WASHINGTON - An Equifax glitch has left thousands of consumers unsettled and worried about how the error could affect their credit scores and reports. A coding issue caused the credit reporting agency to misquote credit worthiness for a small percentage of consumers.
The errors occurred over three weeks between mid-March and early April. An analysis by Equifax shows there was no shift in the majority of credit scores. For consumers who did experience a change, only a small number would have received a different credit decision, Equifax said in a statement.
Equifax said less than 300,000 consumers had a score shift of 25 points or more. Such a drastic change in a person’s credit score could impact their ability to secure a loan, line of credit, mortgage, and how much interest you may pay for a loan.
A Florida woman sued Equifax claiming she was denied a car loan because of a 130-point mistake in her credit report that she says was part of a larger group of credit score errors the rating agency made this spring.
How to tell if you were affected by the Equifax glitch
Determining whether or not your credit scores were compromised is a challenge. However, monitoring your credit reports is a must. Bruce McClary, senior vice president of communications at the National Foundation for Credit Counseling, explained to FOX Television Stations:
"If you were one of those individuals who was out in the marketplace for a loan or line of credit between March and April and you think because of what you’re seeing that it’s possible the decision the lender made was the result of some of the incorrect information provided by Equifax, you can go back to that lender and have a discussion. You can reapply for the loan if your credit score has rebounded. It’s always a good idea to check your credit report and credit score before you approach a lender just to know where you stand, so you may want to take that additional step before you go back to the lender and try again."
Al Bingham, a loan officer at Momentum Loans in Salt Lake City, Utah, tells FOX Television Stations that consumers must find out if they took out any loans between March 17 and April 6.
"Lenders give you a disclosure and it will usually tell you the credit bureau and the FICO score used by the lender. For auto lenders, if that disclosure says Equifax FICO score, then that could be a concern for that consumer," Bingham explained. "For mortgage loans, this is much more difficult for consumers to identify. All three FICO Scores are used in mortgage lending. If one of them is incorrect such as the Equifax FICO Score, it can throw off the entire loan approval, interest rate, fees and pricing of the mortgage."
What’s the timeline to get an error like this corrected on your credit report?
McClary advises consumers to look at their credit reports to determine if any errors exist. He explains that you can reach out to the credit bureau and they will conduct an investigation.
"If you have an error that shows up on your credit report that someone has reported mistakenly, you can dispute that with the credit bureau that’s reporting the incorrect information. They have 30 days to investigate. The credit bureau will reach out to the creditor providing that information to make sure its corrected or to verify that it’s correct and then they get back to you with a correction or some indication that the creditor provided additional proof to show that what they reported is accurate. You want to wait too long and to act fast if you find an error because it can hurt you."
Review your credit report for mistakes
Regardless if you were affected by the credit report, McClary says a good practice is to monitor your credit and credit scores should any discrepancies appear on your report.
"This is a good opportunity to be aware of your credit score when you go out into the marketplace and you’re borrowing and you should be aware of what’s showing up on your credit. It’s good to pull a credit report to see what’s on there. If you haven’t done it in a while you should do it now just to see if there are any errors that are pulling your credit score down or anything you need to address immediately. You can do that by going to annualcreditreport.com, a website established by the three major credit reporting agencies. Right now you can get a free copy of your report on a weekly basis based on changes made during the pandemic."
Contact your lender and Equifax
If affected by the error, McClary suggests contacting your lender to reassess your application or loan terms.
"It’s also a matter of talking to your lender if they rejected you for a loan or line of credit back in March or April and if they used data from Equifax to reach their decision," McClary continued. "You might want to have a conversation with the lender about reapplying or reconsidering that decision if your credit score has rebounded because of the correction to the Equifax issue or not, otherwise it will be a waiting game to hear back from Equifax and the credit bureaus as to what they find to see who was directly impacted."
While Bingham shares McClary’s stance on working with a lender, he emphasizes the importance of monitoring your FICO credit scores which can make a difference in getting approved for a loan or favorable mortgage rate.
"There’s not a real solution for consumers out there. First, most consumers have no idea what their lender’s three classic FICO scores are, and second, how this score is utilized by every lender," Bingham offered. "Consumers need to follow the correct information. The consumer needs to see if they took out a mortgage or auto loan during that timeframe, and if so, they need to contact their lender to determine what they can do.
"Auto loans are an easier process. The lender will pull up the current Equifax FICO credit score, and if it is higher than when they took out the loan, I could imagine the lender would give them a lower interest rate. But with mortgages, it’s more complex. If one score is different, it will impact the other two credit scores and possibly the loan approval and interest rate of the mortgage."
Bingham added: "This is very sound advice for all consumers looking to purchase a house. Track your three classic FICO credit scores. Consumers can use one of these two sites: myfico.com (from FICO) or mycreditplan.org (certified credit counselor with a score improvement program). You have to pay for this information. Know your three FICO scores, find ways to improve them and then track the progress for these three FICO credit scores monthly. This could save you thousands of dollars."
If you or someone you know may have been affected, you can contact Equifax’s customer service department at 1-888-378-4329.
The Associated Press contributed to this story. This story was reported from Washington, D.C.