TLDR; Great Lakes submitted the WRONG student loan status code to the three credit bureaus for ALL of their customers with student loans (as part of the CARES act) and it’s causing everyone’s credit scores to drop 40-50 points.
I’m in the midst of buying a house and my lender pulled my credit yesterday. She told me what it was and I was shocked, it was lower than I thought. I know numbers fluctuate from free services like Discover and Credit Karma, so I looked at Credit Karma to see the numbers from two of the bureaus, and sure enough, a MAJOR drop of 45 points on both of them over a 4 day update period. I know the numbers themselves aren’t super accurate, but the trends sure are.
I saw some articles on this subreddit today alluding to this issue but I wanted to verify the info. I googled and found ONE article about this here. It was actually pretty informative and accurate.
I called Great Lakes and a woman confirmed that it was true: their company had provided the wrong ‘code’ to the credit bureaus, essentially causing everyone’s student loans to look they are in REAL forbearance/deferral. I asked if it was worth looking at my account to see if I was one of the ones affected and she told me that it wasn’t necessary because it affected everyone across the board. Wut.
My follow up was ‘when is this going to be fixed?’ and she said on May 31st they send their normal monthly report to the three bureaus and it will have the correction in there and will set everyone’s accounts back (yeah right! Trust but verify!). As for when the bureaus will fix it once they receive the new information, I am still sitting on hold with one of them now to find out.
The last thing I asked her was if this was written publicly anywhere so that I can show my lender proof of this information. She said that they don’t have it posted anywhere. WTF! No press release, no statement, NOTHING. Feels weird to know about something that affects so many people, yet there’s only one article on it.
I’ll update this post once I talk to someone at TransUnion. What a crazy year.
EDIT: Since Credit Karma pulls Vantage Scores, I wanted to see what my FICO scores were. I signed up for a free trial with Experian’s service that gives me access to all 3 bureaus’ credit FICO 8 scores. It also has, just for Experian scores, a breakdown of a specific credit score for mortgage, auto lending, and credit cards. The only one that was slightly low, at the level my lender would have seen, was the mortgage one. I cannot see ‘trends’ here to see if it had dropped recently.
Conclusively, I cannot confirm yet for SURE whether my lender uses a FICO 2, FICO 8, or Vantage score. Going to talk to them this morning.
EDIT: Sidenote cuz I thought this was pretty cool: as part of the trial of the experian service (and I would hope the other bureaus have something similar), you can use a ‘score simulator’ to click scenarios to see specifically what your credit score will do when you get a new credit card, pay off credit card balances, close down a credit card, etc. Thought that was pretty cool. It’s only on the FICO 8 score model though, not the mortgage, auto, or credit card one.
EDIT: My mortgage lender talked to the credit company and they said they use the following scores to determine my rates:Experian: Fair Isaac v2Transunion – FICO Classic 4Equifax – FICO Classic
In conclusion, I’m calling this the “Great” Mishap of 2020. As far as I know, unless anyone says otherwise in this thread to me, Great Lakes screwing up the code is only affecting the Vantage Score calculations (used by Credit Karma) and not Fair Isaac or FICO.
Last edit I swear: If you have student loans on automatic deferment because of CARES, do yourself a favor and open a high yield online savings account. “Pay” the same monthly payment into that account every month. If you have an emergency between now and September when payments are due again, you’ll have cash on hand. If you don’t have an emergency, even better – take that massive lump sump you saved up with hopefully >1.5% interest, and make a massive payment on your loans – target the ones that HAD the highest interest rates. It’s a win-win scenario.
Disclaimer: This is a guest post and it doesn’t necessarily represent the views of IWB.