A coding error by a student loan servicer has resulted in incorrect information being applied to the credit reports of nearly 5 million individuals, according to a published report.
Great Lakes Educational Loan Services accidentally reported to the major credit bureaus — Equifax, Experian, Innovis, and TransUnion — that the accounts of 4.8 million individuals had been deferred. Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress instructed the Education Department to grant individuals with unpaid student loans a six-month grace period on making loan payments to help them deal with the impact of COVID-19. But the status of those loans was to be reported to the credit bureaus as if the individuals were making payments on time.
Instead, nearly two-thirds of the loans services by Great Lakes were reported as deferred, a status code that could cause an individual’s credit score to drop and affect anything from being approved for a loan to being offered a job.
State regulators and the Consumer Financial Protection Bureau are looking into the incident, according to the report. The Maryland Commissioner of Financial Regulation issued guidance on Monday reminding servicers of their obligations and the penalties they face for violating those obligations.
“We’re working with credit reporting agencies (Equifax, Experian, TransUnion, and Innovis) to ensure the accuracy of the information we reported regarding COVID-19 forbearances,” Great Lakes wrote in a statement that it published on Twitter. “We do not believe our reporting has impacted actual consumer credit scores provided by those agencies.”
Great Lakes has supplied the credit bureaus with updated information, but it was not known how long it would take for the corrected information to be applied to the credit reports of affected individuals.
