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Another reason to track your credit reports

If you keep on top of this, you're unlikely to have any unpleasant surprises about your 3 credit scores.

By MSN Money Partner Aug 30, 2011 11:32AM

This post comes from Jim Wang at partner blog Bargaineering.


Have you seen those advertisements on television where a guy is going to buy a television, only to get snubbed because one of his credit scores is vastly lower than the other two? Two of the credit scores look like Tom Brady, while the third looks like Danny DeVito in a ski mask.


The premise of the commercial is that you'll want to use their credit-score-checking service because you might be at a store, ready to make a purchase, when you discover that one of your credit scores is bad and it derails the whole process.


But, how likely is that?

Three credit scores

You do have three credit scores. In fact, you have more than three. Since there are three credit bureaus -- Experian, Equifax and TransUnion -- you have three separate credit reports that should, in ideal circumstances, be identical. Each credit bureau can calculate your score based on the FICO credit score formula, which are the three sets of numbers in the commercial.

The bureaus also have other scoring equations, like VantageScore and their own proprietary scores. The FICO score is the one that most people care about. (You can estimate your credit score for free.) Post continues after video.

Differing scores

Now that we know you do have three scores, how likely is it that you have two correct scores and one abnormally low one? If you check your credit reports regularly and the three reports match up, this is highly unlikely. If this were to happen, the only explanation would be that something changed between the last time you checked and the day your score was pulled.


The scores can differ by a few points, but anything that great (the scores differ by 100-plus in the commercial) is a sign that one of the bureaus believes you have defaulted on an account or that an account was turned over to a bill collector.

Do creditors pull all three? Rarely, if ever. If you operate off the premise that they should be similar, why would a creditor pay three agencies when they only need to pay one? Most creditors work with one bureau and rarely will they pull all three scores -- it's redundant.


What this means is that even if you did have one inaccurate, very low score, there's only a 33% chance it'll get hit. While that's not a good reason not to use a service, it does prove that the scenario described in the commercial is rarer that it appears.


Do you need their service? That's up to you to decide, but having two accurate scores and one inaccurate score likely won't be a reason to need it. As long as you keep up-to-date on reviewing your credit reports, you probably won't run into that scenario.


Has that ever happened to you?


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