Why Has My Credit Score Dropped So Drastically

Previously, Ellen Roseman wrote a column in the Toronto Star about cleaning up errors in your credit report, and she asked me to help respond to a few of these.

Ellen Roseman is well known as a consumer advocate, with an impressive pedigree in financial journalism. She writes regularly as a personal finance columnist for the Toronto Star, and maintains a popular blog at www.ellenroseman.com.

Here’s the second credit report error email I dealt with at Ellen’s blog last week.This came from a reader named Ian.

I read your column on erroneous information driving down credit scores. I can do one better: NO negative or erroneous information driving down my score. I purchased a credit report from Equifax a year ago and my score, as I recall, was mid to high 700s. I purchased another report a couple of weeks ago and my score had dropped to high 600s.

There has been ZERO material change to my financial situation in the past 11 months.

I’ve had another year of paying my bills on time, paying down my credit card to zero every month and paying my mortgage on time every month (my finances are very simple).

There are no blemishes on my financial record.

I logged into Equifax to get my old report to do a comparison, but it wasn’t there. When I called Equifax and got its offshore customer service, I was told a credit report is only available to me for 30 days, even though it doesn’t say that ANYWHERE on its web site or during the purchase process.

They don’t know why my score went down in spite of a clean record for the last year. There is no way to find out why my score went down because it is an algorithm that is too complex to understand. If I want more information, I can talk to a bank or some other financial agency about how to raise my credit score. I tried going through Equifax’s online dispute process but the link didn’t work. I emailed Equifax’s chief privacy officer, as I was instructed to do, but 9 days later this person has not yet felt the need to respond to me.

I can understand if I do something wrong financially, it is going to affect my credit rating. But to have a perfect financial record for a year and have it drop significantly, and then to have the rating agency wash its hands of this illogical and unreasonable drop, is unconscionable.

The score Equifax generates about my creditworthiness can make or break me in terms of buying or renting real estate, getting loans and a whole host of other things that are important in life. There must be more accountability and transparency around what it does and why it does it, right?

Ross Taylor’s response:

Ian sent you his credit report and after reading it, I think the answer most likely rests with his Telus account. It seems completely out of character, but for some reason Telus had to write off an amount of $172 owing by Ian, perhaps as late as October 2011.

It is quite possible this writeoff (R9) had not yet hit his report when he last checked in and had a score in the high 700s. If he sends THAT report along, I can confirm this diagnosis. If the Telus writeoff was in error, he can fight back to get it removed from his report.

If it was an honest misunderstanding, again he can try to get the report softened. Sometimes people refuse to pay a disputed amount on principal and the result is that their credit history takes a whack.

If it is clear he owed this money, my advice would be to settle it with Telus and secure a pledge they upgrade the account status from bad debt/written off to paid in full.

He should check his report and hound them until it’s done. The late payments would probably remain, but it would be less of a tarnish to his credit history.

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