Calculation of Your Credit Score

Think Credit Reports provides credit reports and monitoring to customers on a subscription basis. In addition, Think Credit Reports helps its customers to understand how their scores compare to national averages and creditor expectations.

Determined by an individual credit bureau, the credit score assigns a number to an individual’s level of responsibility in borrowing and repayment. Scores range from 0 to 800, though most scores lie between 600 and 750. A score incorporates information about the borrower’s payment history, amount owed, types of credit used, amount of new credit, and length of time the person has been borrowing.

For most borrowers, payment history makes up 35 percent of a credit score. This information refers to timeliness of past repayments. Another 30 percent of the score relates to the amounts a borrower owes. Relevant information for this category includes how much of a person’s available credit is being used and how much he or she owes on particular types of accounts.

Types of active credit contribute to 10 percent of a person’s credit history, while the number of new accounts contributes to another 10 percent. If a borrower does not have a long credit history, multiple applications may lower the total score. Credit scores also take into account how long a person’s accounts have been active and how long he or she has had accounts. These factors combine to form a complete picture of an individual’s use of credit throughout his or her lifetime.

Monitoring and Correcting Credit Reports

When Think Credit Reports entered the credit monitoring service field more than five years ago, its leaders knew they had to offer services that allowed their members to manage their credit proactively, as well as an instantaneous way of responding to potentially fraudulent new information the minute it was added to their credit profiles. Thus, the firm offers its members full reports and credit scores from each of the three major credit reporting bureaus, not just one. In addition, Think Credit Reports monitors each member’s credit profile in each of the three credit bureaus, and immediately alerts them by email or text message when any new information is added.

There are several reasons consumers should monitor their credit reports. Banks and credit card companies rely on credit reports as their prime source of information when determining whether to extend credit, and by how much. More and more employers also review their employees’ and applicants’ credit reports, even when the jobs involved have nothing to do with money. Likewise, insurance companies are increasingly reviewing their clients’ credit and cancelling or denying insurance if the credit score is too low. Finally, identity theft, which remains a growing problem, can ruin a person’s credit and make it impossible to qualify for credit or even a job.

Consumers who are planning a major purchase, such as a car or a house, should obtain all three of their credit reports and review them thoroughly. Federal law requires the credit bureaus as well as the companies that report credit information to them to correct any inaccurate information. The credit reports themselves will include instructions on how to request that inaccurate information be corrected.

With the busy schedules and many distractions faced by today’s consumers, it’s easy to let credit report monitoring fall between the cracks, only to find out too late that inaccurate adverse information on a credit report is standing in the way of buying a new house or car. Information on engaging the services of Think Credit Reports is available at the firm’s website, http://www.thinkcreditreports.com.

How Credit Reports Are Determined

For more than five years Think Credit Reports has been providing premium account holders with quarterly credit scores included at no additional charge. Think Credit Reports customers are given access to credit information from all three major credit data bureaus.

An individual’s credit score is determined by calculating numbers in several major areas. First, more than one third of a credit score is based on payment history, including how frequently a person becomes delinquent on an account. Nearly equal in importance to payment history is the total amount owed; while excessive debt will negatively affect a score, having a number of active credit accounts, however, is not necessarily a bad thing. Additionally, the length of time an individual has been building credit is important, including when a person’s oldest and newest credit accounts were opened. Finally, the types of credit in use and the rate at which a person opens new credit accounts each represent 10% of an individual’s credit score.

The Diverse Factors That Determine Credit Scores

Think Credit Reports is a Valencia, California, firm that offers customers nationwide tools for accessing their current credit reports and protecting against identity theft. Think Credit Reports customers receive Equifax, TransUnion, and Experian scores each quarter and are notified automatically each time a major transaction, such as a mortgage or auto loan payment, is processed.

The credit score acts as a widely accepted measurement of individuals’ financial solvency and how likely they are to make good on debt obligations. In addition to being accessed by lenders prior to approving loans at specific interest rates, reports are also increasingly checked by employers and landlords prior to making decisions about hiring or renting to applicants.

As a general rule, anyone maintaining a credit score exceeding 720 has excellent credit and will likely be able to access loans at optimal rates. People with scores lower than 620 may experience difficulty in taking out loans and will incur high interest rates on those that they do qualify for.

The factors that make up the credit score are complex and varied, but as a general rule, 35 percent has to do with simply staying current on bills. Outstanding balances make up 30 percent of the score and have to do with the balance-to-limit ratio on credit cards. Account age defines 15 percent of the score, while the makeup of available credit affects 10 percent of the score. Other factors, such as the number of credit inquiries, also influence the ultimate score received.

Three Myths About Credit Reports

A credit data provider, Think Credit Reports is a website that offers consumers the convenience of ordering their reports online. Operating from Valencia, California, Think Credit Reports works with all three bureaus to provide credit monitoring and educate consumers about their reports.

While some believe that paying off debts is a sign of good credit, a credit report is actually a reflection of an individual’s entire payment history. Making timely payments over time establishes good credit and is the main measurement metric. Regardless of whether a debt is paid in full, late and missed payments will continue to factor into the overall credit score and remain on a report.

In addition, closing or canceling a credit card does not boost a person’s credit standing. In fact, having multiple credit lines open reveals a person’s ability to manage debt. Conversely, opening up several credit cards at once does reflect negatively on a credit report.

Lastly, checking a personal credit report does not lower an individual’s score. This is known as a soft pull, and individuals and credit counselors can obtain a report to check credit standing without being penalized. However, hard pulls initiated by retailers and other merchants seeking to issue a line of credit do harm a person’s credit score.