Several readers wrote to sound the alarm that student loan giant Sallie Mae has screwed up, and their error may cost you money. Bethany writes:

I had been keeping an eye on my credit, making up for my past mistakes by paying on time meticulously and paying off my credit card debt. Yesterday my Equifax score dropped 76 points because Sallie Mae changed the way they report graduated loans. Turns out, I am not the only one.

Another reader named Rebecca saw her score drop from 770 to 650 overnight.

What happened? Bankrate offers a summary of the problem:

Last Thursday, May 8, Sallie Mae made an error in the way it reported some student loans to credit reporting agencies. Essentially, it reported graduated or extended repayment plans as arrangements for partial payment, causing Equifax, one of the three national credit reporting agencies, to code the accounts as delinquent, even if they were current.

[...]

Borrowers with extended or graduated repayment plans who applied for credit or pulled their credit scores in the last three business days may have had “one or more of their accounts show up as delinquent, and had an adverse credit rating,” says Tom Joyce, spokesman for Sallie Mae.

Why is this a big deal? Because your credit score not only affects how much you pay for loans, it can also affect the interest rate on your credit cards and how much you pay for insurance. If you’re in the process of buying a house and your credit score drops by 120 points, it could cost you a small fortune.

This appears to be a temporary glitch in the system. One commenter at the myFICO discussion forum received a call from the Sallie Mae customer advocacy group. Sallie Mae intends to fix the problem by the end of the week, and it’s possible that Experian could have updated information in their system within ten days.

What should you do? If you are concerned that your credit report may have been affected, you should probably obtain your free annual credit report from Experian to see if there’s an issue. (But note that your credit report and credit score are different things — it costs money to get your credit score.) My guess, however, is that there’s not much you’ll be able to do other than wait a few weeks for the problem to be fixed.

The discussion thread at myFICO contains the best, breaking news on this story.

More information about credit reports and credit scores:

I can’t help but think there are real problems with a system in which a glitch at a single company can potentially cost millions of people millions of dollars.