How Are 3-in-1 Credit Scores Evaluated?

The three major credit bureaus, Equifax, Experian and TransUnion, offer a 3-in-1 credit report or score. Each bureau offers a score based off the information that has been reported.

Breakdown

A credit report contains information about various credit accounts, companies who have requested credit information, payment history, and collection accounts. Facts from lenders and collection companies are reported to the credit bureaus and placed on a credit report. All that information collectively determines a credit score.

Open and Closed Accounts

Depending on the type of account or charge off, information can remain on your credit report for as long as ten years. Accounts closed as a charge-off or collection account, such as foreclosures and repossessions, can stay on a report for 10 or more years.

Inquiries

Companies requesting credit reports issue a hard inquiry. Inquiries remain on credit reports for two years. There are two types of inquiries. A soft inquiry is when an individual requests their own credit information. When applying for credit or a loan, a hard inquiry can "cause a 5 point drop", according to All About Credit Scores at credit.com.

Payment History

With loans and credit cards, making payments on time is wise. If a payment is missed, the financial institution will report a late or missed payment to the credit bureaus. According to a Quicken Loans representative, Michael Sorenson, "A score can drop 30 to 50 points by making a payment 30 days late."

Collection Accounts

If an account is not paid per the terms of agreement, it can be sold or turned over to a collection agency to request payment. When the account is turned over to that company, it will report to the credit bureaus the status of the account.

Considerations

Not all information is identical on each report. Some companies will report to only one or two bureaus. Each score issued by a credit bureau in conjunction with the FICO scoring practices will differ. The Fair Credit Reporting Act requires each major bureau to provide one free copy of your credit report every 12 months. Although these reports do not offer a score, they will give up to date information.