First, some information about the class action lawsuit, including who can and how to join. Second, why I think there’s a whole more behind the scenes than anyone has said so far — and why Equifax isn’t the only one at fault.
EQUIFAX ADMITS CODING ERROR MESSED UP CREDIT SCORES
Between March 17 and April 6, Equifax had a coding error that decreased Equifax scores erroneously. Equifax was transitioning to a new technology system, and somehow the mistake occurred. The score drop was inaccurate and unfair, and it was fixed by April 7, 2022. About 300,000 people who applied for financing during those three weeks were negatively impacted by this error. (Although millions of scores were affected, most people were not financially harmed, according to Equifax.)
In May, Equifax reached out to its customers (lenders and creditors), to inform them of this mistake.
Earlier this week, the news exploded all over the media, and now the law firm Morgan and Morgan is seeking a jury lawsuit and collecting data for the class action.
Steps To Take If You Were Affected
If you applied for credit, such as an automobile loan, credit card, or mortgage, between March 17 and April 6, AND you believe you might have been put into a higher interest rate than your credit deserved or denied the loan altogether, then your first step is to gather your documentation. Find the denial letter or your contract. Find the credit score disclosure that came with it. If you were denied credit, then you have the right to receive a copy of the credit report the lender used. If you were approved, you have the right to know the score the lender used.
Second, call the loan officer or sales person who handled your sale. Speak with them to confirm that your financing was penalized by the false low Equifax score.
(Auto loan lenders and credit card companies often use only one credit bureau. If they used Experian or TransUnion, then you were not affected. If they used Equifax, then you may or may not have been affected — depending on if the error caused your score to drop to a lower tier or not. Most people’s scores did not drop more than 25 points and/or did not put them into a lower tier for qualification. But some did and were denied or put into a higher interest rate.)
(Mortgage lenders pull a tri-merge credit report with scores from all three credit bureaus. They throw out the lowest score and go by the middle score. Your loan officer can help you sort out whether or not your financing was negatively impacted.)
The third step, if it is determined that you are a victim of the Equifax scoring error, is two-pronged. Your lender should work with you to refinance or rectify the situation. At the same time, you can apply with Morgan and Morgan to join the class action lawsuit. The link is here. (This is the same law firm that sued Equifax for the 2017 data breach.)
MY PERSONAL COMMENTARY: THREE THINGS SMELL FISHY
There are a few things about this whole scenario that give me major pause and provoke more questions.
1) If Equifax contacted its customers, the lenders and creditors, back in May right after this happened, then what did those lenders do to look up the customers they had between March 17 and April 6? It’s not hard for a company to hold a sales meeting and then for each sales person to look up their closed transactions to see who might have been harmed.
Did any lenders research and reach out to their customers to rectify the situation? I know if I had a mortgage client who had been put into a higher interest rate loan than they deserved, I would have put the wheels into high motion to get their loan modified asap.
JP Morgan Chase Bank says it is now “working proactively” with its customers and Equifax on a fix. But why did they wait until now, August, to take action? Weren’t they informed back in May? Did it take a media blitz for them to care enough to help their own clients? And if so, do they bear some responsibility for the financial loss of people who have been paying higher rates than they qualified for?
2) The first plaintiff in the class action lawsuit is Nydia Jenkins of Jacksonville, FL. She was shopping for a car loan in January. When she found her car in mid-March and applied for financing, her score had dropped by 130 points due to the Equifax coding error. She no longer qualified for the best financing. She said she was “forced” to seek sub-par auto financing. Thus, her car payment went from $350/month to $504/month.
Jenkins has been paying $154 more per month for four months = $616 she has been unfairly penalized, so far. Not counting emotional distress, if that’s a factor here.
Now here is what’s making me scratch my head and say something doesn’t smell right about this scene:
If I had been shopping for a car and suddenly my score “dropped” I would know that I had not done anything bad between January and March to cause that. I would have asked. Which credit bureau did you pull my report from? Why are you using only Equifax? (Oh, because you don’t want to spend the money to order three reports?) Could there be something wrong with your system, because nothing negative happened to ruin my credit? You can’t get me a decent loan? Then I am going to a bank and I’ll be back with good financing.
There is no way someone can “force” you to take a loan-shark subprime loan! You go apply with a better lender who doesn’t rely on only one credit bureau. If Jenkins had gone to a local mid-size bank, she may have gotten the financing she deserved. Why did she toddle off to the subprime lender that the dealership recommended? Am I being too hard on her? I don’t mean to, I’m just saying that she didn’t handle the situation right either.
My husband says “not everyone has read your books.” True enough. But if you have read Build and Protect Your Credit Like the Pros or Credit Repair Mindset, then I would love to hear from you, because I bet you would not have signed for a subprime loan when you knew very well that you had good credit. Am I right?!!!
3) I pity the poor souls on that engineering team who made the coding error. My husband, the brilliant software engineer, says when moving to a new technology platform, you always do a Unit Test to make sure any errors are discovered and fixed before releasing it to your customers. I asked him what he thought would happen to those engineers. He said, “They probably quit already and are working for someone else by now.” Hmmmmm. He’s a funny man, my husband.