From the moment you establish your first line of credit, America's three major credit bureaus - Equifax, Experian and TransUnion - are tracking you. This may begin with a student loan or a credit card. Regardless, it's important for students to start building their credit history before graduation.
"Your credit report and credit scores can play a part in renting an apartment, getting a cell phone and buying a car," says Rod Griffin, Experian's director of public education. "Utility companies may charge you a lower security deposit if you have good credit scores. So having good credit can save you money."
Credit Report Trumps Credit Score
Your credit report carries more weight than your credit scores.
Student Loans Help Build Credit History but Mistakes Will Haunt You
Student loans are considered installment loans and paying these on time can help your credit score. Credit card debt and having multiple credit cards open can hurt your credit score. Also, if you've been late on payment or defaulted on a card, your scores will fall. A mistake can stay on your report for 10 years, especially if you misuse a credit card. For recent college graduates, those 10 years could affect mortgage rates, the ability to rent an apartment and the price of car insurance.
Credit card debt is one of the most important factors in bureaus' determination of your credit score. The way you use credit cards offers insight into your borrowing and credit management decisions more than installment loans do.
Recent grads (and anyone using credit cards) can help build their credit reports and credit scores by paying off their bills in full each month and by keeping utilization rates low. "Utilization" is the ratio of a cards balance to its credit limit (what you have borrowed divided by what you can borrow) and it is key to keep this balance below 30% of your credit limit.
Your Credit Report Can Affect Your Job Opportunities
Many employers run credit checks during the interview process. It's an important indicator of how you handle responsibility. In several fields, if you have a poor credit report, it will knock you out of the running for a position. Credit reports are used by employers to help verify a person's identity by comparing it to the information provided by the employee in their application. For jobs that require high security or higher risk responsibility, it is important that the identifying information in the application matches that in the credit report.
Remember that a prospective employer cannot run a credit report without your written consent so be sure to read the fine print of anything you sign during the job application process.
What now?
We should all be checking our credit reports annually (we all get one from each national credit bureau for free, 3 free credit reports annually) to monitor fraud and to analyze our fiscal health. You can obtain reports from a secondary site like AnnualCreditReport.com. Most other ways of checking your credit score comes with a fee. CreditKarma.com is one of the few that offers free credit scores, however, it only receives credit reports from TransUnion.
Any Credit & Housing Counseling questions can be emailed to rsimon@creditadvocates.org
creditadvocates.org
Congratulations 2014 Graduates!
Friday, May 2, 2014
Wednesday, March 26, 2014
Private Student Loans
Student loans are alike other loans in that you borrow money from a lender and promise that you'll repay it with interest. The two general types of student loans greatly differ - federal and private.
Before approaching private student loans, Credit Advocates HIGHLY encourages everyone to first apply for federal student loans.
Federal student loans are:
How do you get a federal student loan?
Credit Advocates urges everybody to remember...
It is too easy to have a relaxed attitude toward loans & student loan debt is at an all-time high of $1 trillion - outweighing credit card debt. It is imperative to consider our state schools and not just private colleges and universities. The prices of these institutions have no correlation to the cost of education. Before applying to colleges and universities think about the cost of school, room & board, and higher living expenses that are unavoidable in urban areas.
Before approaching private student loans, Credit Advocates HIGHLY encourages everyone to first apply for federal student loans.
Federal student loans are:
- Direct Subsidized Loans & Direct Unsubsidized Loans
- Direct PLUS Loans (for graduate and professional students or parents)
- Federal Perkins Loans
Federal v Private Student Loans
Federal student loans include many benefits (such as fixed interest rates and income-based repayment plans) not typically offered with private loans. Private loans are generally more expensive than federal loans.
Federal Student Loans
- You do not have to start paying until you graduate, leave school, or change enrollment to less than half-time
- Interest rate is fixed and often lower than private loans & much lower than some credit card rates - Interest Rates & Fees
- Undergrad students with financial need will likely qualify for a subsidized loan, the government pays the interest while you are a least half-time enrolled
- No need for a credit check for most Federal Student Loans (except for PLUS loans) - Federal Student Loans can help you establish a good credit record
- Don't need a cosigner to get a federal student loan in most cases
- Interest may be tax deductible
- Loans can be consolidates into a Direct Consolidated Loan - Consolidation Options
- If you have trouble paying your loan, you may be able to temporarily postpone or lower your payments
- Several repayment plans including options to tie your monthly payment to your income
- No prepayment penalty fee
- You may be eligible to have some portion of your loans forgiven if you work in public service - Loan Forgiveness Program
- Free help is available at 1-800-4-FED-AID
Private Student Loans
- Many require payments while still in school
- Variable interest rates, some greater than 18% - a variable rate may significantly increase the total amount you pay
- These loans are not subsidized - you are responsible fro 100% of this loan
- Require an established credit record. The cost of a private loan will depend on your credit score and other factors
- You may need a cosigner
- Interest may not be tax deductible
- Private Student Loans cannot be consolidated into a Direct Consolidation Loan
- May not offer forbearance or deferment
- Check with lender to find out about repayment options
- Be sure there are no prepayment penalty fees
- Unlikely your lender will offer a loan forgiveness program
- The Consumer Financial Protection Bureau's private student loan official may be able to assist you if you have concerns about your private student loan
How do you get a federal student loan?
Complete the Free Application for Federal Student Aid (FAFSA)
Credit Advocates urges everybody to remember...
It is too easy to have a relaxed attitude toward loans & student loan debt is at an all-time high of $1 trillion - outweighing credit card debt. It is imperative to consider our state schools and not just private colleges and universities. The prices of these institutions have no correlation to the cost of education. Before applying to colleges and universities think about the cost of school, room & board, and higher living expenses that are unavoidable in urban areas.
Credit Advocates strives to educate the public on all credit & housing counseling matters. For all questions answered you can email me at rsimon@creditadvocates.org.
Protecting your rights begins by knowing your rights!
Tuesday, March 18, 2014
Lets Understand Federal Student Loans!
Subsidized and unsubsidized loans are federal student loans for eligible students to help cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school. The U.S. Department of Education offers eligible students at participating schools Direct Subsidized Loans and Direct Unsubsidized Loans.
Direct Subsidized Loans
Direct Unsubsidized Loans
Complete & submit the Free Application for Federal Student Aid (FAFSA). Your school will use your FAFSA to determine how much student aid you are eligible to receive. Direct Loans are typically included as part of your financial aid package.
What are the current interest rates?
Direct Subsidized Loans for Undergraduate Students - 3.86%
Direct Unsubsidized Loans for Undergraduate Students - 3.86%
Direct Unsubsidized Loans for Graduate Students - 5.41%
Understanding interest rates & fees
Information for military members & family
Direct Subsidized Loans
- Available to undergraduate students with financial need
- Your school determines how much you can borrow & the amount may not exceed your financial need
- The U.S. Department of Education pays the interest on a Direct Subsidized Loan
- While you're in school at least half-time
- For the first 6 months after you leave school (grace period), and
- During a period of deferment
Direct Unsubsidized Loans
- Direct Unsubsidized Loans are available to undergraduate and graduate students
- There is no requirement to demonstrate financial need
- Your school determines the amount you can borrow based on your cost of attendance & other financial aid you receive
- You are responsible for paying the interest on a Direct Unsubsidized Loan during all periods
- If you choose not to pay the interest while attending school, during grade periods & deferment or forbearance periods, your interest will accrue and be capitalized (added to the principle amount of your loan)
- Enrolled at least half-time at a school that participates in the Direct Loan Program
- Enrolled in a program that leads to a degree or certificate awarded by the school
- Direct Subsidized Loans are only available to undergraduate students who have financial need
- Direct Unsubsidized Loans are available to both undergraduates and graduate or professional degree students & are not required to show financial need
Complete & submit the Free Application for Federal Student Aid (FAFSA). Your school will use your FAFSA to determine how much student aid you are eligible to receive. Direct Loans are typically included as part of your financial aid package.
What are the current interest rates?
Direct Subsidized Loans for Undergraduate Students - 3.86%
Direct Unsubsidized Loans for Undergraduate Students - 3.86%
Direct Unsubsidized Loans for Graduate Students - 5.41%
Understanding interest rates & fees
Information for military members & family
Are there other fees for this loan other than interest?
Yes.
There is a 1.072% loan fee on all Direct Subsidized & Unsubsidized Loans & will be proportionately deducted from each loan disbursement.
*Loans disbursed prior to December 1, 2013 have different loan fees
So... How do I receive my money?
The school will first apply your loan funds to your school account to pay for tuition, fees, room and board, & other school charges. If any additional funds remain, they will be returned to you. All loan funds must be used for education expenses!
Learn more about the process of receiving federal student aid
If your federal aid package includes your federal student loans, your school will tell you how to accept the loan. If it's your first time receiving a Direct Loan you must:
Is that is? Does anyone contact me?
when you receive your Direct Loan, you will be contacted by your loan servicer (who you repay your loan to).
Yes. You must pay this back. There are several ways.
There are several ways to repay your federal loans (private loans are different, Credit Advocates will review these soon). Your loan servicer can help you understand which repayment options are available to you. Generally you have 10-25 years to repay your loan depending on the repayment plan.
Learn more about repayment options
Understand deferment or forbearance options for those having trouble repaying their loans
Yes.
There is a 1.072% loan fee on all Direct Subsidized & Unsubsidized Loans & will be proportionately deducted from each loan disbursement.
*Loans disbursed prior to December 1, 2013 have different loan fees
So... How do I receive my money?
The school will first apply your loan funds to your school account to pay for tuition, fees, room and board, & other school charges. If any additional funds remain, they will be returned to you. All loan funds must be used for education expenses!
Learn more about the process of receiving federal student aid
If your federal aid package includes your federal student loans, your school will tell you how to accept the loan. If it's your first time receiving a Direct Loan you must:
- Complete entrance counseling
- Sign a Master Promissory Note (MPN)
Is that is? Does anyone contact me?
when you receive your Direct Loan, you will be contacted by your loan servicer (who you repay your loan to).
Yes. You must pay this back. There are several ways.
There are several ways to repay your federal loans (private loans are different, Credit Advocates will review these soon). Your loan servicer can help you understand which repayment options are available to you. Generally you have 10-25 years to repay your loan depending on the repayment plan.
Learn more about repayment options
Understand deferment or forbearance options for those having trouble repaying their loans
Define this Lingo.
- Grace period - Period of time after borrowers graduate, leave school, or drop below half-time enrollment when they are not required to make payments on certain federal student loans
- Deferment - Postponement of payment on a loan is allowed under certain conditions. Interest does not accrue on Direct Subsidized Loans, Subsidized Federal Stafford Loans, & Federal Perkins Loans - all other loans do accrue interest
- Forbearance - Period during which your monthly loan payments are temporarily suspended or reduced. Your lender may grant you a forbearance if you are willing but unable to make loan payments due to certain types of financial hardship
- Loan servicer - Company that collects payments on as loan, responds to customer service inquiries, & preforms other administrative tasks associated with maintaining a loan on behalf of a lender - click here if you are unsure of who your loan servicer is
- Entrance counseling - A tool to ensure you understand your obligation to repay the loan
- Master Promissory Note (MPN) - Agreeing to the terms of the loan
Credit Advocates strives to educate the public on all credit & housing counseling matters. For all questions answered you can email me at rsimon@creditadvocates.org.
Protecting your rights begins by knowing your rights!
Friday, January 31, 2014
Happy Apartment Hunting!
Just because you've managed to sign a lease for an apartment and give a company your money before, does not mean you did it correctly. Finding a realtor you trust, hunting down the elusive "perfect" apartment in your price range, and securing it can be an adventure.CACC is here with guidance to help ensure you have as easy of an experience as possible!
We like to think that all people are good, yet unfortunately that's not how life tends to play out. It is imperative to make sure your management company/landlord is reputable. Just because a company is widely known, does not make it a safe bet. Having a harassing or neglectful landlord can ruin your apartment experience. Credit Advocates reccomends looking up reviews for your potential management company and asking people who currently have an apartment managed by that company if possible. Landlords tend to assume that tenants are not aware of their rights - which is often correct - thus charge tenants illegal fees or other things landlords are not permitted to do. Additionally, landlords cannot enter your apartment without your permission!
Tenant rights in New York City: http://www.nyc.gov/html/hpd/html/tenants/tenantsrights.shtml
Tenant Rights in Boston: http://www.mass.gov/ocabr/docs/tenantsrights.pdf
When seeing apartments keep these questions in mind:
Things to make sure you take note on a lease before singing:
Lastly, before you see apartments with your realtor be aware of the realtor fee. This fee is typically (and cannot be more than) 1 months rent.
We like to think that all people are good, yet unfortunately that's not how life tends to play out. It is imperative to make sure your management company/landlord is reputable. Just because a company is widely known, does not make it a safe bet. Having a harassing or neglectful landlord can ruin your apartment experience. Credit Advocates reccomends looking up reviews for your potential management company and asking people who currently have an apartment managed by that company if possible. Landlords tend to assume that tenants are not aware of their rights - which is often correct - thus charge tenants illegal fees or other things landlords are not permitted to do. Additionally, landlords cannot enter your apartment without your permission!
Tenant rights in New York City: http://www.nyc.gov/html/hpd/html/tenants/tenantsrights.shtml
Tenant Rights in Boston: http://www.mass.gov/ocabr/docs/tenantsrights.pdf
When seeing apartments keep these questions in mind:
- Is there a dishwasher?
- Is there a washing machiene & dryer? If so, where are they?
- Is there a basement? Look and smell around for mold. Look for wet spots and water damage. This should be done in the bathrooms too. Mold can bother your allergies, cause or worsen asthma, or cause more serious health issues.
- Are there signs of pests? Look for chewed corners or holes in ceilings or walls.
- Noise. Know who your neighbors are. College students tend to make more noise than the elderly. If you plan on having loud gatherings or want a peaceful experience, make sure to take notice of your surroundings.
Things to make sure you take note on a lease before singing:
- Amount needed to secure your apartment & get it off the market - usually first & last months rent and a security deposit (typically 1 months rent - more then that is illegal)
- If utilities are included
- Ability/provisions for subletting
- If pets are allowed (if so, if there is an extra deposit)
- Key deposits (front & unit door, mailbox, gate, or parking lot entry)
- Rules of conduct, quiet hours, & guest policy
- Parking policy & fees
- Rent due date and where/who it needs to be paid to
- If there are any repairs you need done prior to moving in & dates for these repairs or cleaning of the carpets. Make sure you have a phone number and email address to use to request maintenance
- How you will do your laundry
- Where and when to dispose of your garbage & recycling
Lastly, before you see apartments with your realtor be aware of the realtor fee. This fee is typically (and cannot be more than) 1 months rent.
Credit Advocates strives to get as much useful information out to the public as possible. If there is an unanswered question on Housing OR Credit Counseling email me at rsimon@creditadvocates.org and I will answer any & all questions here on the blog!
Protecting your rights begins by knowing your rights!
Thursday, January 16, 2014
Federal Housing Administration Loans
The Federal Housing Administration (FHA) has been helping people become homeowners since 1934. The FHA is part of the Department of Housing and Urban Development (HUD) Office of Housing. The FHAhas helped finance military housing for returning veterans and their families during the 1940s. Since the 1940s, FHA programs have aided in the production of millions of units of privately-owned apartments for the elderly, handicapped, & lower income Americans. The FHA and HUD have insured over 34 million home mortgages and 47,000 multifamily project mortgages since 1934. Currently FHA has 4.8 million insured single family homes and 13,000 insured multifamily projects.
FHA Loan Programs
Refinance Programs
- Loans do not have to be FHA loans to be refinanced into a FHA loan
- Increased loan limits allow a low rate on loan amounts up to $729,750 in some counties - click here to see the loan limit for your county
- Refinance up to 97.75% of your home's value
- Apply here to learn if you qualify to refinance your mortgage into a fixed FHA mortgage & no out of pocket closing cost
- With the the help of FHA you maybe able to refinance your home into a lower monthly payment & be assured that your monthly principle & interest payments never increase
Home Purchase Mortgage
- The most important step in purchasing a new home is getting a pre-approval letter for a home loan
- A pre-approval letter allows you to look for a home and make an offer while giving the seller confidence in you as a buyer because you have already been pre-approved for your loan amount
Types of FHA Mortgages
- HUD offers temporary FHA Jumbo loan limits ranging from $271,050 to $729,750
- Change in loan limit intended to provide economic stability to America's communities and the maximum amount will only be applicable to high-cost metropolitan areas
- Previously the loan limits for high-cost metropolitan areas were capped at $362,790 however the Economic Stimulus Act of 2008 permits the FHA to insure leans on amounts up to 125% of the area median house price
Home Improvements
Guidelines for Home Improvement Loans (Purchase or Refinance)
- Section 203(k) program is the department's primary program for the rehabilitation and repair of single family properties
- This is an important tool for community & neighborhood revitalization and for expanding homeownership opportunities
- Apply here to see if you prequalify for the FHA 203K Rehab Loan
Reverse Mortgages
FHA Assistance for Seniors
- Homeowners 62 and older who have paid off their mortgages or only have a small balance remaining are eligible to participate in HUD's reverse mortgage program
- Homeowners receive payments as a lump sum or on a monthly basis (for a fixed term for a long as they live in the house) or on an occasional basis as a line of credit
- Unline typical home equity loans, a HUD reverse mortgage does not require repayment as long as the borrower lives in the home - lenders recover the principal plus interest when the home is sold & the remaining value goes to the homeowner or whomever he/she stated
- There are no asset or income limitations on borrowers receiving HUD's Reverse Mortgages & there are not limits on the value of homes qualifying for a HUD Reverse Mortgage
- See if you prequalify online for a HUD Reverse Mortgage here
Home Equity Loans - Home Equity Line of Credit (HELOC)
A Home Equity Loan or Line of Credit may be right for homeowners who prefer:
- Access to funds for a one-time expense
- Security of a fixed interest rate & fixed monthly payment
With a Home Equity Loan you get:
- The full loan amount up front
- Fixed interest rate
- Fixed monthly payment
- Predictable payoff schedule
- A Home Equity Line of Credit (HELOC) is a home loan that permits borrowing up to a pre-approved "credit line" using their home's equity
- FHA HELOC is credit that allows the homeowner to borrow up to a pre-determined amount set by the mortgage lender unlike a conventional home loan when the amount borrowed is the total amount financed
- HELOC allows flexibility to choose how you receive and use your money
- Apply here to prequalify
VA Loan Programs
- Veterans, active duty military personnel and certain members of the reserves and National Guard are offered a special VA Home Purchase Program & VA Refinance Loans
A to Z FHA Program Index
Online Prequalifications
Contact an Expert at FHA!
All Credit & Housing Counseling questions can be emailed to rsimon@creditadvocates.org. Don't forget to return to Credit Advocates' blog to continue learning about other Housing and Credit Counseling topics!
rsimon@creditadvocates.org | creditadvocates.org
FHA Loan Programs
Refinance Programs
- Loans do not have to be FHA loans to be refinanced into a FHA loan
- Increased loan limits allow a low rate on loan amounts up to $729,750 in some counties - click here to see the loan limit for your county
- Refinance up to 97.75% of your home's value
- Apply here to learn if you qualify to refinance your mortgage into a fixed FHA mortgage & no out of pocket closing cost
- With the the help of FHA you maybe able to refinance your home into a lower monthly payment & be assured that your monthly principle & interest payments never increase
Home Purchase Mortgage
- The most important step in purchasing a new home is getting a pre-approval letter for a home loan
- A pre-approval letter allows you to look for a home and make an offer while giving the seller confidence in you as a buyer because you have already been pre-approved for your loan amount
Types of FHA Mortgages
- Fixed Rate Mortgages (Section 203b) - FHA issues mortgages made by qualified lenders to people purchasing or refinancing a home of their own
- Adjustable Rate Mortgages (Section 251) - Insures home purchasing or refinancing loans with interest rates that may increase or decrease over time, enabling customers to purchase or refinance their home at a lower initial interest rate
- Graduated Payment Mortgages (Section 245) - Enables a household with limited income but is expected to raise the total income to buy a home sooner by making mortgage payments which increase in size
- Growing Equity Mortgages (Section 245a) - Alike the Graduated Payment Mortgages, enables a household with limited income but is expected to raise the total income to buy a home sooner by making mortgage payments which increase in size however, the increased payments are applied to reduce the principal owed on the mortgage thus shorten the mortgage term
- Energy Efficient Mortgages - Energy Efficient Mortgages Program (EEM) helps homebuyers or homeowners save money on utility bills by enabling them to finance the cost of adding energy-efficient features to new or existing housing as part of their FHA-insured home purchase or refinancing mortgage
- Mortgages for Condominium Units (Section 234c) - Insures the loan for units bought within a condominium building
- HUD offers temporary FHA Jumbo loan limits ranging from $271,050 to $729,750
- Change in loan limit intended to provide economic stability to America's communities and the maximum amount will only be applicable to high-cost metropolitan areas
- Previously the loan limits for high-cost metropolitan areas were capped at $362,790 however the Economic Stimulus Act of 2008 permits the FHA to insure leans on amounts up to 125% of the area median house price
Home Improvements
Guidelines for Home Improvement Loans (Purchase or Refinance)
- Section 203(k) program is the department's primary program for the rehabilitation and repair of single family properties
- This is an important tool for community & neighborhood revitalization and for expanding homeownership opportunities
- Apply here to see if you prequalify for the FHA 203K Rehab Loan
Reverse Mortgages
FHA Assistance for Seniors
- Homeowners 62 and older who have paid off their mortgages or only have a small balance remaining are eligible to participate in HUD's reverse mortgage program
- Homeowners receive payments as a lump sum or on a monthly basis (for a fixed term for a long as they live in the house) or on an occasional basis as a line of credit
- Unline typical home equity loans, a HUD reverse mortgage does not require repayment as long as the borrower lives in the home - lenders recover the principal plus interest when the home is sold & the remaining value goes to the homeowner or whomever he/she stated
- There are no asset or income limitations on borrowers receiving HUD's Reverse Mortgages & there are not limits on the value of homes qualifying for a HUD Reverse Mortgage
- See if you prequalify online for a HUD Reverse Mortgage here
Home Equity Loans - Home Equity Line of Credit (HELOC)
A Home Equity Loan or Line of Credit may be right for homeowners who prefer:
- Access to funds for a one-time expense
- Security of a fixed interest rate & fixed monthly payment
With a Home Equity Loan you get:
- The full loan amount up front
- Fixed interest rate
- Fixed monthly payment
- Predictable payoff schedule
- A Home Equity Line of Credit (HELOC) is a home loan that permits borrowing up to a pre-approved "credit line" using their home's equity
- FHA HELOC is credit that allows the homeowner to borrow up to a pre-determined amount set by the mortgage lender unlike a conventional home loan when the amount borrowed is the total amount financed
- HELOC allows flexibility to choose how you receive and use your money
- Apply here to prequalify
VA Loan Programs
- Veterans, active duty military personnel and certain members of the reserves and National Guard are offered a special VA Home Purchase Program & VA Refinance Loans
A to Z FHA Program Index
Online Prequalifications
Contact an Expert at FHA!
All Credit & Housing Counseling questions can be emailed to rsimon@creditadvocates.org. Don't forget to return to Credit Advocates' blog to continue learning about other Housing and Credit Counseling topics!
rsimon@creditadvocates.org | creditadvocates.org
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