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A class-action lawsuit has been filed against Equifax for their credit score debacle which led some customers to pay double on their mortgage repayments.
Equifax, one of America’s top credit rating companies that reports on more than 200 million consumers, sent out inaccurate credit scores which then affected consumers looking to apply to auto loans, mortgages and credit cards.
Many people had their credit scores downgraded between March 17 and April 6 – meaning in many cases their loan applications were rejected and they were plagued with high interest rates.
But now the credit bureau, who blamed the blunder on a ‘coding issue’ is facing a lawsuit, filed in US District Court in North Georgia by law firm Morgan and Morgan.
The Florida-based firm are seeking a trial by jury for damages suffered by anyone whose credit score changed during the glitched period.
Equifax is now facing a class-action lawsuit, filed in US District Court in North Georgia by law firm Morgan and Morgan. The company sent out inaccurate credit scores which then affected consumers looking to apply to auto loans, mortgages and credit cards
Mark Begor, Equifax’s chief executive who is believed to earn around $16million a year in his position, had acknowledged the glitch in June at an investors’ conference, claiming that the impact was ‘going to be quite small’ and ‘not something that’s meaningful to Equifax’
The lead plaintiff in the suit is Nydia Jenkins – who was denied an auto loan in early April after her credit score plummeted by 130 points, according to documents seen by DailyMail.com.
She was forced to seek a more expensive loan, because of the dramatic shift in her Equifax credit score.
In a pre-approved loan from January – before Equifax’s glitch – she was estimated to pay $350 per month. But under her current loan, she now pays $252 bi-weekly.
According to the suit filed on Wednesday, the woman from Jacksonville, Florida, ‘was forced to apply for another loan from a ‘buy now’ dealership and received a loan with much less favorable rates.’
The lawsuit is attempting to represent any other individual in a similar situation.
Morgan and Morgan said in a statement: ‘This lawsuit alleges that Equifax failed to live up to its responsibility as one of America’s major credit reporting agencies by providing inaccurate information on millions of Americans.
‘We believe that many of the people impacted — some of whom may still be unaware of what happened — suffered severe financial consequences.
‘We will hold Equifax accountable for these alleged failures and win justice for everyone impacted.’
Equifax said that it will ‘respond more fully in its court filings at the appropriate time.’
Dozens of victims have spoken to DailyMail.com about how they were forced to give up their dream homes, pay extortionate interest rates, and were denied car and mortgage loans during March and April this year.
Some saw their otherwise excellent credit scores disappear overnight – dropping by 100 points in some cases because of Equifax’s ‘technology coding issue.’
The furious victims, many of which were in the middle of securing milestone in their lives, have blasted Equifax after the CEO said the three-week ‘glitch’ was ‘not meaningful’ to the company.
When asked if they would compensate customers for the credit changes, Equifax did not respond and instead told affected people to reach out to their lenders for more information.
One Twitter user said he also saw a sudden dip in his credit score during the affected period in late March as he was finalizing the purchase of his new home.
He told DailyMail.com that after going into a contract with a preapproved rate, he didn’t use their credit card at all – but he was suddenly slapped with a higher interest rate regardless.
During the period the false credit scores were given out by Equifax, his rate went from 4.74 to 5.374 – and he were told he would lose his earnest money in the property purchase if he didn’t agree.
They said: ‘I closed on my house March 30th and on March 23rd, the lender re-ran my credit and magically it raised my rate. F*** you Equifax, I’ll give you these hands in court you f***s.’
One woman, Amaya Magdala, said that she was also set to close on a house in May – but after inspections already went through, her lender said her credit went from high 700s to zero.
Bank executives and other sources claimed applicants for auto loans, mortgages and credit cards were affected by the error, which saw their scores fluctuate between credit ranges and may have caused them to miss out on the best interest rates available
Shalomim Halahawi, a rabbi from Georgia, said his credit score dropped from 820 to 669
Amaya Magdala said that her credit score plummeted from the high 700s to zero just as she was trying to close on her house in May. She said that everything was going smoothly before the lender told her the rating had suddenly dropped
Amaya said that the buying process was going smoothly right before her credit seemingly plummeted out of nowhere.
She wrote: ‘This happened to us. We were all set to close on our house in May and then, after inspections, appraisal, everything went smoothly and we were set to move in in a couple weeks, we heard from our lender that suddenly our credit went from high 700s to ZERO. The ‘credit’ system ought to be abolished.’
Julie Hennessey told DailyMail.com that her Equifax score dropped a total of 63 points from 680 to 617 ‘with no reason’ earlier this year, just as she and her husband were trying to get a loan to build their house. The couple were declined the loan.
Samuel, another Twitter user who was affected by the glitch, wrote: ‘My TransUnion credit score is 706 while Equifax is 620. I actually submitted a credit dispute with them last week.
‘This afternoon, this popped up on my phone. I knew something was egregiously off!!!
‘When I called last week, a law firm picked up. I kept asking the lady why a law office would pick up Equifax line, she won’t give me a straight answer.’
One victim Anthony Giddens told DailyMail.com that his Equifax credit score dropped 78 points in March – despite the fact that they had just finished paying off a ‘bunch of debt.’
Teri Foley, from Colorado Springs, also said that their credit score went from high 700s to low 600s in a matter of a week, despite always making payments on time.
Edward Gomez was a victim of the credit score glitch. He was ‘screwed’ by two loans, one of which got denied. And when the second car loan got approved – he was given it at a higher interest rate.
He said that he had an Equifax credit score of 780 before applying for both loans, but this dipped to 750 before ‘miraculously’ going back up a few weeks later.
Christopher Martin said that Equifax’s credit glitch nearly ‘sabotaged my chance of getting an apartment’ after his landlord revealed there were massive credit discrepancies between varying reports.
Mr Martin was only then able to secure his home after paying a larger security deposit and forking out cash to get multiple credit reports to prove that Equifax’s figure was wrong.
Deidra MacLeod told DailyMail.com that she was forced to forfeit a $5,000 deposit and give up her pre-fab home that she had made custom to her after her Equifax credit score crashed overnight.
One twitter user said they saw the interest rate of his mortgage increase after their credit score was checked during the affected period
She was on track to getting a mortgage with a score of 780 – but when she approached her bank in March, she was told her rating had sunk to 542 and she was denied the loan.
Another victim, from New York State Mike Kessler said that his Equifax credit score went from 710 to 575 – despite his TransUnion score remaining at 728.
Shalomim Halahawi, a rabbi from Georgia, attested to the glitch, saying he saw his credit score, which ranged between 811 and 820, suddenly dropped to 669 in a day.
‘I went ballistic and challenged it and suddenly 809 popped back up,’ Halahawi wrote on Facebook. ‘This is with 100% paid bills, mortgage payments, loans, credit cards etc, combined for over a decade. Never missed a payment, including during the pandemic.’
‘I don’t play about my credit score,’ he added.
Bank executives and others familiar with the errors said that the inaccurate scores were enough to alter the interest rates available to consumers, while others were rejected from applying for the loans altogether, The Wall Street Journal reports.
Equifax said the issue, which was attributed to a ‘technology coding issue,’ has been fixed and that the glitch did not affect the vast majority of consumer’s credit reports.
‘We have determined that there was no shift in the vast majority of scores during the three-week timeframe of the issue,’ Sid Singh, president of Equifax’s U.S. Information Solutions, said in a statement.
‘We can confirm that the issue has been fixed and that we’ve been working closely with our customers on analysis to best meet the needs of consumers.’
Mr Singh, who has an estimated net worth of $18.5million, added: ‘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.
‘Our data shows that less than 300,000 consumers experienced a score shift of 25 points or more.’
Mark Begor, Equifax’s chief executive who is believed to earn around $16million a year in his position, had acknowledged the glitch in June at an investors’ conference, claiming that the impact was ‘going to be quite small’ and ‘not something that’s meaningful to Equifax.’
He added: ‘Obviously any data quality issue is a big issue for us. We take it very seriously, and it’s one we are going to make sure we are going to fix.’
Sources, however, told the WSJ that millions were impacted, with one banking official saying as many as 18 percent of applicants during the three-week glitch period had their credit scores affected by 8 points.
Another source told the outlet that one auto lender saw 10 percent of its applicants have inaccurate credit scores, with several thousands seeing their score affected by up to 25 points.
One source even claimed that a small number of loan applicants went from having no credit scores to a score in the 700s, and vice versa.
During the affected period from March to April, one industry expert suggested that mortgage lenders in the US sought about 2.5million credit scores to see if applicants were eligible.
But because lenders normally seek scores from all three credit reporting companies – Equifax, Experian, and TransUnion- the impact of Equifax’s glitch may be blunted, according to some experts.
Even the smallest changes can have lasting effects on what interest rates and loans consumers can get. Typically, the higher the credit score, the more likely an applicant will get approved for a loan at a lower interest rate.
Equifax also breaks down consumers’ credit scores into five categories: poor, fair, good, very good and excellent, and a change of 25 points can make all the difference.
If a consumer with an excellent score of 775 saw their credit dip by 25 points, it would drop them to the very good category and cause them to miss out on the best interest rates.
‘We do not take this issue lightly,’ Singh said in a statement as he added that Equifax was working on a solution with lenders and providing updated credit information.
Immediately following the news of the blunder, Equifax saw its stock drop by 2.12 percent on Tuesday, closing on its first low since the stock saw a large rise last week.
This is not the first time Equifax has got into trouble. Back in 2017, the credit rating giant fell victim to a hack that exposed the personal information of nearly 150 million American consumers.
The breach led to the ouster of former CEO Richard Smith after regulators found the company failed to take basic steps to protect consumers’ data, with Equifax forced to pay $700 million in fines.
The glitch is likely to land Equifax in hot water with the Consumer Financial Protection Bureau, which regulates America’s three main credit-reporting companies – Equifax, TransUnion and Experian.
The agency is currently investigating how the three companies handle consumer disputes after the companies agreed to strip tens of billions of dollars in medical debt from consumer’s credit reports.