How Equifax has falsified loan applications in the United States

4 August 20222 years ago babelfish

A coding error caused Equifax to misjudge the creditworthiness of millions of consumers in the United States. All the details and consequences for the banks

The Wall Street Journal wrote that the American credit rating agency Equifax has provided inaccurate credit scores to millions of people in the United States seeking loans.

SCORES WRONG BY 20 POINTS

The errors covered a period between mid-March and early April, but Equifax began reporting to credit institutions in May. Wrong scores involved American consumers who applied for a loan to purchase cars or to obtain mortgages and credit cards from various banks and lenders, including JPMorgan Chase, Wells Fargo and Ally Financial.

According to sources in the Wall Street Journal , in some cases the scores were out of order by 20 points negative or positive: this is – writes the newspaper – a sufficient value to alter the interest rate that consumers have been offered, or cause their loan applications to be rejected.

THE CAUSE OF THE ERROR

An Equifax representative said the error was caused by a problem with a coding technology and it has been fixed.

THE CONSEQUENCES FOR BANKS

Chief Executive Officer Mark Begor spoke of “impacts” on Equifax's business. But it seems that credit institutions have suffered the most from the blow, having found themselves managing loan requests from consumers with inaccurate scores. A source told the newspaper that a large bank – it did not disclose its name, however – found that in the three weeks that the Equifax problem occurred, there were mis-assessments in 18 percent of loan applications received; the margins of error also reached up to 8 points.

Banks and other credit entities are evaluating how to proceed with respect to those consumers who, due to the error, have seen their loan request rejected or have obtained a higher interest rate: they could modify the interest and allow who has been refused the loan to submit a new application.

HOW DO THE ACTIONS GO

Equifax shares fell 2.1 percent to $ 206.3 on the New York Stock Exchange yesterday afternoon.

THE COMPUTER ATTACK

In 2017, the company was hit by a cyber attack: the criminals had gained access to the personal data of many US consumers, such as their social security and driver's license numbers and their addresses.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/equifax-errore-punteggi-credito/ on Wed, 03 Aug 2022 11:41:20 +0000.