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Credit Freezes Are Now Free

October 10th, 2018 · Credit Repair, Credit Reports

Because of new law signed last May by President Trump, credit freezes are now free at all three credit bureaus. The freezes formerly cost $10 per bureau. Once a report is frozen, it must be thawed and credit “thaws” also used to cost $10 per bureau, making the cost of a credit freeze $60 for a single freeze/thaw cycle. The new law took effect September 21, 2018 and was part of the Dodd-Frank Act. Before the law took effect, Equifax and TransUnion had already quietly waived the fees, but because of the law, Experian must now also offer credit freezes/thaws for free.

What is a credit freeze?

A credit freeze essentially blocks a lender’s access to your credit report. If you are having issues with identity theft, a credit freeze will essentially block a lender from reviewing your credit report information. Without access to your credit report, a lender will not issue new credit, so no new accounts can be taken out in your name. Since different lenders use different credit bureaus, or all three, In order to effectively freeze your credit, you need to freeze your credit reports at each of the bureaus: Experian, Equifax and TransUnion.

A credit freeze will not block existing creditors from looking your credit report, nor prevent you from reviewing your own credit report at websites like is where consumers are allowed pull their credit report for free once per year.
See this article for more information on credit freezes.

Other Credit Report Protections
There are different types of security measures you can take with your credit reports, some of which are not free.

Credit Locks
You can also do a credit “lock.” A credit lock is essentially the same as a freeze, but is supposedly easier, as the lock or unlock process happens instantly. The other difference is that a credit lock costs money at Experian. Like a freeze, you must do the lock at all three bureaus for it to be effective.

Here’s where the gotcha comes in: service agreements for each bureau make it clear that the companies don’t guarantee error-free operation or uninterrupted service. The protections of a credit freeze are mandated by law and can offer better protection.

While all three locks can be done with the aid of an app, there are differences. Experian bundles its lock with another credit report service and charges $9.99/month. It also requires that you waive the ability to enter into a class action lawsuit and mandates arbitration. Equifax and TransUnion do not require you to waive your right to sue, though TransUnion requires you to opt into advertisement of various credit products.

Fraud Alerts
Another type of protection is a fraud alert, which requires credit bureaus to contact you to verify your identity when a company requests your credit file. This isn’t a fool proof system. Under the new law, initial fraud alerts must last for one year once established. Advantages: fraud alerts are free. One other advantage: with a freeze, you must initiate at freeze at each credit bureau, meaning you need to go through the process 3 times and maintain 3 separate PINs. With a fraud alert, placing the alert at one credit bureau automatically places the alert at all three bureaus.

To remove a fraud alert, Experian and Equifax requires that you notify them in writing and submit copies of proof of identity. TransUnion has an online system to remove the fraud alert.
You can have both a credit freeze and a fraud alert on your credit report simultaneously if you want to make your credit report as tamper-free as possible.

Credit Monitoring
With credit monitoring, the consumer is sent alerts when something on their credit reports change. All of the credit bureaus offer this service at a price, though there are some free ways to get credit monitoring. For instance, if you sign up to a website like Credit Karma or have a credit card from a major bank, you are often offered credit monitoring for free. Paying for credit monitoring is not really a good idea. It’s like finding out your home has been robbed and the thieves have already made off with all the loot — doesn’t really do you much good. It just allows you to know there is a problem and take steps to fix the damage, not prevent it in the first place.

Should I do a credit freeze?
Since there is absolutely no cost for doing so, some experts recommend doing the credit freeze permanently, only thawing when you know you are going to apply for new credit. The only things you will have to remember are your PIN (which you are required to create at the time of freezing your credit), and to give the process ample time to thaw your credit file. The process of thawing is supposed to take an hour, but really you should give it three business days so you are not left in the lurch when trying to obtain new credit. Also, since it’s impossible to predict which bureau the lender will use, you will need to initiate the thawing process at all three credit bureaus, then freeze them again when the process is complete.

Even with the well-known Equifax hack which happened in 2017, where millions of American consumers were affected. many consumers did nothing to protect themselves from this potentially serious personal security breach. According to the New York Times, the University of Michigan interviewed 24 people who knew about the breach and its serious nature and found that none of them had taken any steps to protect themselves. These consumers suffered from what the researches called “optimism bias,” which is to say that the consumers believed nothing could really happen to them. In other cases, people with poor credit assumed that because their credit was so terrible, no identity thief using their information would be offered credit. Such people often wake up to unwelcome surprises when reviewing their credit files.

The new law also required that credit bureaus allow parents to freeze their children’s (age 16 and younger) credit reports. Children are commonly the target of identity thieves as their Social Security numbers are untarnished — unused and have no credit data. A person under the age of 18 cannot legally enter a contract without a parent’s permission, so typically, children do not open credit accounts and often a child’s credit report is not reviewed with the frequency as an adult’s. This makes the situation ripe for taking the information and running with it. If the information is obtained early enough in a child’s life, the identity thief could potentially operate for 10 years without being detected.

Where to place a freeze:
TransUnion: Visit The company also has a free-freeze mobile app called myTransUnion, available at the Google Play Store and the Apple App Store.
Equifax: Visit Or call its automated line at 800-685-1111.
Experian: Visit Or call 1-888-EXPERIAN (1-888-397-3742).

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4 Things You Can Do While Waiting to Buy a Home

September 20th, 2018 · Mortgages

If you’re feeling wary about taking on a mortgage right now, you’re not alone. As reported by HousingWire, nearly one-quarter of Americans think high prices make this is a bad time to buy a home. On the flip-side, Yahoo Finance has good news on the same front – experts expect home prices to soften this year. While you wait, take steps to put yourself in the best position for buying a home when the time is right.

Why U.S. Homebuyers are Holding Out

Rising prices

As reported by MarketWatch, over the past year, the median home value has risen by more than 8 percent:

“The national median home value is now $217,300, an increase of 8.3% on the year and 8.4% above the bubble-era peak. In 21 of the nation’s 35 largest markets, the median home value is now at an all-time high.”

Why the price hike? It’s largely due to low inventory.

Rising mortgage rates

As though higher-priced homes don’t make affordability challenging enough, consider the impact of rising mortgage rates, too.

Jonathan Miller, president and CEO of real estate appraisal firm Miller Samuel Inc., told Yahoo Finance that “While the rate increases are currently nominal for Americans living paycheck to paycheck, it’s enough to sway a person’s decision to make that home purchase.”

Wages not keeping pace with inflation

It doesn’t help that inflation is growing at a greater rate than the wages of potential homebuyers.

According to Yahoo Finance, “When you adjust for inflation, wages haven’t risen in a decade, experts note. As the lack of inventory drives home prices up, affordability becomes an issue.

“Wages aren’t keeping pace and consumers are priced out of markets by 6% to 8% — depending on which home price index you look at, in terms of home values and wages.”

Fear of another housing bubble

As stated in the report cited by HousingWire, “We suspect memories of the house price crash 10 years ago are also playing a role in the relatively fast build-up in concerns over high house prices…. An understanding that house prices can quickly lose value is making Americans more cautious about buying a home.”

What to Do While You’re Waiting to Buy

1) Improve your credit
While you can buy a home with subprime credit, you’re much better-served taking the time to improve your credit score first. Otherwise, you’ll be looking at a much higher interest rate that will dramatically increase the cost of your loan.

To improve your credit before buying a home:

2) Do the math
How much home can you really afford? Use our mortgage calculator to figure your monthly payment – and overall loan cost – based on a specific interest rate.

3) Save your down payment
Aim for saving 20 percent for your down payment. Anything less than that may mean paying more, either in the form of higher interest or private mortgage insurance (PMI).

Fortunately, renting right now has its perks in this department.

As reported by MarketWatch, “The median rent nationwide only increased 1.3% over the past year to $1,440, marking the second straight month in which rent appreciation has fallen below the overall rate of inflation.”

In other words, as much as you may dislike renting right now, with rent appreciation falling below the rate of inflation, you’re in a better position to save more.

4) Educate yourself about mortgages
One of the biggest mistakes homebuyers make is going into the process unprepared. This not only means making uninformed decisions; it can also make an already stressful process even more challenging to navigate. So, do yourself a favor and make sure you can answer all the following questions before delving in.

Before You Buy

  • Do you know how to improve your credit first?
  • Do you know the best type of mortgage for you?
  • Do you know how to figure the real cost of your loan?
  • Do you understand underwriting guidelines?

After You Sign on the Dotted Line

  • Do you know how to pay off your loan early?
  • Do you know the alternatives to foreclosure?
  • Do you know how loan modifications work?
  • Do you know how to spot mortgage relief scams?

Find answers to all these questions (and more) in our comprehensive guide to mortgages.

While you may not love waiting to buy a home, it really is in your best interest. Take advantage of all these good things you can do in the meantime to put yourself in the best position once the time is right.

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8 Practical Ways to Keep Yourself Out of Debt

August 6th, 2018 · Debt Management

Debt is easy to get into and can be extremely difficult to get out of. Whether you have recently managed to pull yourself out of debt or are new to the wonderful world of budgeting and financial planning, here are several ways you can prevent getting into the debt trap:

Avoid Using Credit Cards

Owning credit cards is a blessing and a curse. On the blessing side, they are meant to give you instant access to money when you need it for big purchases or emergencies, and credit cards can help you build credit.  On the curse side, they can also be tempting to use for small everyday purchases and can rapidly add to your debt load.  In addition, you can hurt your credit by racking up large balances on your credit cards.

Credit is not free and should only be used when you absolutely need it. In order to avoid temptation and keep yourself from piling up debt, leave your credit cards at home when you are out and about during the day. If a situation arises where you think you need to use your card, you will be forced to go home and get the card, which may make you think twice before making the purchase.

If you are not able to pay off your balance each month, to keep your balances from growing, you need to make more than the minimum payment.  Studies have shown that for optimum credit scores, you need to keep your balance below 30% and preferably under 10%.  In addition, carrying a balance means that you are paying interest on your credit card debt, which is literally throwing your money away.  The money you pay in interest could go towards paying down other debt or go into savings.

Pay for College as You Go

Despite the high cost of college tuition, having a college degree is still an advantage in the working world.  Going to college is an important milestone in life that can open up career pathways and more earnings potential, but it can also leave you paying off a mountain of debt if you do not plan accordingly. Americans owe close to 1.5 trillion dollars in student loan debt.  The average student loan borrowers has $37,172 in student loans when they graduate, a $20,000 increase from 13 years ago.

How to avoid debt while you’re getting your education?  Student loans are much too easy to get, as credit requirements are often waived during the loan process.  Instead piling up student loan debt as convenient way to pay for college, look at other options you may have available:

  • Apply for as many college scholarships and grants as you can before heading off to college. There are many grants available for a variety of life circumstances; doing a little research can turn up hidden pots of money.
  • Instead of attending four years at a university, save money by attending community college first and then transferring credits over to a four year college. If I had to do it all over again, I would definitely have gone to a community college first before completing my degree at ASU.
  • Save up the money you need to pay tuition before you go to school. Delaying college is not necessarily a bad thing.  Some colleges are looking for students with practical life experiences in their college application process.  Many colleges are willing to accept a student who wishes to have a “gap year” in between high school and college.  This could be a prime way to get a job and earn the cash for tuition and expenses before entering school.
  • Get a job to earn tuition money while you are attending. I worked the entire time I was in college, and while it took me an extra 2 years to get my degree, I graduated with minimal student loan debt that I was able to pay off in 3 years.

The 30-Day Rule

Too often people make impulse purchases.  Indeed, merchants spend a lot of time, money and effort placing tempting “good deal” items at the right places their stores that trigger the desire to spend money on items they did not intend to buy when they entered the store.  Costco places a wide variety of items at the building entrance, which may or may not be the best deal for you.

I have what I call the 30-day rule when it comes to buying things.  Mastering the 30-day rule is a personal challenge in self-discipline that will save you lots of money and keep you from piling up debt. The 30-day rule simply means that if you find something you really want, wait 30 days before making the purchase. Oftentimes people will forget or change their mind if they do not make the purchase immediately. You will probably find that many items are not as interesting to you after time has passed. Before you make any non-essential purchase, wait for 30 days to see if you still want the item.

When I shop online at Amazon, I often leave items in my “wish list” or even in my shopping cart for an extended period of time before I buy.  I find many times that my desire to purchase the item was fleeting and I can just delete the items from my shopping cart with no pangs of remorse.

Complete a Spending Fast

A spending fast works much like a food fast you may complete for a diet plan or religious purposes. A spending fast is where you select a set amount of time and refrain from spending any money during that time period. You can complete a spending fast as often as you would like and can put all of the money you saved into a savings account. The more spending fasts you complete each month, the more money you can tuck away for emergencies or to pay down debt.

A good way to set yourself up for this is to anticipate your spending necessities like food, utilities, insurance, rent and car payments at the beginning of the month, then refrain from spending any more money for a week, as your expenses will already have been paid for this time period.   If you successful resist the urge to spend, try and put an amount equal to approximately what you would have spent towards other debt or savings.

Make Spare Money in Your Spare Time

Instead of spending idle time reading old magazines, watching TV, or shopping, use your spare time making some spare money to save or indulge on the things you really want. You can take surveys and work on small tasks with a smartphone, create crafts to sell, or provide a service like mowing lawns or dog walking. Another good way to earn money is to write content for the internet.  Websites are always hungry for new content and you can sell your writing to blogs and article “farms” to earn a little extra money.

The money earned from these odd jobs can be used for fun activities so you are not dipping into your general fund or credit cards while indulging. Building savings to provide that little extra financial cushion is also a great benefit to moonlighting.  You just may find a passion for being an entrepreneur and start the next great business.

Avoid Loans

In my experience as a credit counselor, it seems like people want to fix their credit in order to get into more debt. The two most often cited reasons that I heard in my credit counseling days: the desire to purchase a car or a home.  Yes, they’re necessities of life and most people need a car, unless you’re living in a city with excellent public transportation, but buying a new car or leasing is not a good idea – ever.  You can get a newer car for a fraction of the cost of a brand new car without suffering the drawback of the instant depreciation that occurs when you drive a new car off the lot.   Even buying a home, which is considered an investment, can be a bad idea.  Home prices are approaching an all time high and making a purchase right now may not be the best course of action.

Try to avoid getting a loan for anything. You can save up for a new car, college, and home remodels. Loans are borrowed money that must be paid back, and you will almost always pay interest on money that you borrow. While it may not always be possible to avoid getting a loan, always consider other options before signing the contract.

Build a Solid Savings Account

Emergency expenses can take a bite out of anyone’s budget. Even if your car is running like a clock, if you need new tires, a new set can set you back hundreds of dollars. Many people, when faced with unexpected car repairs or medical expenses, opt to charge away on their credit cards, or worse yet, get a payday loan. Payday loans can charge interest rates over 100%, and severely cripple your ability to get out of a financial hole.

Building an emergency savings account is key for staying out of debt. An emergency savings account will ensure that you have money available to cover life’s unexpected expenses. While it may not be possible for you to save a large reserve of cash quickly, you should make it a point to at least save small amounts of money each time you get paid. Even if you can only afford to put $5 or $10 a week into your savings account, your savings account will grow over time.

Always Look For Discounts

The literature on the subject of budgeting fills library shelves, and while I’m not going to go into everything you need to become a budgeting and money savings champion, here are a few tips:

  • To maximize your savings on goods and services you purchase, always look for coupons, sales, and discounts before buying. It always pays to be a money conscious consumer, and the money you save on things you are going to purchase anyway will help you to be able to tuck money away for a rainy day or pay down existing debt.
  • Before signing up for cable, internet, or other services, be sure to ask about promotional deals for becoming a new customer. If you’re an existing customer, it might be worth a call to cancel these services to see what kind of deal you may get for continuing to be a valued customer.
  • Look for coupons before you head out to the grocery store, and always purchase everyday items when they are on sale.
  • If you are one of the millions of Amazon users, look to see if you can get items that are used instead of new, especially hard back books.

In Summary

Use these simple techniques to keep your financial portfolio clear of unnecessary debt. Getting into debt can be stressful and could actually have negative impacts on your health, well-being, and family life. Debt is very expensive: if you carry a credit card balance for months or years, you can wind up paying more in interest than the original charge for the item.  If you’re already living paycheck to paycheck, your ability to get ahead financially is going to be hindered by large amounts of debt.  For instance: if you are trying to buy a home, having too much debt can cause you to be disqualified from obtaining a mortgage.  By doing some careful planning now, you can avoid paying more money needlessly on burdensome debt and will have a financial cushion available when you need it in the future.

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