What Equifax credit score errors mean for consumers
Although 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 are about to experience one of credit bands. 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.
NerdWallet spoke with credit experts and consumer advocates to determine what you should do in the wake of this Equifax error.
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.”
Follow these steps to help protect your score following the Equifax error:
REVIEW ANY NOTICES OF DENIED APPLICATIONS 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 “finding out what credit score the creditor was using for you assess,” he says.
RISK-BASED PRICING NOTICE: If you applied for a loan or credit card during this time and were granted less favorable terms (e.g. higher interest rates), you should have received a notice risk-based pricing.
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 “firm pull” is confirmation that you applied for credit during the three-week period in which 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.
Getting rate changes on a credit card will be easier than changing the terms of a mortgage or auto loan, Wu says.
If you think you’ve been affected, you can also try calling Equifax Customer Service at 1-888-378-4329.
PLEASE ATTENT A MESSAGE FROM EQUIFAX
Keep an eye on other communications from Equifax. “It is the responsibility of the credit bureau to notify those who have been affected and to provide a course of action people can take to resolve any issues arising from this accident,” McClary said.
This article originally appeared on the personal finance website NerdWallet. Amanda Barroso and Lauren Schwahn are writers at NerdWallet. Email: [email protected], [email protected] Twitter: @lauren_schwahn.
NerdWallet: what is a credit score? What are credit score ranges? https://bit.ly/nerdwallet-credit-score-ranges-and-how-to-improve
NerdWallet: What is an Adverse Action Notice? https://bit.ly/nerdwallet-adverse-action-notice
NerdWallet: How to get your free credit reports from major credit bureaus https://bit.ly/nerdwallet-how-to-use-annualcreditreport-com
Equifax: Statement from Equifax on a recent coding issue https://www.equifax.com/newsroom/all-news/-/story/equifax-statement-on-recent-coding-issue/