Equifax Sent Lenders Inaccurate Credit Scores on Millions of Consumers

Aug 10, 2022Financial Literacy, News

For three weeks earlier this year, Equifax Inc. sent inaccurate consumer credit scores to lenders resulting in denied applications and higher interest rates for millions of borrowers. Blaming the problem on a “technology coding issue,” scores were sometimes off by 20 points or more in either direction, and sent to lenders for people applying for credit cards, mortgages, and auto loans.

“We have determined that there was no shift in the vast majority of scores during the three-week timeframe of the issue,” said Sid Singh, president of Equifax’s U.S. Information Solutions, according to the Wall Street Journal. “For those consumers that did experience a score shift, initial analysis indicates that only a small number of them may have received a different credit decision.”

The company said the issue did not affect the information in consumers’ credit reports. Equifax experienced a hack in 2017 that exposed the sensitive private information of about 150 million Americans.

Equifax’s chief executive Mark Begor acknowledged the error at a June investor conference, stating that it was fixed and that the impact would be small. However, at one big bank during the three-week period, 18 percent of applicants had erroneous scores with an average swing of 8 points.

Additionally, the company told a large auto lender that 10 percent of applicants had incorrect scores during the three-week period, several thousand of which saw credit score changes of 25 points or more. Lenders are considering repricing loans and giving consumers an opportunity to reapply to rectify the glitch.

After the news was initially reported, House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) issued a press release vowing to hold Equifax accountable. Waters sent a letter to Equifax and the CEOs of the nation’s largest commercial banks demanding answers as to how the delivery of erroneous credit scores occurred, the scale of consumers affected, and the steps that the institutions are taking to remediate harm to customers and ensure accurate credit reporting moving forward.

Waters also said she plans to introduce legislation in response to the events and has urged CFPB Director Rohit Chopra to investigate. Chopra also recently ordered an investigation on how Equifax, Experian PLC, and TransUnion handle consumer disputes.

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