The Tri Merge Credit Score
Tri-merge credit reports use nearly the same formula as those of the individual bureaus. The only difference is that they also combine the three scores, either by calculating the mean (average) or getting the median or midpoint between the highest and lowest scores. FICO, the most widely used credit scoring system, assigns a credit score to one’s portfolio which basically tells lenders how much risk he or she poses to the lenders. The following factors are usually taken into account in a tri-merge credit report:
Payment history: This is often the biggest factor influencing a credit score. Any missed or late payments will reflect negatively on a tri-merge credit report. Likewise, timely or advanced payments will have a positive effect.
Debt history: This refers to the amount of credit one currently has, how long he or she has it, and how well he or she is handling it. A long credit history can be good if all payments are promptly made, but a short credit history that approaches the credit limits may be considered negative.
Credit inquiries: Each inquiry made into a person’s credit report typically takes one or two points away from the score. This makes it a bad idea to shop around for mortgages and fill out prequalification forms. It’s better to browse through the programs and calculate rates based on an assumed credit score.
Bankruptcies or foreclosures: These factors strike the biggest blow to one’s credit score. Many lenders will immediately deny applications from people who have had foreclosures or filed for bankruptcy in the last seven years.
Since the bureaus don’t reveal their exact formulas, it’s hard to know what other factors go into the credit scores. Each bureau assigns a different weight to various factors. More information on score calculations can be found on resource sites such as myfico.com, truecredit.com, freecreditreport.com, credit.com, and creditreport.com.