How are 3 in 1 Credit Scores Calculated
Most systems calculate the combined score by determining the median, or the midpoint between the highest and lowest scores. A less common method is calculating the mean or average of the three scores. Because the combined score uses data from the individual bureaus, the factors affecting the three in one score are the same ones that influence individual scores. These include the following:
Payment history: Often having the biggest influence on the credit score, payment history includes all the payments made on existing credit. Missed and late payments will negatively affect one’s credit score, while advanced and timely payments will reflect positively on the report.
Bankruptcies and foreclosures: These often have the biggest negative effect on the credit score. Any filings for bankruptcy within the last seven years usually result in outright denial. Even after the filings are cleared, records on bankruptcies and foreclosures may still significantly pull down the score.
Debt history: Debt history shows how much credit is currently available, how long the consumer has been handling credit, and how close he or she is to the credit limit. Longer credit histories are not necessarily better, unless all payments are promptly made and the debt cleared is of an acceptable amount.
Credit inquiries: Every time a company makes an inquiry into a person’s credit standing, points are taken away from the credit score. To avoid this, it’s best not to enter into prequalification programs when shopping around for credit.
The weights assigned to each of these factors can vary from bureau to bureau. Other factors may be involved in the calculations, but since bureaus don’t reveal their formulas, consumers can only speculate. Resource websites such as credit.com, creditreport.com, truecredit.com, and freecreditreport.com offer more information on understanding and estimating credit scores.