Living with credit, Protecting yourself

Sallie Mae’s latest foul-up

Jeremy Simon

Student loan giant Sallie Mae appears to have spoken too soon when it said a credit reporting issue that impacted about 1 million student loan borrowers had been resolved. Yes, they fixed the problem that made it look like students were deadbeats. But some borrowers are now reporting that in doing so, it replaced one problem with another, making it appear borrowers have twice as much debt.

Yesterday, Sallie Mae spokeswoman Martha Holler told me the student loan lender had already resolved a coding error that made credit alert systems think that even responsible borrowers had been delinquent with their loans. Borrowers were understandably panicked to learn their credit scores had (in some cases) dropped by more than 100 points. “This never happened before, and it will not happen again,” Holler told me.

She was at least partially right: The latest problem seems to be somewhat different.

I spoke with borrower Shannon Gallagher of Providence, R.I., who has suffered through both of the Sallie Mae errors. Last Saturday, Gallagher received an alert tied to her Equifax account showing a credit score drop of 139 points. “When you see your FICO score has gone down 100 points overnight it’s kind of scary,” she says. “The whole rest of the evening was kind of a blur.”

Gallagher had to wait until Monday to speak with Sallie Mae directly, which eventually explained the coding goof that had walloped her credit score.

Gallagher, who is in the process of securing a mortgage for her first home, decided to buy a copy of her Equifax report. That report no longer showed the delinquency and indicated she had regained all but 10 of the points lost due to the earlier coding error. But her credit report woes weren’t over.

It also copied her Sallie Mae credit lines — showing duplicate balances and the same date of account opening, just with new account numbers for the latest entries. Rather than overriding the existing Sallie Mae accounts, the report showed entirely new ones “effectively doubling” her installment loan debt. Having more debt could cause a mortgage lender to raise her rate, or even deny her a loan.

“Compared to my last good credit report, I have a lot of debt,” Gallagher says. “I had a lot of debt to begin with and now it’s doubled.”

A call to Sallie Mae for comment was not yet returned.

Gallagher is not the only one to report new problems with a doubled-up balance. There are several such reports on the myFico forums.

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  • Suzanne

    I have the same problem that Ms. Gallagher has. Sallie Mae’s initial error dropped my credit score by 133 points. Their ‘fix’ has restored my credit, but has made it look like that I have double the debt with them that I actually do.

  • Doniele

    I had the problem with Sallie initially my score dropped 124 points!I score went back to pre-error numbers but at the same time, I disputed the problem with CSC and now the entire tradeline has been deleted! It was an old and positive tradeline now is vanished. I havent gotten any alerts that my score has changed and I am not sure I what to do next.