Why is 'Credit Score' the Term of the Day?

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Equifax, one of the nation’s top credit rating agencies, recently made national headlines after the bureau provided lenders with inaccurate credit scores on millions of consumers. The error affected millions of U.S. borrowers seeking to obtain new lines of credit on credit cards, mortgages, and auto loans. 

Credit bureaus such as Equifax typically transfer information on consumers’ creditworthiness to banks and other credit originators. Inaccurate reports were transferred over to some of the nation’s largest banks including J.P. Morgan Chase, Bank of America, and Wells Fargo. The credit scores were erroneously altered by as much as 20 points in either direction—enough to change the interest rates granted on credit or to reject credit requests altogether.

Executives at Equifax attributed the error to a “technology coding issue” that occurred during a transfer of consumers’ credit data to the Equifax cloud. Equifax maintains extensive credit information on up to 200 million U.S. borrowers. This information, which includes payment history, account type, and whether or not consumers are paying on time, helps determine a borrower’s credit score.

This isn’t the first time Equifax has garnered public attention on its credit reporting in recent years. In 2017, the bureau was involved in a highly-publicized data breach that affected nearly 150 million Americans.

What can you do if your credit report contains an error or a faulty assessment? The Consumer Financial Protection Bureau (CFPB) recommends that consumers contact their credit reporting company as well as the bureau providing the credit information. The CFPB recommends consumers submit a report in writing, complete with personal information, a confirmation number, the nature of the mistake, and the reason for disputing the information. Consumers should also submit a copy of their credit report, highlighting or marking the area that needs to be addressed.

-Mack