can raise credit utilization.

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credit mix

The variety of credit accounts in a credit file, such as revolving accounts and installment loans. Its importance varies by scoring model; opening accounts solely to diversify can cost money.

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credit utilization

The portion of available revolving credit currently in use, often expressed as a percentage. Lower utilization can help some scores, but there is no universal threshold that guarantees a result.

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debt to income

Debt-to-income ratio (DTI): monthly debt payments divided by gross monthly income. Lenders may use it to assess ability to repay; it is not itself a credit score.

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DSCR

Debt-service coverage ratio: cash flow available for debt payments divided by required debt payments. Lenders use different methods and periods to calculate it.

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DUNS number

A nine-digit business identifier issued by Dun & Bradstreet. It identifies a business but is not a tax ID, credit score, or promise of financing.

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EIN

Employer Identification Number, a federal tax identification number issued by the IRS to eligible businesses and other entities. It does not by itself establish business credit or guarantee financing.

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entity

A legally recognized organization, such as a corporation, partnership, or limited liability company. Formation and registration requirements depend on the jurisdiction.

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equipment financing

Financing used to acquire business equipment, often with the equipment serving as collateral. Terms, down payment, and personal-guarantee requirements vary by lender.

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Experian Boost

An optional Experian service that may add eligible payment data, such as certain utility or streaming payments, to an Experian credit file. Results are not guaranteed and may not affect other bureaus or every score.

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factoring

A business sells invoices to a factor for an advance, usually less fees, and the factor collects from customers. It is different from a conventional loan and can affect customer relationships and cash flow.

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FICO

A brand of credit scores developed by Fair Isaac Corporation using information in credit reports. There are multiple FICO versions and industry-specific scores, so scores can differ.

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fundability

An informal term for how likely a business may be to qualify for financing under a provider’s criteria. It is not a standardized score or a guarantee of approval.

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goodwill letter

A request asking a creditor to consider removing a correctly reported late payment as a courtesy. Creditors are not required to agree, and accurate information generally cannot be disputed as an error.

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hard inquiry

A credit-report inquiry generally made after applying for credit. It may affect some credit scores for a limited period; the effect varies by model and credit file.

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installment loan

A loan repaid in scheduled payments over a set period, often with a fixed payment amount. Examples include many auto and personal loans.

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Intelliscore

Experian’s business credit scoring product, often referred to as Intelliscore Plus. The score and underlying data are distinct from personal credit scores, and lender use varies.

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line of credit

A borrowing arrangement that lets a business draw funds up to a limit, repay, and potentially borrow again during the draw period. Rates, fees, and renewal terms vary.

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merchant cash advance

A provider advances funds in exchange for an agreed portion of future sales or receipts. Cost, collection method, and legal treatment vary; compare the total repayment and contract carefully.

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microloan

A relatively small loan, often offered by nonprofit, community, or government-supported programs to small businesses. Eligibility, loan size, rates, and permitted uses differ by program.

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NAICS code

A code in the North American Industry Classification System that classifies an establishment’s industry. It is used for statistical and administrative purposes and does not itself confer a license or financing eligibility.

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net 30

A payment term generally requiring an invoice to be paid within 30 days. It does not automatically build business credit; the supplier must report eligible payment data to a relevant bureau.

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PAYDEX

A Dun & Bradstreet business payment score based primarily on reported payment experiences. Its scale and meaning differ from consumer credit scores, and available trade data can affect the result.

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personal guarantee

A promise by an individual to repay a business debt if the business does not. It can put the guarantor’s personal assets at risk, subject to the agreement and applicable law.

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revenue based financing

Funding repaid through a share of future business revenue, often until an agreed amount is paid. Total cost and payment timing depend on the contract and revenue performance.

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revolving credit

Credit with a limit that can generally be borrowed, repaid, and borrowed again, such as a credit card. Interest and fees may apply to balances and transactions.

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SBA loan

A business loan made by a participating lender under a U.S. Small Business Administration program, often with an SBA guarantee to the lender. The SBA generally does not lend directly in its main guaranteed-loan programs; eligibility and terms vary.

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secured card

A credit card backed by a refundable security deposit that commonly helps set the credit limit. The deposit does not pay the monthly bill, and reporting practices vary by issuer.

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soft inquiry

A credit-report check that generally does not affect credit scores, such as many personal checks or prequalification reviews. Whether an inquiry is soft or hard depends on its purpose and authorization.

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statement closing date

The date a card issuer ends a billing cycle and prepares a statement. The balance reported to credit bureaus may reflect the balance around this date, but issuer reporting schedules vary.

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term loan

A loan providing a lump sum that is repaid over a set term under agreed payment and interest terms. Fees, collateral, and prepayment rules vary.

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tradeline

An account listed on a credit report, showing details such as account type, balance, and payment history. In marketing, “tradeline” can also refer to a credit account someone offers to add an authorized user to.

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UCC filing

A public notice, commonly a UCC-1 financing statement in the United States, that a creditor may file to indicate a security interest in personal property. A filing is not by itself proof that a debt is valid or unpaid.

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working capital

Funds available for a business’s day-to-day operations, such as payroll and inventory. In accounting, working capital usually means current assets minus current liabilities.

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