By Alexandra Peers, CNN Business
Updated: Wed, 03 Aug 2022 14:49:03 GMT
Source: CNN Business
Credit giant Equifax sent lenders incorrect credit scores for millions of consumers this spring, in a technology snafu with major real-world impact.
In certain cases the errors were significant enough — the differential was at least 25 points for around 300,000 consumers — that some would-be borrowers may have been wrongfully denied credit, the company said in a statement.
Shares fell about 2% Tuesday on the report and were down nearly 5% and shortly after the open Wednesday.
The problem occurred because of a "coding issue" when making a change to one of Equifax's servers, according to the company, which said the issue "was in place over a period of a few weeks [and] resulted in the potential miscalculation" of credit scores.
While Equifax did not specify dates or figures, a June 1 alert from housing agency Freddie Mac to its clients said Equifax told the agency that about 12% of all credit scores released from March 17 to April 6 may be have been incorrect.
Equifax wrote that "there was no shift in the vast majority of scores" and that "credit reports were not affected." But the company declined to comment to CNN Business about how people can learn whether they were among those whose credit scores were incorrectly reported — and what recourse they may have if they were issued loans at a higher rate or denied a loan outright because of the snafu.
Equifax issued its statement later Tuesday, hours after the Wall Street Journal published a report about the errors. Trade publication National Mortgage Professional had reported in May that Equifax was warning lenders about the possibility of incorrect scores, and the company released a statement to the magazine at the time acknowledging the technology-based error.
Tuesday's disclosure about the score errors comes just after Equifax said its board voted to give CEO Mark Begor a $25 million retention bonus package.
Last Friday's regulatory filing announcing the bonus said the board believes Boger is "uniquely qualified to continue to lead the Company during the final stages of our $1.5 billion technology transformation."
Equifax tracks the credit history of millions of borrowers — almost all Americans — and sells that information to banks and other lenders. As one of only three major credit reporting companies, Equifax plays an outsized role in the credit-score business: Its information helps lenders set interests for borrowers or deny borrowers seeking mortgages, car loans or credit cards.
This isn't the first data issue for Equifax. In 2017, the company revealed that the personal information of nearly 150 million people was compromised. The company eventually reached a deal to pay up to $700 million to state and federal regulators to settle probes related to the incident, the largest settlement ever paid for a data breach.