Equifax was filed with an incorrect credit score lawsuit that it sent out to millions of customers this spring.
In a lawsuit filed Wednesday in the Northern District of Georgia, Florida for class action status, Nydia Jenkins’ lawyers say Equifax’s mistake earned her a substantially more expensive auto loan. The Equifax error, which has been in effect for about three weeks, has potentially affected millions of people, the lawsuit says.
On Tuesday, the Wall Street Journal reported that Equifax sent incorrect credit scores to millions of customers applying for home and auto loans. A company coding error affected customer scores by up to 20 points in both directions, enough to allow some potential borrowers to be turned down for loans, the Journal reported.
As one of the top three credit reporting companies in the United States, Equifax provides financial information and scores to consumers, which affects people’s approval of products including mortgages, credit cards, and auto loans, and the interest rate they pay. Most credit ratings range from 300 to 850, with higher-rated consumers getting more favorable loan terms.
In a statement to CBS News, Equifax said very few people were affected by the error, which it called a “coding problem.”
“This problem, which was ongoing for a period of a few weeks between March 17 and April 6, was resolved on April 6,” the company said.
“As part of our effort to address this problem, Equifax conducted an analysis of the credit scores used for consumers seeking credit during the time period of the problem. Our analysis indicates that for those consumers there has been no change in most scores during the three-week problem period. For those consumers who experienced a shift in score, the initial analysis indicates that only a small number of them may have received a different credit decision. may be changed, a shift in the score does not necessarily mean that a consumer’s credit decision has been adversely affected. ”
The company said it would respond further in court documents.
Pre-approved, then denied
According to the lawsuit, resident Nydia Jenkins was pre-approved for a car loan in January, but Jenkins’ loan was denied in early April because Equifax’s reported credit score was 130 points lower, the complaint.
Because the loan was denied, Jenkins was forced to buy a car from another dealership with much higher interest, the lawsuit claims. With the initial loan, Jenkins would have paid $ 350 per month, but now he pays $ 272 every two weeks – or about $ 2,352 more per year, according to the lawsuit.
“For a credit reporting agency, one of only three, on which so many millions of Americans depend in the context of researching credit extensions, we must rely on the accuracy and expertise of those organizations,” said John Yanchunis. , Morgan & Morgan attorney representing Jenkins.
“This is a big misstep,” he said.
Yanchunis said the damages could be in the “millions”, depending on how many other plaintiffs join. The lawsuit requires Equifax to pay the defendants’ additional costs caused by incorrect credit scores and compensate them for emotional damages. If a jury finds Equifax’s mistake was intentional, the company may be awaiting compensation of up to $ 1,000 more for each defendant.
Your credit score fluctuates
According to the Wall Street Journal report, the incorrect scores were sent to Ally Financial, JPMorgan Change, and Wells Fargo, among other lenders. The report states that a small number of people affected by the Equifax breach went from having a credit score to having a score in the 700, or vice versa.
The news was previously reported by National Mortgage Professional, an industry publication, in May.
Equifax, in its response, pointed out that the underlying credit report information has not changed. “[T]here there was no change in the vast majority of scores during the three-week period of the problem, “the company said.” For those consumers who experienced a shift in score, the initial analysis indicates that only a small number of them may have received a different credit decision. ”
Equifax CEO Mark Begor acknowledged the mistake at a financial conference in June.
“We encountered a coding problem due to a mistake made by our technology team in one of our legacy applications that resulted in some scores containing incorrect data. And we solved the problem,” he told attendees, according to a transcript from the ‘event.
Begor added that the company was working with affected consumers, noting, “We think the impact will be rather small, not something significant for Equifax.”
Equifax was previously implicated in awhich exposed sensitive information of nearly 150 million Americans and led to the . Equifax paid $ 700 million in fines and restitution after the breach.