Q:
I checked my credit about five years ago and discovered an unpaid $50 bill to the local electric company on a property I own.

I paid it immediately. Recently, I checked with another credit reporting company and the bill was listed as unpaid.

They gave me a FICO credit score of 700. I checked with Experian and the account is not mentioned and my score is 790. I don't feel like going to the mats with the other credit companies. Would it really hurt me to let it ride? After all, I could always print a copy of my report from Experian when getting a loan.

-- Tom Cornelius,
McCandless

A:
Will it hurt you to leave an error on your credit report with one of the major credit reporting bureaus? It could, Tom.

There are three big national credit reporting companies: Equifax, Experian and TransUnion. Not all lenders use the same bureau, so you are taking a chance that a lender may pull the report with the error.

If you are applying for a mortgage or other major loan, the lender probably will get reports from all three bureaus. Typically in that case, the lender will throw out the high and low scores and use the one in the middle.

Lenders use credit reports and credit scores to evaluate your risk as a borrower. The higher your score the better because it will save you money.

People with the highest scores get the best rates on credit cards, auto loans, mortgages and increasingly, car and homeowners insurance. Insurers claim there is mounting evidence that people with the worst credit histories file the most claims, so the companies raise rates to compensate.

If your score is really low, you not only could be rejected for a loan, but also for insurance coverage, utility service an apartment rental or even a job.

The industry-standard FICO credit score, developed by Fair Isaac Corp., ranges from a maximum of 850 to a low of 300. The median score nationwide is 723, according to Fair Isaac's Ryan Sjoblad.

Let's look at your scores, Tom. Your 790 at Experian is top-notch. Only about 10 percent have scores of close to 800 or better. Your 700 at the other bureau, which believes that you skipped out on a utility bill, is still pretty good. Nevertheless, it's below the median score of 723.

If you want to get an idea of how much the difference between a score of 790 and 700 could cost you in terms of higher rates, try the loan savings calculator at Fair Isaac's Web site, www.myfico.com. (Click the "Calculators" link near the bottom of the page).

My advice is that you go to the mat, as you put it, and fix any errors on your credit report. I'm told that correcting errors is a lot less complicated and time consuming than it used to be. You can do it through the mail, or online at the bureaus' Web sites.

You can learn more about credit scores in a free publication called "Your Credit Scores," by Fair Isaac and the Consumer Federation of America. It can be ordered through the Federal Citizen Information Center at 1-888-878-3256.

The report also can be viewed at www.pueblo.gsa.gov by clicking "Free newspaper and magazine offers" and then clicking "Your Credit Scores."