How a lender name change can affect your credit reports

Woman checks her credit reports for a lender name changeImage: Woman checks her credit reports for a lender name change

In a Nutshell

Keep a close eye on your credit reports whenever a lender changes its name or transfers your account to another loan servicer. A lender name change may result in some new information on your reports, but it shouldn’t affect your scores too much.

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When Sallie Mae completed its transition to two separate companies back in 2014, several consumers noticed a change on their credit reports. The name of the new company responsible for servicing federal student loans, Navient, had taken the place of Sallie Mae.

This type of lender name change can be confusing, but is it really such a big deal? In some cases, it might be. Several Credit Karma members commented that the Sallie Mae name change seemed to coincide with a double-digit drop in their credit scores.

That type of drop can significantly impact a person’s ability to qualify for the best credit cards and interest rates, so it’s important to know why it may have happened — and if the name change had anything to do with it.

The truth is, the nuances of credit reporting are tricky. In Navient’s case, consumers’ credit reports and scores may have changed for a number of reasons. There may have been some mistakes that weren’t caught during the transition, or there may have been some other factors at play. It’s worth noting that the Consumer Financial Protection Bureau sued Navient in January 2017 for “[creating] obstacles to repayment by providing bad information, processing payments incorrectly, and failing to act when borrowers complained.”

That’s a somewhat extraordinary case, and a lender name change generally shouldn’t have a huge impact on your credit scores if the details on your account stay the same. But it does illustrate the importance of checking your credit reports regularly and knowing when — and how — to report any errors that may accompany a lender name change.

What to look out for with a lender name change

When your lender changes its name, your accounts may be transferred to a new entity or appear on your reports with the lender’s new name. These types of corporate changes may or may not result in some adjustments to your credit reports.

Say, for example, that your mortgage servicer (the company you send your monthly mortgage payments to) changes.

This shouldn’t come as a surprise, as both your old and new servicers generally must send you a notice at least 15 days before the change. You’ll want to make sure you start sending payments to the new service, but you should also look out for any changes on your credit reports.

What to do when you see a lender name change

You don’t always need to take action if your lender changes its name. But if you notice any errors or issues on your credit reports that may be related to the name change, you’ll want to act.

The CFPB advises sending both your old and new servicers an information request or notice of error. In most cases you can either call or write a letter to your servicer, but a letter may provide you with more protections and better results.

We also recommend disputing any errors directly with the credit bureaus. You can use Credit Karma’s Direct Dispute™ tool to report an error on your TransUnion® credit report without leaving Credit Karma.

Learn more about Credit Karma’s Direct Dispute™ feature

Bottom line

It’s important to regularly review your credit reports to make sure everything looks accurate. Credit Karma makes this easy with free credit monitoring that helps you stay on top of any significant changes to your TransUnion or Equifax credit reports.

If you’re looking over your reports and notice a lender name change, don’t panic. Review the account information carefully and ensure that it’s accurate. If everything looks good and you don’t notice any change in your credit scores, great! You can rest easy. But if you notice something that might be an error, do your due diligence and dispute the error as soon as possible.

About the author: Rod Kelly has been a writer and editor for more than three decades, the last of which has been in the financial services industry. A native of Minnesota, Rod has made Chicago his home al… Read more.