Major Credit Reporting Agency Agrees to $2.2M Settlement: What It Means For You
The following is presented for informational purposes only and is not intended as credit repair advice.
For most of us, class action lawsuits only matter if the settlement amount is massive and there's at least a small chance that we may be entitled to some of that money.
In the case of Equifax's recent $2.2 million class action lawsuit settlement, you probably don't qualify and, even if you did, it wouldn't make you rich. But the lawsuit and the resulting settlement are a great reminder why paying attention to your credit report is so important.
Who is Equifax?
Equifax is one of the "big three" credit reporting agencies in the United States, along with TransUnion and Experian. Every month, your various creditors will report the current status of your accounts to these reporting bureaus, including balance, credit limit, current payment status, and more. That information makes up the heart of your credit report.
That information is also the basis of your credit score. So it's important for Equifax, TransUnion, and Experian to report your credit information accurately. (You can probably see where this is going...)
Why was Equifax sued?
The class action lawsuit alleged that Equifax incorrectly reported the same collection account on consumer credit reports multiple times. Having an account in collections on your credit report can have an extremely negative impact on your credit score, so even though the original collection account was real, duplicating that account increased the credit damage.
As a result of the duplicated accounts, the plaintiff claimed that their creditworthiness was harmed unfairly and they suffered financial harm as a result.
(If "Equifax" and "settlement" is giving you a sense of deja vu, that may be because Equifax was hit with a massive data breach in 2017 that ultimately led to a $425 million settlement. So...it could definitely be worse this time.)
Who qualifies for the settlement?
Let's get this out of the way: the odds are against you seeing any money from this particular settlement.
Officially, Equifax never admitted to any wrongdoing, but did agree to pay $2.2 million to anyone negatively impacted by the alleged error. And if you're just finding out about this settlement through this blog post, you're probably not eligible.
Equifax has already identified any potentially impacted consumers. If you're eligible, you would have received a Duplicate Reporting Letter sometime in August or September of 2022. To participate in the settlement, you need to file a claim by September 1, 2026 affirming that you were harmed financially by the error. The amount of the payoff will vary depending on the number of claims, but the maximum payout is $600.
Why the settlement matters (even if you won't get any money)
Regardless of whether or not you qualify for the $600 payout, the lawsuit and settlement are an important reminder that credit reporting errors happen.
And not only do credit reporting errors happen, they can be costly. Errors can greatly impact your credit score, which can potentially freeze you out of loans or other credit products, while making the credit products you do qualify for more expensive.
So let this be your reminder: look at your credit report. Go to annualcreditreport.com and download a copy of your credit report from each of the three major reporting agencies. If you spot an error, get it corrected. Fixing errors in your credit report isn't instantaneous and the worst time to find an error is when you need your credit to be pristine.
And if poor credit is making it difficult to find an affordable debt repayment solution, MMI has your back. Our debt solutions are tailored to your needs and come with no credit requirements. Even if you've missed payments or have accounts in collections, we can help you create an affordable payment plan that fits your unique circumstances.
