Consumer loans are the primary source of income for institutional lenders such as banks or mortgage companies. As with any other asset, lenders may buy and sell these loans. When this happens, it is known as a loan reassignment. The loan purchaser becomes the new lender, meaning the borrower must submit payments to that new lender. Like other consumer credit transactions, a loan reassignment might temporarily affect your credit score, but it is not very likely to have a significant effect in the long run.
Your Credit Score
Your credit score is a number that represents how reliable a borrower you are. This score is based on information in your credit report, which is the history of how you have used credit in the past. If you have made your payments on time, do not max out your credit cards, and do not have a lot of debt, creditors will generally see you as reliable and will give you a good score. On the other hand, missing payments and having too much debt will likely lower your score and make it harder for you to get new loans and keep you from getting the lowest possible interest rate.
When a lender reassigns a loan to another lender, this doesn't really change any of the fundamental factors that affect your credit score. For example, you do not take on more debt in loans, acquire new loans or take any other actions that might impact your credit score when your loan is reassigned. You may see some change in your credit score once the reassignment is indicated on your credit report, but this is simply because credit scores tend to decrease whenever a new loan appears, and the reassignment may initially appear as a new loan. However, the impact of this change is likely to be very slight and will not last very long because you have not acquired any new debt.
Maintaining Your Score
Though the reassignment itself is unlikely to increase or decrease your credit score, your behavior with the new lender can impact your score. As with any other loan, you are still under the obligation to maintain regular payments with the new lender. If you fail to meet this obligation your score will decrease. Also, if you take on more debt or begin applying for new loans you may also see your credit score go down.
Though a loan reassignment is not likely to affect your credit score in the long term, practical concerns involved can. For example, the new lender will likely require you to send payments to a new address. Also, if you are using an online payment system you will likely need to set up a new account with the new lender. If you fail to do this properly, you may inadvertently lower your credit score if, for example, you miss a payment or send the payment to the wrong address.
Roger Thorne is an attorney who began freelance writing in 2003. He has written for publications ranging from "MotorHome" magazine to "Cruising World." Thorne specializes in writing for law firms, Web sites, and professionals. He has a Juris Doctor from the University of Kansas.