MyFedLoan has been my assigned student loan servicer for years. Most of that time my account has been set up to make automatic payments, aka auto-debits. These payments are scheduled each month on the 10th.
This month I logged on and saw something disturbing, I was delinquent.
After confirming that there were sufficient funds in my bank account, I sent MyFedLoan an email. I was concerned about preventing this issue from happening again and worried it could negatively impact my credit score even though it was 100% not at fault.
The First Email to MyFedLoan
I sent the following email when I noted the issue:
My account is set up to direct debit the monthly payment each month. It has been set up this way for at least six months. When I logged in today it indicated that my account was 1 day past due and delinquent. I have several questions:
1) Why has the money not been pulled from my bank account for this month?
2) Will this trigger a negative credit reporting that will need to be corrected?
3) Do I need to change the auto-debit settings?
The First MyFedLoan Response
Three days later, I received the following response from MyFedLoan:
Your payment was received on December 10, 2017, which was a Sunday. Unfortunately, payments can’t be processed on weekends or holidays. If your due date falls on a weekend or holiday, we will process your payment the following business day. Though your payment may take 2-3 business days to go through, it will always post effective for your due date. Please note that your account will reflect as delinquent until the payment has been posted. We report monthly to each nationwide consumer reporting agency, so a temporary delinquency of only a few days will not negatively affect your credit report.
I was relieved to learn that there would not be any negative consequences to this “delinquency” but still concerned over what I deem to be a flaw in their system. At no point should a borrower who is enrolled in auto-debit and making payments be told they are delinquent. If there is even a chance that this reports in a delinquency report, it is an issue.
The Second Email to MyFedLoan
With my concerns now shifted to others who might get an erroneously reported delinquency just because their auto-debit date fell on a Sunday, I asked the following:
When you say you report monthly, does that mean all of your credit reporting for all customers happens on the same day? My concern is that if the day of the month you report happens to be the 11th, then my report might indicate that I was delinquent. Is this possible?
The Second MyFedLoan Response
MyFedLoan responded by stating:
We report every account on the last day of every month. You will not be reported as delinquent.
Lessons from my “Deliquency”
Emails have value – This interaction is a good example of why I encourage borrowers to communicate with their lenders via email. If I look at my credit report next month and I see a delinquency reported by MyFedLoan, I’ll be in an excellent position to dispute the issue. I’ll have an email chain to show the credit agency and I’ll have proof to MyFedLoan that any errors reported were mistakes that need to be corrected.
Make MyFedLoan happy by the end of the month – The policy to report the status of all customers on the last day of the month is valuable information to have. If you have an issue with your account status early in the month, it means there is plenty of time to get things resolved. If the calendar says it is the 28th and an issue arises, you need to contact MyFedLoan as soon as possible.
MyFedLoan is sloppy – Whoever programmed the MyFedLoan system should not have set up the account to read delinquent on the days following auto-debits set for a Sunday. Further, once this issue was identified, their system should have been fixed. If I log on the following Monday, it would be far more appropriate for the account to read “payment processing”. This issue wasted my time and the time of MyFedLoan employees. Every time they get a call or an email about this issue more time is wasted.
