One of the features of the massive stimulus package passed by Congress earlier this year gave people across the nation a temporary break from paying off their student loan debt during the coronavirus pandemic. Unfortunately, many of those same people have had their credit scores take a tumble because of a credit reporting error by a student loan company.
The CARES Act passed in April suspended student loan payments for six months without interest and without penalties. But Great Lakes Educational Loan Services reported the deferment incorrectly, which caused borrowers’ credit scores to drop, according to a recent lawsuit.
“I was shocked that something that’s supposed to help someone, help all of us financially would actually cause your credit score to drop,” Joan Stohl said. Her Equifax credit score dropped 44 points and her Transunion score lost 60 points after Great Lakes’ error.
A financial planner said Great Lakes reported borrowers’ accounts as “deferred” rather than as “current.” Experts say that a deferment on a credit report is likely to cause the credit score to drop.
A Great Lakes spokesperson said, “We apologize for the inconvenience caused by this situation and have been committed to resolving the issue quickly.” The spokesperson said the company thought that marking accounts as “deferred” wouldn’t have a negative effect on scores, but it began receiving calls from borrowers days after it made the initial mistake.
Great Lakes says it has contacted the credit reporting agencies and it urges borrowers to do the same.
The company has offices across the nation, including here in Minnesota.
Hopefully Great Lakes has learned its lesson. Those who borrowed from the company and have seen their credit scores drop through no fault of their own have undoubtedly learned that a reporting error can have a negative impact on their credit scores. In turn, that impacts their ability to borrow for a house, car, appliances and more.