The 3 in 1 credit report is just the right tool for you to improve your overall credit score by identifying areas for improvement in your financial status. It contains the summary of your financial records from the three major reporting bureaus in order to come up with a baseline for other companies to evaluate your credit worthiness. This is like the report card of your financial health which most institutes pay a close attention to.
In other words, the information in your 3 in 1 credit report helps other financial institutions to judge your capacity to pay for your applied loans by judging your financial reputation based on your previous payment history and behavior. This will help them minimize past due accounts in the future. On your part, this will also help you get applied loans easily approved if you have good financial records. As you can see, having a clean record is important and should not be neglected at all costs.
In the United States, the three main reporting agencies are Trans Union, Experian, and Equifax; and the most commonly used method of scoring is the FICO score which was developed by the Fair Isaac Corporation by using a mathematical formula. These three main reporting bureaus use different scoring formula aside from FICO score such as the Emperica score and Beacon score. As a lay person, you need not be overly concerned about this formula.
The scores found on your 3 in 1 credit reports were mathematically designed to measure the risk of an individual of defaulting a loan; taking into consideration many different aspects of financial records. Such aspects like your outstanding loans, promptness on payment, types of credits used, length of payment, and the total amount of credit applied. As a general rule of thumb, as long as you make sure that you make your payments on time and do not take unnecessarily huge loans, you are generally safe.
The FICO score in your credit report varies depending on your overall financial performance. It usually ranges from 300 to 850; a score above 720 indicates that you are a good risk while any score below 600 is considered a poor risk. Hence, always try to get your annual 3 in 1 credit reports in order to get a fair estimate of your current credit score and make necessary changes to improve your score way beyond the ideal level.