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Understanding Loan Servicer Changes and Their Impact on Your Credit

At O1ne Mortgage, we understand that navigating the complexities of loan servicing can be challenging. Whether you’re dealing with a mortgage or student loan, changes in your loan servicer can have significant implications. In this article, we’ll explore why loan servicers change, how these changes can affect your credit, and what steps you can take to minimize any negative impact. For personalized mortgage services, call us at 213-732-3074.

Why Did My Loan Servicer Change?

There are several reasons why your loan servicer might change:

• Non-renewal of Contract: Federal student loan servicers have contracts with the government. If a servicer doesn’t renew its contract, your loans will be transferred to a different servicer.
• Loan Sale: It’s common for lenders to sell your loan to a servicer shortly after closing. This servicer can then sell your loan to another servicer at any time.
• Debt Consolidation: If you’ve consolidated your federal student loans or refinanced any loan, you’ll typically get a new lender or loan servicer in the process.

How Does a New Loan Servicer Affect Your Credit?

A simple transfer of your loan from one servicer to another generally won’t impact your credit score, provided you continue making timely payments. However, there are scenarios where your credit could be affected:

You Miss a Payment

With a new loan servicer, you’ll likely need to update where you send your monthly payments and possibly even your due date. To avoid hurting your credit, continue making payments to your current servicer until you receive details from the new one. Late payments aren’t reported until they’re 30 days late, so if you miss a due date, get current as quickly as possible.

A New Loan Is Created

In some cases, changing the loan servicer could create a new tradeline, zeroing out the balance of the original loan. This can cause a temporary dip in your credit score. Additionally, if you’ve consolidated or refinanced your loan, a hard inquiry on your credit report may occur, impacting your credit history by reducing the average age of your accounts.

Actions to Take if Your Loan Servicer Is Changing

If you receive notice that your loan servicer is changing, here are some steps you can take to limit the impact on your credit:

• Ensure your contact information with your current servicer is up to date.
• Open all emails and mail from your current and new loan servicer.
• Set up automatic payments with your new loan servicer as soon as you receive instructions.
• Save copies of your payment history with your current loan servicer in case of miscommunication.
• Be vigilant for potential scams that could take advantage of the transition and try to steal your personal information.

Monitor Your Credit Regularly to Track Potential Changes

As you go through a loan servicer change, it’s a good idea to keep track of your credit score. With Experian’s free credit monitoring service, you can access your Experian credit report and score, and receive real-time alerts when changes are made to your credit report. This will help you understand the impact of any changes, such as paying off another loan, missing a payment, or increasing your utilization rate.

Contact O1ne Mortgage for Your Mortgage Needs

At O1ne Mortgage, we are committed to helping you navigate the complexities of loan servicing and ensuring that your mortgage needs are met with the highest level of service. If you have any questions or need assistance with your mortgage, don’t hesitate to call us at 213-732-3074. Our team of experts is here to help you every step of the way.

Thank you for choosing O1ne Mortgage. We look forward to working with you!

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