One of the three major credit bureaus in the United States reported an error credit scores to lenders for several weeks this spring, a mistake that could have resulted in people applying for loans paying higher interest rates — or not being approved at all.
Equifax confirmed the error on Tuesday, saying in a statement that the errors were caused by a computer coding issue that has since been corrected. The inaccurate scores were sent to lenders between March 17 and April 6, the company said.
National Mortgage Advisoran industry publication, reported for the first time the glitch in May.
It’s important because when Americans apply for loans like mortgages, auto loans, or credit cards, credit bureaus like Equifax provide their financial history – including a credit score – to the lender. The lender then uses this information to determine if the applicant will be approved. A person’s credit rating and history can also affect the terms of the deal, including the interest rate.
The the wall street journal provided more details about the error to Equifax on Tuesday, reports consumers affected by the glitch number in the millions. Bad scores were reportedly sent to a host of lenders, including JPMorgan Chase, Wells Fargo and Ally.
(Equifax did not identify the number of affected borrowers or name the specific companies that extracted the fake data.)
According to Log, mistakes were sometimes enough to change credit scores by more than 20 points in either direction. That was enough, the Log noted, to signify the difference between approval or rejection of a loan and to influence the interest rates offered to consumers by lenders.
In his statement, Equifax insisted that the “vast majority” of credit scores were unchanged due to the coding issue. He said less than 300,000 people saw their credit rating change by 25 points or more. It’s unclear how many consumers have had their credit applications rejected due to incorrect scores, although “Equifax’s initial analysis indicates that only a small number of [people] may have received a different credit decision.
“We don’t take this issue lightly,” Equifax said, adding that it was working to determine the extent of the damage.
That’s not the only problem Equifax has had in recent years. In 2017, a data breach at the company exposed the personal information, including names, addresses and social security numbers, of nearly 150 million people. As part of the $700 million settlement, affected consumers who filed a claim were entitled to four years of free credit monitoring or a cash payment of up to $125.
How to Find Errors in Your Credit Report
Equifax did not return Money’s request for comment asking how consumers can determine if they have been affected by the issue. That said, it’s always a good idea to keep an eye on your credit report, both to check for errors you may spot on your own and to maintain a good understanding of your credit.
One way to do this is to regularly request a free credit report. Usually, you can get a free online credit report from each of the three major agencies once a year. But you can take advantage of a change in the age of the pandemic in which Equifax, Experian and TransUnion offer a free online credit report every week until the end of 2022.
Once you receive your report, look carefully for any unusual or sudden changes that might be wrong. Be sure to pay close attention to your credentials, the status of all your accounts (are there any accounts incorrectly labeled as open or closed?), and your credit balances and limits.
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