Credit Freeze & Fraud Alert
Updated November 2, 2019 . AmFam Team
If you find yourself the victim of identity theft, you may not know where to turn or what to do. Sometimes, you’ll get a call from your bank letting you know that your identity, or personally identifiable information like your name, address — even your social security number — has been compromised. They may offer up a few suggestions on what to do next with initial fraud alerts like these. What if you get the wrong advice? Is “watching and waiting” really a good strategy?
Fraud alerts and credit freezes are two primary ways that can help to halt new credit applications from proceeding, but which one’s right for you? And what are the risks? Take a look at our tips on how to lock down credit history inquiries and limit access to your data so you’ll have a better idea of what to do if the unexpected should happen to you.
What Is a Credit Freeze?
Credit freezes are designed to lock down access to your credit report — and thereby shut down any new credit applications. Because lenders won’t be able to assess your financial data or see your payment history unless you allow them access with your PIN, any and all new attempts to ping your credit report will fail when you freeze your credit. If you’ve suffered a financial loss as a result of an ID theft, a credit freeze may be a step in the right direction.
What are the pros and cons of a credit freeze?
Building up a positive credit profile is key if you’re in the process of saving for a home. If your personal information has been compromised in the past, it may be wise to contact the bureaus and place a freeze in order to help ensure stability of your credit profile.
One real benefit to executing a credit freeze is the ability to selectively turn it on and off with your PIN. After you launch a freeze, you’ll be issued a PIN by the individual bureau. So, you’ll need to keep track of three different PINs when a freeze is active. If you want to grant a qualified lender or other group access to your credit history, they can get the data they need to make an informed decision about your credit-worthiness after you provide that PIN.
When you’ve got a credit freeze in place, you’re dependent on that PIN to grant access or even lift the freeze altogether. If you lose that PIN, you’ll need to go through heightened measures — which can vary by credit bureau — to prove your identity, and that can be a difficult process to navigate.
Find the Right Coverage for Your Home and Your Identity
So, there you have it — two different ways to keep tabs on your credit profile to better manage your online financial data. Tools like these help you to take control of your financial history and realize your dreams. Another key way to build out protection for everything that means so much is with a well-tuned homeowners insurance policy. Get in touch with your American Family Insurance agent today and check out your coverage options. You’ll find real peace of mind with our easy to understand policies and protection.
This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal or financial advice. You should contact a professional for advice specific to your situation.
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After college, life moves fast. You get your first big job, move out of your parents’ house and start a whole new life on your own. For most people, this also means paying off student loan debt from your college tuition. Having this debt may make big milestones like buying a house seem far off, but there are ways to make the leap from renter to homeowner even if you have student loans. So can you get a mortgage while also paying off student debt? Or should you wait to pay it off before you buy a house?
Every situation is different, so it’s important to do the right research and choose the best option for you. Luckily, we’ve done some of the breakdown for you to help you decide whether to pay off your student loan entirely or buy a house.
Can Student Loans Affect Buying a House?
Typically, student loan debt doesn’t prevent you from getting a mortgage. The biggest thing to note is that student loan debt does influence your debt-to-income ratio, which is a factor lenders consider before giving you a loan. It can also affect the interest rate you pay on your mortgage.
Buying a house with defaulted student loans
If you’ve defaulted on your student loans, it’ll be more difficult — but not impossible — for you to get a mortgage. Because defaulting negatively affects your credit score, lenders will be less likely to want to give you a loan or will charge a much higher interest rate on a loan.
Getting a home loan with student loan deferment
If you’ve deferred your student loans, this usually won’t affect your chances of getting a mortgage. Just be sure to consider how the future estimated payments will factor your debt-to-income ratio. Some types of mortgages may reject applicants with deferred loans, so do your research on the different types of mortgages before shopping.
Should You Pay Off Student Loans Before Buying a House?
Buying a house is expensive, there’s no doubt about that. It can seem smart to hold off on house shopping while you still have student loan debt, and it can be even more difficult to save for a house if you’ve got a high debt-to-income ratio. But if you have enough income to handle the payments for both, you may want to consider investing in your first home.
Signs You Should Pay Off Student Loans
When considering whether to pay student loans or save for a house, there are a few factors that can help you decide if paying off your student loans should be a priority.
Your debt-to-income ratio is too high
If the amount of money you bring in monthly or yearly is almost the same as the amount of money you pay out in debts — like student and car loans or credit cards — it may be best to pay down your debt before buying a house.
You’ve defaulted on your loans
Defaulting on your loans has a severe negative impact on your credit score, which tells lenders that you’re a bigger risk to take on. Work on improving your credit score before shopping for a mortgage.
You’re struggling to make payments
If you feel like you’re living paycheck to paycheck or struggling to make payments on your loan every month, it’s best to hold off on saving for a house. Need help keeping track of your student loan payments? Try our student loan payment tracker to get organized.
You haven’t saved for a down payment or emergency fund
Before you start picking out which houses you want to tour, you should take a look at your savings. If you don’t have enough for a 5 to 10 percent down payment or enough as an emergency fund for home expenses — like a broken dishwasher or damaged roof — take more time to put money away for your first home.
