Credit Watch: Sallie Mae error torpedoes credit score of many student loan holders

Do you have an extended or graduated student loan program with Sallie Mae? If so, you may find that your Equifax credit score is as much as 100 points lower than it should be.

Sallie Mae made a mistake in coding its report to Equifax last month. People who hold student loans with extended payoff periods (more than 10 years) or with a graduated payment plan (which means your payment starts lower and then gradually increases every two years over a term of 12 to 30 years), should check their credit scores to be sure they haven't been ruined.

Sallie Mae promises that it will be sure the coding is corrected within the next few days, so give them a week to correct the snafu and then check. If you haven't pulled your credit report in the last 12 months, you can get one for free by going to Annual Credit Report.com. Other websites may offer you a free report, but they usually make you sign up for a trial for a credit monitoring service and then start billing you automatically.

Supposedly only 10% of Sallie Mae loan holders were impacted by this mistake, but it can be a costly one if you plan to apply for a car loan or mortgage in the future. If you do find an error on your credit report, and you have been making your student loan payments on time call (888) 272-5543.

All it takes is one late payment to drive a excellent credit score down by 100 points. Once your score drops it can take months to build it back up. If your score has dropped like a stone because of Sallie Mae's error, insist that Sallie Mae pay for credit score monitoring until your score returns to its previous high.

Lita Epstein has written more than 20 books including the "Complete Idiot's Guide to Improving Your Credit Score.