What Equifax Credit Score Miscalculations Mean for Consumers | Smart Change: Personal Finances
Equifax, one of the three major credit bureaus, announced that a computer coding error led to miscalculation of consumer credit scores during a three-week period between March 17 and April 6. . For 300,000 consumers, the error changed credit scores by as much as 25 spikes. Changes to credit scores do not appear on credit reports, Equifax said in a press release.
While the error caused scores to shift in both positive and negative directions, a 25-point drop in your credit score could cause significant financial damage, especially if you’re on the cusp of one of the bands. credit. For some consumers, this could mean reduced access to financial services and products like car loans and home mortgages, as well as credit cards with good terms.
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We spoke to credit experts and consumer advocates to determine what you should do in the wake of this Equifax error. From checking your credit score to contacting lenders, we’ve got you covered.
How to know if you have been affected
It may not be easy to determine if you have been affected by this Equifax error. “To the naked eye, a consumer would never know they’ve been impacted, for good or ill,” credit expert John Ulzheimer said in an email.
Equifax says it is “working with our customers to determine the actual impact on consumers,” although it’s unclear how or when they will notify affected customers, if at all.
“It’s not the consumer’s fault,” says Chi Chi Wu, an attorney at the National Consumer Law Center. “And it’s outrageous that a mistake by Equifax hurt consumers and now they need to go back and fix it.”
Next steps for consumers
Follow these steps to help protect your score following the Equifax error:
Review all notices related to denied requests during this period
If you applied for a car or home loan or a credit card between March 17 and April 6 and your application was denied or you had to pay more – potentially due to this miscalculated score – you may have a recourse if you have received one of the documents below:
Adverse Action Notice: If your request was denied, you should have received a Notice of Adverse Action. Federal law requires creditors to tell you why your application was denied and what office they got their information from, so it’s important to read this letter to better understand if the coding error affected you.
If you’ve been denied” because of things that show up on your credit report, if it has to do with your credit score in some way, then it’s worth going back and pulling a copy of your credit report and credit score,” says Bruce McClary, senior vice president of communications for the National Foundation for Credit Counseling. It’s also worth “knowing what credit score the creditor was using to rate you,” he says.
Risk-Based Pricing Notice: If you applied for a loan or credit card during this time and got less favorable terms (e.g. higher interest rates), you should have received a risk-based pricing notice .
If consumers applied for a credit card or loan during this period and did not receive either of these two notices, then, according to Ulzheimer, “they were not declined and they were not approved. with disadvantageous conditions”.
Check your Equifax credit report
Checking your credit report should be your next step. Here, you’re looking to see if a serious inquiry – or a request to check your credit – comes up. This “hard pull” is confirmation that you requested credit during the three-week period when the error was not detected by Equifax.
Disputing the error with Equifax is not an option since incorrectly calculated scores do not appear on credit reports. “There were no errors on their Equifax credit reports that required investigation and correction,” Ulzheimer said. “This was a programming error that was not affected by how a consumer acted or paid their bills.”
Contact your lender and Equifax
If you are concerned, contact your lender and ask them to reassess your application or the terms of the loan.
According to Wu, getting rate changes on a credit card will be easier than changing the terms of a mortgage or auto loan.
If you think you’ve been affected, you can also try calling Equifax Customer Service at 1-888-378-4329.
Watch for a message from Equifax
Keep an eye on other communications from Equifax. “It is the responsibility of the credit bureau to notify those affected and provide a course of action people can take to resolve any issues arising from this incident,” McClary said.