Lenders use the score as a snapshot of whether you’re likely to repay a loan. Scores may also be checked when you apply for a job or an apartment lease. The higher the score, the better. Paying bills on time and keeping credit card balances low help boost scores.
Because of the complexity of the credit reporting system, consumers may feel stymied when they find an error and try to fix it.
A student borrower in California, for instance, complained in December about a 200-point credit score drop because of “incorrect” information reported by a student loan servicer. The servicer said it wasn’t reporting flawed information and referred the borrower to the credit bureaus. The drop in the credit score prevented the borrower from taking steps like moving and buying a car, but “no one seems to help fix it,” the borrower wrote. “My credit score continues to drop after I’ve tried so hard to rebuild it.”
A similar situation is the subject of a lawsuit, cited by Consumer Reports, that a New Jersey woman filed against Equifax, TransUnion and VantageScore in Federal District Court last summer. The complaint says her student loan servicer, Navient, mistakenly reported her payments as late, even though they should have been reported as current under the federal relief program. The error caused her credit score to drop by almost 100 points, the complaint says.
Navient, which isn’t a defendant in the suit, corrected the mistake, but the credit bureaus didn’t update her credit score to reflect the change, the suit says.
The complaint claims that “thousands” of borrowers are in a similar situation, though a lawyer for the borrower, Philip L. Fraietta of Bursor & Fisher in New York, said that number was an estimate.
A spokesman for Navient, Paul Hartwick, declined to comment on the lawsuit.
During the pandemic, Navient is reporting the payment status of student loans as instructed by the federal Education Department, he said. “If you have questions about a specific credit score, please contact the company that issued it,” Navient has advised borrowers.