×

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

 

 

NOTICE: Third Party Web Sites
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.

Leave a Reply

Your email address will not be published. Required fields are marked *

2019-07-03
Measuring the Costs of Employee Turnover

Best-selling business management author Jim Collins was asked during a 2001 interview if he had identified a good business response to the economic slowdown that had gripped the nation. His widely quoted answer is as relevant today as it was at the time:   “If I were running a company today, I would have one priority above all others: to acquire as many of the best people as I could [because] the single biggest constraint on the success of my organization is the ability to get and to hang on to enough of the right people."   Nearly 20 years later and in a highly improved economic climate, Collins’ words still encapsulate the biggest challenge facing HR departments of corporate giants and small start-ups alike: finding and retaining quality team members. In an era of competitive recruitment and job-hopping staff, your company risks losing monetary and human capital each time a valued employee chooses to leave. Employee turnover impacts your bottom line and your company's culture. To set wise employee retention policies, you first need to assess the costs of staff turnover accurately and measure the full impact of employee loss.  

Direct Costs of Replacing Employees

A talented employee exiting your company costs you money. Estimates of how much employee turnover costs can vary by industry and employee salary. A study by Employee Benefit News estimates the direct cost to hire and train a replacement employee equal or exceed 33% of a worker’s annual salary ($15,000 for a worker earning a median salary of $45,000). Cost estimates are based on calculatable expenses like these:
  • HR exit interview & paperwork
  • Benefit payouts owed to the employee
  • Job advertising, new candidate screening & interviewing
  • Employee onboarding costs
  • On-the-job training & supervision
You can track the expenses of your company’s employee turnover using this online calculator, or create a spreadsheet to determine how actual costs add up to affect your bottom line.  

Full Impact of Employee Loss

Josh Bersin, a human resource researcher, writing for LinkedIn, refers to employees as a business’s “appreciating assets.” Good employees grow in value as they learn systems, understand products and integrate into their teams. When one of these valuable employees leaves, the business loses more than just the cost of hiring and training a replacement. Bersin cites these additional factors contributing to the total cost of losing a productive employee:
  • Lost investment: A company typically spends 10 to 20% of an employee’s salary for training over two to three years.
  • Lost productivity: A new employee takes one to two years to reach the level of an exiting employee. Supervision by other team members also distracts those supervisors from their work—and lowers the team’s collective productivity.
  • Lost engagement: Other team members take note of employee turnover, ask “why?” and may disengage.
  • Less responsive, less effective customer service: New employees are less adept at solving customer problems satisfactorily.
  According to Bersin, studies show the total cost of an employee’s loss may range from tens of thousands of dollars to 1.5 to 2 times that employee’s annual salary.  

Strategies to Slow Employee Turnover Rates

An effective exit interview helps you and your HR team pinpoint the drivers of your company’s employee turnover. You may find that hiring practices need to be refined or employee engagement should be enhanced. Changes to the break room space, such as fresh fruit or games, will allow your employees to relax and come back to work with fresh eyes and a better attitude. This will keep up the workplace morale, shaping your company culture to include perks appealing to younger workers and will lead to increased job satisfaction. Today’s employees are career-oriented and highly motivated. Keep them on your team with other opportunities such as:  
  • Pathway for advancement within the company
  • Professional development & advanced education
  • Flex-time & work-from-anywhere options
  • Management support & recognition
  • Lifestyle rewards or amenities like catering & concierge services
  • Culture of shared values & volunteerism
 

Add Student Loan Benefits Through ELFI

Student loan repayment tops the financial-worries checklist of many recent graduates. Older team members question their ability to pay for educating their children. New, highly desirable HR benefits like student loan contributions and financial literacy education are emerging from these employee concerns—and ELFI for Business is leading the way for employers to incorporate them into hiring packages. You can connect with ELFI directly from your HR portal and access multiple ways to contribute to employees’ student loan debt. We offer new-hire onboarding booklets, educational newsletters and onsite consultations filled with information for you and your employees. Reach out to us at 1.844.601.ELFI to add cutting-edge benefits to your HR employee package!  

Learn More About ELFI for Business

  NOTICE: Third Party Web Sites Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the web sites 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.
2019-06-12
Should You Pay Off Student Loans Immediately or Over Time?

When you start your post-college career, you may be tempted to breathe a sigh of relief. Before you do that, you have important decisions to make. You’ll have to stretch your paycheck to cover your new lifestyle and associated expenses: a furnished home or apartment, vehicle, insurance, and hopefully a 401K contribution. If you are like 70% of college graduates, you also have student loans that need to be repaid.   In most situations, it's going to be most beneficial to pay off your loans as quickly as possible so that you are paying less towards interest. The average college graduate's starting salary, however often cannot allow for enough additional income to cover more than the regularly scheduled student loan payments.  Most student loans have a six-month grace period so you can do some budgeting and planning first - if you need to. We don't suggest using the grace period unless you find it necessary to organize your finances. During a deferment such as a grace period, the interest could still be accruing depending on the type of loan that you have.   If you determine that you may be better off establishing sound financial footing and a workable monthly budget before you begin repaying those daunting loans. Keep these tips in mind as you formulate a strategy for debt payoff.  

Student Loans Have Advantages

Varying types of debt are governed by different laws and regulations. Banks often base interest rates for consumer credit loans on your established credit rating. Interest rates for auto loans or credit card debt tend to be higher than a mortgage or student loan interest. As you review your debt load and make a plan, remember: student loan debt comes with a few "advantages" that other types of debt don’t offer.  
  • Preferential tax treatment: With a new job, you will be paying taxes on your income. Student loan interest is deductible up to $2,500 and can be deducted from pre-tax income.
  • Lower interest rates & perks: Federal student loans have lower interest rates and are sometimes subsidized by the government.
  • Lender incentives: Private student loans may come with incentives from the lender that make them a better deal than other credit types. These include fee waivers, lower interest rates, and deferment options.
  • Flexible payment plans: Options for lower payments and longer terms are available for both federal and private student debt.
  • Build your credit score: You can build your credit score with student loan debt. Now, depending on whether you’re making on-time payments or not, you could negatively or positively affect your credit. If you chose to make small payments during deferments, or a grace period, and regular on-time payments you will be more likely to establish a favorable credit record and reduce the amount of interest you pay overall.
 

Programs to Help You With Student Loan Payments

There are few options for loan forgiveness with regular debt, but student loans offer opportunities to reduce or eliminate your debt. These may come with commitments and tax implications, so be sure you fully understand them if you decide to take advantage of these programs.  
  • Loan forgiveness: Federal student loans may be forgiven, but you'll want to be sure that you're following all of the requirements needed of the program. Be sure before choosing this option that the federal loans you have qualify for the program. Also, keep in mind there could be taxes due on the amount that is forgiven. Some student loan forgiveness programs include PAYE (Pay as You Earn) and REPAYE (Revised Pay as You Earn), Public Service Loan Forgiveness, and Teacher Loan Forgiveness.
  • Loan Consolidation: Multiple student loans can be consolidated into one payment with the interest rate determined by a weighted average of your current loans - interest rates. Combining multiple loans may be easier to manage on a modest starting salary. Consolidating federal loans usually doesn’t require a good credit score, either.
  • Refinance, and you could achieve a lower interest rate: Lenders like Education Loan Finance specialize in student loan refinancing, and have options like variable interest rates and flexible terms. Refinancing your debt could make student loan debt easier to manage than other types of credit.
 

Pay Off High-Interest Debt First

Before you decide to pay off your student loans, think about the financial obligations you’ll be taking on. Instead of carrying a credit card balance or making low payments for an auto loan, it makes sense to continue your low student loan payments and pay off more expensive debt first or debt with a higher interest rate. In the long run, you’ll save money and build your credit score.   If you still have doubts about not paying off student debt first, consult a professional financial advisor for help prioritizing your goals and setting up a budget that lets you achieve them.  

Click Here to Learn More About Student Loan Repayment

   
2019-06-07
How Do You Know When It’s Time to Get a Graduate Degree?

The most recent data from the Digest of Education Statistics show that over 54% of those completing graduate studies take on student loans, and the average loan amount for grad school is over $70,000. With so much at stake, isn’t it worth a serious analysis of the value?  

Develop a Decision Matrix to Help You Decide

A decision matrix is an analytical tool that helps you compare different factors when making a choice. If you are about to take on more student debt to continue your education, a personal decision matrix that weighs the following questions can help you clarify your values and decide what makes both personal and financial sense.  
  • Why do you want a graduate degree? Motivation is a complex process, and you may not know what is driving you to continue your education. A little self-analysis is in order. Do you think graduate work will elevate your prestige, make you an industry authority, or help you find a more challenging job? Or are you afraid of leaving your college comfort zone and entering the workforce?
 
  • Do the jobs in your field of study match your talents and disposition? Do you thrive in a fast-paced environment or enjoy working with the public? Perhaps a predictable or solitary workplace suits you more. If you’ve never been employed in your chosen field, it might be wise to work for a while after completing your bachelor’s degree. You’ll get a better understanding of employment opportunities and personal satisfaction levels before investing more time and money toward an advanced degree. Working before pursuing a graduate program has two other distinct advantages:
 
  1. You can make progress toward paying off undergrad student loans.
  2. You will have time to solidify your life and career goals.
 
  • Will a graduate degree improve your employment and earning potential? Before committing to graduate school, do your research. Monitor the job market on sites like Indeed, Monster or Study job requirements, salaries, and the number of job openings. Talk to individuals in your field—both those with graduate degrees and those with four-year degrees. Will an advanced degree make enough difference in job availability, career stability, and earning potential to offset the time and money required to obtain it?
 
  • Are there alternatives for enhancing your employment value? Explore professional or specialized certifications that could make you more valuable to an employer. Obtaining certificates is usually less expensive than continuing with graduate studies, and added training indicates to employers that you take the initiative and possess advanced skills.
 
  • How will you pay for your advanced degree? If you already have student loans, adding more debt for graduate school could further delay your ability to achieve many financial milestones: marriage, purchasing a home, traveling, or starting a family. Often, grad school loans come with a higher interest rate and greater accumulated balance than undergraduate loans. You’ll need to determine whether the added earning potential of an advanced degree justifies the payments and payback period. It may also be worthwhile to explore alternatives like part-time studies and employer educational benefits to lessen the student loan burden.
 

Refinance Student Debt in Three Easy Steps With ELFI

You’ve graduated with a college degree and increased your earning power. Now, get the most for your money by refinancing your student loans with Education Loan Finance. Our competitive interest rates, personalized service, and nationwide availability give you the power to manage your debt and achieve your goals. With ELFI, you could be just three steps away from a brighter future!  

Click Here to Learn More About Refinancing Student Loans

    NOTICE: Third Party Web Sites 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.