Navigating Changes in Loan Servicers: What You Need to Know

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Why Did My Loan Servicer Change?

There are several reasons why your loan servicer might change:

• Contract Expiration: Federal student loan servicers have contracts with the government. If a servicer doesn’t renew its contract, your loan will be transferred to a new servicer.
• Loan Sale: It’s common for lenders to sell loans to servicers after closing. These servicers can also sell your loan to another servicer at any time.
• Debt Consolidation: If you consolidate your federal student loans or refinance any loan, you’ll typically get a new lender or loan servicer.

How Does a New Loan Servicer Affect Your Credit?

Generally, transferring your loan to a new servicer won’t impact your credit score if you continue making timely payments. However, certain situations can affect your credit:

You Miss a Payment

With a new loan servicer, you may need to update your payment details. To avoid missing payments, continue paying your current servicer until you receive new instructions. Remember, late payments aren’t reported until they’re 30 days late, so get current as quickly as possible if you miss a due date.

A New Loan Is Created

Sometimes, changing servicers can create a new tradeline, closing the original loan and opening a new one. This can temporarily dip your credit score. Additionally, consolidating or refinancing loans can create a new account, potentially impacting your credit history and score.

Actions to Take if Your Loan Servicer Is Changing

If you receive notice that your loan servicer is changing, take these steps to minimize the impact on your credit:

• Ensure your contact information is up to date with your current servicer.
• Open all communications from both your current and new servicer.
• Set up automatic payments with your new servicer as soon as possible.
• Save copies of your payment history with your current servicer.
• Be cautious of potential scams during the transition.

Monitor Your Credit Regularly

It’s wise to monitor your credit score during a loan servicer change. With Experian’s free credit monitoring service, you can access your Experian credit report and score, and receive real-time alerts for any changes.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to assist you with all your mortgage requirements.

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