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What’s a Credit Freeze?

May 30, 2019

What does buying a house, applying for a student loan, and getting a personal loan all have in common? They are all different forms of credit. Credit is provided to you by a financial lender.  That lender will utilize your credit report in order to evaluate your credit history to decide if you qualify for credit with them. While evaluating your credit history and credit score they will do an inquiry on your credit. This inquiry can affect your credit score and can be placed on a report depending on the type of inquiry that’s completed by the institution. It’s essential to know the two different types of credit inquiries, what a credit freeze is, how it relates to a credit inquiry, the benefits of a credit freeze, and how to put one in place and remove it.

 

What Is a Credit Inquiry?

 

According to myFICO.com, a credit inquiry is a “request by a ‘legitimate business’ to check your credit.” These checks are categorized as either “hard” or “soft” inquiries, which we’ll break down in more detail later. “Credit pulls” are often a casual term used to describe both types of inquiries which gives a person, lender, or company the ability to view your credit report and see your credit score. Both types of credit pulls are included on your credit report but, only you can see the soft inquiries.

 

For example, imagine you’re looking for a mortgage. Let’s say that a credit card company recently did multiple soft credit inquiries on your account to “pre-qualify” you for a new credit card promotion that they have. When the mortgage company you submitted an application too reviews your credit report, they will not see the soft credit inquiries completed by the credit card company.  Additionally, the soft inquiries that were completed by the credit card company will not affect your credit score.

 

Regardless, the type of credit you’re opening, obtaining credit takes time, careful consideration, and patience. Each time a lender accesses your credit score and credit report to make a decision, you run the risk of damaging your creditworthiness. So what types of credit inquiries will affect your credit report and credit score? What type of credit inquiry are they, soft credit pulls or hard credit pulls?

 

 

Student Loan Refinancing: How to Avoid Predatory Lending

 

 

 

Soft Credit Inquiries vs. Hard Credit Inquiries

 

There are many differences between soft credit inquiries and hard credit inquiries. For example, soft credit inquiries can be part of the employment process if you are applying to a financial institution. Soft credit inquiries won’t affect your credit score, and they won’t show up on a credit report. Soft credit inquiries can be done without your permission. You may be wondering, “who’s sitting around running my credit report on a Saturday night?” Involuntary checks on your credit report will typically come from financial lenders who want to market a “pre-qualified” offer to you. We’ve all seen these types of mailers that you get from unfamiliar companies that say “Hey, you’ve pre-qualified for an auto loan! Here’s your special code go sign up today!” Soft credit inquiries usually consist of employment verification checks, pre-qualified credit card offers, when you check your credit score, and pre-qualified insurance quotes. Now, we know what a soft credit inquiry or soft credit pull is, but what is a hard credit inquiry or hard credit pull?

 

 

Hard credit inquiries are usually completed for larger banking requests like submitting an application for a mortgage. For example, you’d submit an application if you were applying for a mortgage, personal loan, auto loan, or student loan, among other types of loans. After having a hard credit inquiry completed there is a chance that your credit score may be affected. Multiple hard credit inquiries can affect your credit score negatively and all the hard credit inquiries will be visible on your credit report. These inquiries can show up on your credit report for up to two years after the inquiry is completed.

 

Typically when you’re submitting an application or applying for new credit – it will affect your FICO score if you are applying for a loan with multiple lenders. You should still apply to multiple lenders to find yourself the best interest rates. Now, if you are applying for the same type of credit, it is likely that if the inquiries are done within a certain window, they may be counted as a single inquiry. Inquiries are important to understand because they are the building block to your credit score and credit report which illustrates for lenders your financial wellness. Be sure that you know what you are signing up for before you proceed to submit those application documents. Speaking of financial wellness, what is a credit freeze and how can you benefit from it?

 

What is a Credit Freeze?

A credit freeze is pretty self-explanatory, it’s a freeze or hold that is placed on your credit to stop lenders from completing any inquiries. You may have heard a credit freeze referred to as a security freeze. Having a credit freeze will not impact your day-to-day financial wellness routines. You’ll still have the ability to pull an annual credit report to review it for accuracy. If you want to open up new credit that will require a hard credit inquiry all you need to do is simply lift the credit freeze temporally until it is completed. It’s important to note that though you may have a credit freeze in place, creditors, debt collectors, who actively have an account that belongs to you and government agencies utilizing warrants, and subpoenas will have access to your credit report.  All these simple things to secure your financial wellness and guess what? It gets better, all credit freezes are free!

 

You’re protecting your identity from thieves who may be trying to open accounts in your name, but it doesn’t cost a dime – no brainer! As we learned above, when you’re applying for credit like a mortgage, a lender will need to do a hard credit inquiry. If you’re not expecting to have your credit reviewed, it’s recommended that you place a credit freeze on your account. It’s important to know how to put a credit freeze into action and get it onto your account ASAP to keep those thieves away! Also, if you are a parent of a child under the age of sixteen, you should consider freezing their account too as per the FTC.

 

How to Implement a Credit Freeze

Now it sounds like it’s a lot harder than it actually is to implement a credit freeze. It also sounds way expensive too, but we know thanks to government laws it is free! Here’s how to place a credit freeze with each of the major U.S. credit agencies.

 

Equifax:

Visit https://www.equifax.com/personal/credit-report-services/ to setup an Equifax account.

 

Step 1 –

Provide Personal Information (Name, Date of Birth, Social Security Number, Mobile Number, Address)

 

Step 2-

Create Account Details (Email Address, Password)

 

Step 3-

Verify your identity using a text message or answering financial questions about yourself. My phone was broken, so I got to take my very own financial quiz to confirm my identity.

 

Step 4-

Once the quiz questions are answered you’re queued to sign in.

 

Step 5-

Select “Place or Manage A Freeze”

 

Transunion:

Visit https://www.transunion.com/credit-freeze to setup a Transunion Account.

 

Step 1- Select “Add Freeze”

 

Step 2- Provide Personal Information (Name, Date of Birth, Last 4 Digits of Social Security Number, Address)

 

Step 3- Create an Account

 

Step 4- Verify finance history via questions provided.

 

Step 5- Add Credit Freeze.

 

Experian:

Visithttps://www.experian.com/freeze/center.html and select “Add a Security Freeze”

 

Select Whose Credit You’d like to Freeze

 

Step 1- Provide Personal Information (Name, Date of Birth, Social Security Number, Address, Email Address, Create a Pin)

 

If you are serious about freezing your credit you’re going to want to utilize all three U.S. major credit agencies Equifax, Transunion, and Experian. Most of them provide a pin once the freeze is placed, so be sure that you keep that pin for your records. When you are ready to lift the security freeze or credit freeze you should have it readily available to you.

 

How To Lift a Credit Freeze

 

You can lift a credit freeze or you can choose to remove it altogether. In order to do so, it’s similar to the credit freeze sign up process. You need to contact each credit agency and make a request to remove the credit freeze. As we discussed previously many of the three major agencies utilize a pin, almost like a password, that you’ll need to provide to lift or remove the credit freeze from that bureau.

 

Attaining good credit and working hard to keep your finances healthy, isn’t easy. With all the recent data breaches it is so important to take the necessary steps to protect yourself and your family from those looking to complete identity theft. One incorrect credit inquiry could cause a much bigger problem for you then taking the time to prevent it now. Credit freezes aren’t the only way to protect your credit from thieves if you lifted your credit freeze or removed it fully you may want to look into utilizing fraud alerts.

 

 

Are Student Loans Impacting Your Credit Score?

 

 

Fraud Alerts for Credit Reports

If you don’t want to freeze your credit but want added security for your credit reports, try fraud alerts. There are three different types of fraud alerts: initial fraud alert, active duty fraud alert, and extended fraud alert. What’re the differences between each and what makes them different from a credit freeze?

 

Initial 90 Day Fraud Alert

 

The initial fraud alert is an alert that lasts usually around 90 days and is often used when financial information, credit card numbers, or your wallet have been stolen or even lost. The initial fraud alert gets placed on your credit report. Meaning, if someone is, in fact, trying to steal your identity they will have a difficult time because companies will be required to take additional steps to verify your identity before issuing additional forms of credit. You can place these alerts on your credit report by contacting a credit agency. Once one agency is contacted they must notify the other two U.S. credit agencies. Initial fraud alerts can be renewed after the 90 day period.

 

Active Duty Alerts

 

These alerts are designed for people who are on active military duty. They operate similarly to initial fraud alerts in that they require businesses to complete extra tasks to confirm the borrower’s identity before an additional form of credit can be issued. These types of alerts typically last about 12 months or a year but can be renewed to match the deployment period. When you contact a credit agency, it must notify the other two U.S. credit agencies. Also, according to the FTC, the credit agencies must remove your name from any marketing lists for prescreened credit card offers for two years unless you request otherwise.

 

Extended Fraud Alerts

 

Extended fraud alerts are commonly used if you have already fallen victim to identity theft. Extended fraud alerts last 7 years. In order to place this type of alert on your credit report, you’ll need to send proof of identity theft to one of the three major U.S. credit agencies. Here is a great government resource if you ever fall victim to identity theft.

 

Similarities and Differences between Credit Freezes and Fraud Alerts

 

Fraud alerts and credit freezes have some similarities and unique differences. For example, both alerts and freezes are free of charge according to U.S. federal law. Any current creditors will still have access to your credit report even if you have fraud alerts enabled or you have a credit freeze in place. If you choose to open any new forms of credit while these are enabled it could lengthen the process for the new creditor. These are the similarities but what makes fraud alerts and credit freezes different?

 

One main difference is for a credit freeze each U.S. agency will need to be contacted directly. Whereas, for fraud alerts, if you notify one credit agency, that credit agency is responsible for notifying the other two credit agencies. During a credit freeze, prospective lenders will not have any access to your credit report. With a fraud alert, prospective lenders do have access to your credit report but will need to take additional steps before issuing new lines of credit. The last and one of the most obvious differences between these two is that credit freezes don’t have an expiration date. A credit freeze can be placed on your credit report until the end of time unless you request that it is removed. A fraud alert typically will expire within a year, or seven years depending on the type of fraud alert you’ve selected.

 

 

5 Reasons to Refinance Your Student Loans

 

 

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2019-12-04
Tips for Starting Your Student Loan Repayment Journey

Once you graduate from college, leave college, or drop below half-time enrollment, it’s time to start thinking about when your student loan repayment period kicks in. Understanding the repayment process for your student loans is very important for a number of reasons – for one, if you don’t pay, your interest will accrue. Second, if you don’t pay, it will affect your credit score, which can hinder your ability to buy a home, buy a car, qualify for credit cards, take out a personal loan, or refinance your student loans.   If you graduated this past spring, your student loan repayment period will likely start around this time of year (if they haven’t kicked in already). Follow these tips to master student loan repayment and get yourself to a strong financial start after college.  

Know How to Access Your Loan Information

A good first step is to acquire your loan information. This can typically be accessed via an online login. Monitoring your loan information will be essential during the course of repayment. If you took out Federal Student Loans, you can likely access your info at https://myfedloan.org/. If you took out private student loans, check with your lender for how to access your information. Tracking your loans will give you a gage on the status of each loan, the balance you owe, as well as interest rates for each loan. By understanding the status of your loans, you can make more informed decisions about how you want to prioritize repayment, what type of repayment plan you want to choose, or even whether you want to consolidate or refinance your student loans.   

Know When Your Payments Start

Immediately following graduation, you’ll likely have a grace period, or a period of time before your first payment is due. This can vary depending on the type of loan you have, and they can be different for each loan. Subsidized and Unsubsidized Federal loans have a six-month grace period. Perkins loans have a nine-month grace period. There is no grace period for PLUS loans; however, if you are a graduate or professional student PLUS borrower, you do not have to make any payments while you are enrolled at least half time and (for Direct PLUS loans first disbursed on or after July 1, 2008) for an additional 6 months after you graduate or drop below half-time enrollment. Private student loans will have differing grace periods so contact your loan servicer for more details. Knowing when your loan will be due is imperative to starting off on the right foot when it comes to your student loans.  

Weigh Repayment Options

When you take out federal student loans and your grace period is complete, you will automatically enter the Standard Repayment Plan. This plan allows you to pay off your debt within 10 years, with the monthly payment remaining the same over the life of the loan. If standard repayment doesn’t work for your budget, you may want to consider some other options, or perhaps even refinance your student loans. The federal student loan program offers the following Income-Based Repayment plans: 
  • Graduated Repayment Plan – Gives you a smaller payment amount in the beginning and gradually increases the payment amount every two years.
  • Extended Repayment Plan – Allows you to pay the least possible amount per month for 10 to 25 years.
  • Revised Pay As You Earn Repayment Plan or REPAYE Plan – Bases the monthly payment on you (and spouse’s) adjusted gross income, family size, and state of residence.
  • Pay As You Earn or PAYE – Monthly payments are based on your adjusted gross income and family size. You must be experiencing a financial hardship to qualify. You must also be considered a “new borrower” as of 10/1/2007 or after, or be someone who received an eligible Direct Loan disbursement on 10/1/2011 or after.
  • Income-Based Repayment or IBR – Monthly payments based on your adjusted gross income and family size. Must be experiencing a financial hardship to qualify.
  • Income-Contingent Repayment or ICR – Based on your monthly adjusted gross income and family size. Typically chosen if an individual can’t qualify for the Pay As You Earn Plan or Income-Based Repayment.Any changes to your income or your spouse’s income will affect your student loan payment. For example, if your salary increases, your student loan payment will as well. If you are married, both your income and your partner’s income are combined. Two combined incomes will increase your total income, likely increasing your monthly payment. 
  Keep in mind that each repayment option will have positives, negatives, as well as eligibility requirements. Research each option before making a decision, and consider contacting your loan servicer if you have questions or need more information.   

Automate Your Payments (If you can)

Setting up automatic payments will make student loan repayment less of a hassle, will avoid late payments, and may even score you an interest rate reduction. Just be sure you have enough money in your account month-to-month to endure the payments without overdrawing.   

Make Extra Payments

When you make your monthly payment, it will first apply to any late fees you have, then it will apply to interest. After these items are covered, the remaining payment will go toward your principal loan balance (the amount you actually borrowed). By paying down the principal, you reduce the amount of interest that you pay over the life of the loan. Applying extra income by making larger payments or double payments will reduce the total amount you’ll end up paying.   

Reach Out for Help if Necessary

If you’re having trouble making your monthly payments, particularly on your federal student loans, contact your loan servicer. They will work with you to find a repayment plan you can manage or help determine your eligibility for deferment or forbearance. If you stop making payments without getting a deferment or forbearance, you risk your loan going into default, which can have serious consequences to your credit.   

Weigh Refinancing & Consolidation Options

If you have multiple student loans that are all accruing interest at different rates, you may want to consider student loan refinancing or consolidation to make repayment more manageable. The federal student loan program offers student loan consolidation, in which they combine your loans into one loan with a weighted average interest rate, rounded up to the nearest 1/8th percent. You can also consolidate your federal and/or private student loan with a private lender through the process of refinancing. Refinancing your student loans is much like consolidation, however it offers the opportunity to start new repayment terms and possibly lower your interest rate. Keep in mind that refinancing with a private lender may cause you to lose access to certain federal student loan repayment options that are listed above.   

Look Into Loan Forgiveness

If you work in a public service position or for a non-profit, you may want to consider the Public Service Loan Forgiveness program or another loan forgiveness program offered by the federal government. Other options exist for volunteers, military recruits, medical personnel, etc. Some state, school, and private programs also offer loan forgiveness. Check with your school or loan servicer to see if you may qualify for student loan forgiveness.  

Earn Your Tax Benefits

If you are paying your student loans, you may be able to deduct the interest you pay on your student loans when filing your taxes. Deductions reduce your tax liability, saving you money and serving as a nice tradeoff for having to pay interest on your student loans.    Repayment of student loans can be a long, difficult journey – but by taking advantage of your resources and staying determined to pay off your debt, it is manageable. If you need more information on paying back your student loans or the options that are available to you, contact your loan servicer.  
  Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.
2019-11-29
So I’ve Refinanced My Student Loans – Now What?

By Caroline Farhat  

Congratulations! You just made the big step of refinancing your student loans. Your wallet is fatter and you’ve likely shaved off thousands of dollars from what you will have to pay on your student loans. That’s a huge achievement that will positively impact your financial life.

 

You may be tempted to use your new found moolah on brunches and vacations, but don’t start spending lavishly quite yet. While present you may be saying “yes!” to fancy dinners, future you would really benefit from spending this extra cash in a smarter way. If you’re feeling financially empowered, you’ll love these five financial tips for what to do after you refinance to maximize your money.

 

1. Reexamine (or create) your budget

Any time you have a change in your financial situation, such as a raise or a new recurring bill, it’s important to evaluate your current budget. If you don’t already have a budget, getting a little extra money each month can be a great motivator to start one. We’re fans of the zero-based budget system. With zero-based budgeting, you allocate each dollar you make to a specific expense or goal so it can help curb unnecessary expenses you may regret later. For example, say you bring in $4,000 a month after taxes. You spend $3,000 on fixed expenses such as rent, utilities, and food. Your monthly payment for student loans is $600, leaving you with $400 extra each month. Under zero-based budgeting, you would allocate the extra $400 to other goals (such as contributing to a savings account) or wants (such as a travel budget). Once you have figured out exactly where each dollar will go, you should set up an automatic transfer to a savings account so that you never get tempted to spend money that you should be saving.

 

Of course, budgets aren’t one size fits all. If you have a method that works for you, then use that! The important things to know and keep track of are:

  1. How much money you have (after taxes and health insurance payments)
  2. Your essential fixed expenses (such as housing, utilities, food, student loan payments)
  3. Your non-essential fixed expenses (such as gym memberships, Netflix, etc.)
  4. Your long-term financial goals (buying a house, saving for a child, retirement)
  5. Your short-term financial goals (dining out, travel)
 

2. Start or pad your emergency savings account

If you don’t have at least three months of living expenses saved up, you need to start right now. We don’t want to set off alarm bells, but an emergency savings account is the number one thing everyone needs to have on their financial to do list. Depending on your situation, you may benefit from stashing away six to nine months of living expenses, but start with at least three months and build from there. Be sure to have this money easily available, so put it in a savings or checking account that does not incur any fees or penalties for withdrawing money. For example, you do not want to put your emergency savings in a CD, even if it will yield you a higher interest rate, because getting your money out can be a costly and sometimes time-intensive process. That said, find a savings account that will pay you interest so you don’t lose all your earning power on that money.

 

3. Pay down other high-interest debt

After you have a healthy savings account, paying off high-interest debt should be your next priority. Just like how refinancing your student loans helped you save money in the long run, paying off debt with high interest rates such as credit card debt or a personal loan will help you shave off hundreds or possibly even thousands of dollars that you would have to make in interest if you just paid the minimum monthly payment. Even putting an extra hundred dollars a month to this debt can pay off big time in the future. Additionally, lowering your debt load can help bolster your credit score, especially if you are carrying a lot of credit card debt. Your debt-to-income ratio is critical if you want to get a mortgage or other big-ticket items so paying down high-interest debt can only work to your advantage.

 

4. Contribute to your retirement

Say you have a healthy emergency savings, you’ve paid off all of your credit cards, and you have enough to cover your living expenses with a little bit of extra fun money. First, congrats! That’s a big feat and you’re killing it with your finances!

 

Set your future self up for success is by starting or increasing your contribution to a retirement account such as a 401(k) or IRA. Retirement accounts benefit from compounding interest so the sooner you start, the better. Plus, many employers have matching programs that help you pad your retirement account. Remember the free money you can make from a high-interest savings account? This is similar, but your future self will be the one to reap the benefits.

 

5. Treat yourself, responsibly

If you have refinanced your student loans, it’s safe to say that you’re clearly on top of your financial game. Let’s be real -- there will always be a list of things you can and should do with your money. But it shouldn’t all be about the work. You deserve to treat yourself! Just be sure to do it responsibly. Should you suddenly move into a budget-busting luxury penthouse apartment? Probably not. But you absolutely should treat yourself to that nice dinner or new pair of sneakers you’ve been eyeing. The keys to a successful financial life are staying informed and staying balanced. Just like any other goal, providing little rewards along your journey can help you stay motivated. So take this as our encouragement to enjoy yourself! Just do it responsibly with an eye on your financial independence.

   
2019-11-27
3 Things You Should Know About Black Friday

Black Friday used to be just one, crazy day of shopping. Deal seekers would wake up before sunrise, grab a thermos of coffee and a warm jacket, and wait in line for hours to get the best deals on televisions, laptops, and Cabbage Patch Dolls. The desire to shop and save is so popular that Black Friday has spun off nearly a week’s worth of celebrations, including:

 
 

Black Friday itself has even crept into our day of gratitude, with stores opening just after the dishes are cleared on Thanksgiving night. Some brands and shoppers have pushed back against Black Friday, like REI with their #OptOutside campaign that provides an active alternative to malls and box stores. But for many, the excitement of Black Friday is as much a part of Thanksgiving as turkey and pumpkin pie.

 

For those who are on the hunt for the best deals, here are a few tips to help you succeed.

 

Make a List (and Check It Twice)

While this tip is true for nearly every shopping trip, you definitely need a list, plan of attack, and even a budget for Black Friday. What items are your absolute must-haves? Are you more of a big-ticket item shopper or are you in it for smaller deals on everyday items? Just as you need to plan out that Thanksgiving dinner menu, sit down and list where you want to go and in what order to keep yourself from impulse buys and overspending. There’s no worse feeling than getting home and realizing you wasted money on something that wasn’t really a good deal or that you didn’t even want. Consider the following for your list:

 
  • Category
  • Item
  • Store or URL (for online Black Friday deals)
  • Deal or Coupon Code
  • Price
  • Budget Countdown
 

Shop Online

Cyber Monday used to be the online shopping day of the holiday season, but Black Friday is king for a reason and quickly expanded in-store-only deals to the online crowd. Shopping online helps you cover more territory in less time, and there are apps that can help you organize and simplify your shopping efforts.

 

With the BlackFriday.com app, you can easily filter through Black Friday promotional clutter, search by keywords, compare deals at different retailers, share deals with friends, and even set up notifications for when sales start. With the TGI Black Friday app, you can set up alerts if one (or more!) of your big-ticket items go on sale before Black Friday. This app also has a shopping list feature so you can digitize your plan of attack.

 

Shop All Year

For decades, Black Friday has gotten a reputation for being the deal day of the year. The name “Black Friday” even dates back to the 1960s when it was first used to name the kickoff to the holiday shopping season. However, it’s not always the best time of the year to get the best deal on several key items.

 

Televisions frequently go on sale just before the Super Bowl to appeal to fans looking to see the biggest game of the year on a new screen. On the hunt for a smaller electronic device? iPhones are typically discounted in September after the annual Apple event announcing the latest models. What about a new set of skis for the slopes? The best time to shop can be just before the end of the ski season, as retailers look to clear out inventory. And for more of the homebody, home goods are often discounted around holidays like President’s Day, Independence Day, and Labor Day. Finally, if you are ready to kick off the new year in a healthy way, consider waiting until June or July to buy that gym membership. At that time, gyms are eager for sales since clients are outside enjoying the long, sunny days of summer.

 

Find Other Ways to Save

You don’t have to brave the weather and the crowds to save money before the holidays. If you have student loans, you can keep money in your account by refinancing or consolidating. ELFI customers reported saving an average of $309 every month and an average of $20,936 in total savings after refinancing. See what kind of savings you can qualify for at elfi.com/refinance-education-loans.

 
 

1Average savings calculations are based on information provided by SouthEast Bank/Education Loan Finance customers who refinanced their student loans between 8/16/2016 and 10/25/2018. While these amounts represent reported average amounts saved, actual amounts saved will vary depending upon several factors.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.