Equifax this week admitted it misreportedpotentially affecting applications for mortgages, car loans or credit cards.
The Wall Street Journal reported Tuesday that between March 17 and April 6, the company sent out millions of incorrect credit scores to consumers. Still, Equifax said fewer than 300,000 customers had their credit scores change by 25 points or more in either direction. Errors in how various elements of a credit report are weighted led to fluctuations, the company said.
A Florida woman who was forced into an expensive car loan as a result of an incorrect Equifax score is now suing the company. The lawsuit, which seeks class action status, notes that during the three-week period Equifax issued the erroneous results, 25 million credit reports were obtained from the three credit reporting agencies. Given those numbers, millions of Americans could have been affected by the error, the lawsuit claims.
Although Equifax said the underlying information was not changed, a credit score shift of 25 points can make the difference between being approved or denied for financial products, as well as affecting how much interest you pay.
Read on to find out if the errors affect you and what you can do if your credit score was affected.
Did you apply for a loan or credit this spring?
Unless you have applied for a loan, credit card or other financial products between March 17 and April 6, it is difficult to know whether you were affected by Equifax’s scoring errors.
“If you haven’t been monitoring your credit score and credit report regularly, how would you know?” said Bruce McClary, senior vice president of membership and communications at the National Foundation for Credit Counseling
However, “If you went to a lender and got turned down … that could be a clue that you were possibly a victim,” he said.
What did the lender say?
If you were refused a loan, or if you were given worse financial terms because you were considered a credit risk, the lender is required to send you a notice explaining the decision.
McClary recommends going back to the rejection notice to see what factors were involved. If you can’t find it, call the lender and ask if they can pick it up from their post office.
“You want to be very sure what caused the lender to decline your application,” he said.
“It’s not right to assume that it’s always going to be credit scores,” McClary added. “Maybe your debt-to-income ratio wasn’t what they wanted. Maybe your employment history didn’t reflect the kind of stability they were looking for.”
There are two types of notices lenders send when they deny credit, according to the Federal Trade Commission. If you were refused based on information in a consumer report, the lender is required to send an “adverse action notice”. If you got less generous terms, the lender must send a “risk-based pricing” notice.
If you applied for a credit card or loan and didn’t receive one, you weren’t negatively affected by the Equifax bug, according to Nerdwallet.
Check your credit report
The next step is to request your credit report. Consumers are entitled to a free periodic credit report, which they can request from annualcreditreport.com. If something in the report is wrong, dispute it. You can also try calling Equifax’s hotline at 1-888-378-4329.
Once any issues on your credit report have been corrected, “it’s worth going back and asking for a second review. That means reapplying for the loan,” McClary said.
McClary noted that the current case is unusual. Unlike financial institutions that have been hit by data breaches, Equifax has not contacted customers to notify them of the problem.
The credit bureau did not respond to questions from CBS MoneyWatch about whether it plans to contact customers.
Some legislators are now pressuring the company to explain the mistake and compensate, if any.