Credit scores are an important part of who we are as Americans. Our credit score is a number that helps lenders determine whether we are worthy of getting a loan – and how capable we are of paying on that loan. Our number goes up or down based on the amount of credit we currently have, how we make our payments, and so on.
There are three credit reporting bureaus – Equifax, TransUnion, and Experian. Depending on the line of credit you are seeking, a lender may pull from one, two, or all three as a way to get a better understanding of who you are, financially speaking.
The Wall Street Journal recently reported that Equifax sent out incorrect scores for millions of Americans who applied for home and auto loans.
Credit scores typically range from 300 to 850. Those on the higher end of the spectrum will get more favorable terms, such as fewer fees and lower APRs.
Equifax’s error could have changed a score by as much as 20 points in either direction. This would be enough to get approval – or not get approval, for a number of loans.
Many lenders have a hard line. If the credit score drops below a certain number, they get rejected for a loan. This means that a person perfectly capable of getting a loan and paying on it may have been rejected – or forced to take a higher APR, because of this slip-up.
The Wall Street Journal also noted that in some instances, a few people went from having no credit to suddenly having a score in the 700s – or perhaps even more dangerous, vice versa.
Some of these incorrect scores were sent to such large lenders as Wells Fargo, Ally Financial, and JP Morgan Chase.
What this means is that some people may have been able to use this “oops” to their advantage. They may have been able to secure an auto loan or a mortgage as a result of having a better credit score than they actually do. And if they cannot make the payments, it could easily end in foreclosure or repossession.
Equifax is aware of the problem and has corrected what they call a “coding issue.” The bureau’s website notes, “We know that businesses and consumers depend on our data and Equifax takes this technology coding issue very seriously. We can confirm that the issue has been fixed and that we’ve been working closely with our customers on analysis to best meet the needs of consumers.”
The timeframe of the issue apparently lasted three weeks. Equifax maintains that most people didn’t see a score shift and for those who did, it was a very small number.
Still, they seemed to be content to keep the issues under wraps. Equifax CEO Mark Begor identified the error when attending a financial conference back in June. However, the company didn’t go fully public with it until after the Wall Street Journal released its report.
Equifax is prepared to sweep the whole thing under the rug as though it never happened. Begor noted, “We think the impact is going to be quite small, not something that’s meaningful to Equifax.”
Sure, it might not be meaningful to them, but it may have been meaningful to those who had their loan denied because of a sudden and random shift in their credit score.
This isn’t the first time that Equifax has encountered an “oops,” either. In 2017, they experienced a data breach that exposed info from 150 million Americans, resulting in fines and restitution of $700 million.
Basically, Equifax doesn’t think it’s a big deal. If you’ve noticed something strange with your credit score, it’s likely not your fault. You might want to check yours out, just in case.