Can You Bump Hard Inquiries Off Your Credit Report By Monitoring With Soft Inquiries?

Posts Tagged ‘Student Loans’

Can You Bump Hard Inquiries Off Your Credit Report By Monitoring With Soft Inquiries?

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“Soft” inquiries – even lots of them – will not bump off or remove “hard” inquiries on your credit reports. This is because all inquiries stay on your credit report for two years, and hard inquiries count against you, for the purposes of calculating your FICO scores, for one year.

What Is the Difference Between a “Hard” and a “Soft” Inquiry?

A hard inquiry in your credit file is a record of any application for credit that you made. For example, if you seek a mortgage, student loan or car loan, or even if you apply for a credit card or perhaps request an increase in your current credit card limit, any of these actions can result in an inquiry on your Equifax, Experian or TransUnion credit files. Other business-related transactions can also produce inquiries: Among them: signing a cell phone contract, launching new service with a utility provider (like a local gas or electric company), filling out an apartment rental application, and – as even using a debit card to reserve or pay for a car rental. All of these activities generate inquiries that are known as “hard” pulls. By contrast, when you examine your own credit report, or when an existing creditor does a review of your credit files, those are called “soft” pulls, and they do not impact your credit score. So let’s say you use a credit monitoring service, and you review your credit report each month – or even weekly or daily. Those “soft” inquiries will be noted on your credit files, but they won’t hurt your FICO scores, and they won’t make your “hard” inquiries go away.

Don’t Allow Excessive Hard Inquiries of Your Credit Files

The American Bankers Association says a single inquiry can drop your credit score by 35 points. According to the formula used by Fair Isaac Corporation (the company that created FICO credit scores), inquiries account for 10% of your score. So think about it this way: If your FICO score is 680 points, inquiries account for 68 of those points. Obviously it’s not that simple, because different elements of FICO’s formula are weighted differently, based on a slew of considerations. And inquiries can have a greater or lesser impact on your score depending on the length of your credit history and other factors. Nevertheless, to minimize the impact of inquiries on your credit rating, only apply for credit when you truly need it. And if you have to shop around – say, for a mortgage or a new car loan – do so within a concentrated period of time. FICO executives say that multiple inquiries for auto financing or home loans are treated as a single inquiry, so long as the inquiries all occur within a 14-day period. The idea, according to FICO, is for them to avoid penalizing consumers for shopping around for the best rate.

Are There Any Programs That Can Help Pay Off My Student Loans?

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Author: The Money Coach

Question:

I have a question from one of my readers, who wanted to know about what to do with regard to student loans that they’re not able to pay. The person said, “I currently have about $30,000 in student‑loan debt and have not been financially able to make any payments in about two years. I’ve been out of school since 2006.

Right now, what I make isn’t enough to pay my monthly expenses, such as rent, utilities, groceries, medical bills, et cetera. I was wondering if there are any programs, grants, or scholarships that I can apply for that will help pay off my student loans.

I’m scared to go into the military due to the war, so I don’t feel secure going that route. I also don’t have a state job, currently, or any kind of career that would qualify for the forgiveness program. Do you know of any other options?”

Answer:

Yes, I actually do know of a couple of options with regard to work‑related programs that can help you to pay off student loans. The key one is via the Federal Student Loan Repayment Program. It’s administered through the Office of Personnel Management.

Essentially, if you will work for any federal agency in the government, you could be eligible for student loans to be paid off by the federal government, up to the tune of $60,000. This program will pay off, specifically, $10,000 per year of your federal student loans, up to $60,000.

Again, the catch is you have to agree to work for some agency within the Federal Government. It could be for Amtrak, which is sort of a quasi‑government agency. It could be for the Smithsonian Museum. It could be for the Department of Defense.

It doesn’t have to be for a Washington DC‑based federal entity. You could be working in any state in the country and potentially qualify for the Federal Student Loan Repayment Program. So that’s one.

In terms of grants or scholarships that will help you pay off your student loans, no, I don’t know of any. To my knowledge, there are no such programs. I’ve written an entire book about the subject of student loans. The book is called “Zero Debt for College Grads: From Student Loans to Financial Freedom.”

You mentioned teaching jobs that would qualify for loan forgiveness. Yes, there are certain careers; service‑based careers that would help you qualify for loan forgiveness. Generally speaking, those are available to professionals who work in the following areas: teaching, nursing, the medical field, doctors. People who work in the legal area, as well, often qualify.

Generally, these kinds of loan‑forgiveness programs are deemed appropriate and necessary to help people with student loans who are serving under‑served communities. So, maybe you don’t have to be a teacher, but if you are a social worker, if you are a lawyer helping an indigent group or population, if you are a nurse helping sick people in an area where there is a critical shortage of nurses, those could qualify you for some student‑loan relief programs.

I hope this information is helpful to you. You can certainly visit my blog, AskTheMoneyCoach.com, type in the keywords, “student loan repayments” or “student loan forgiveness,” and read up on the articles that I’ve written on this topic.

Recommended reading: Zero Debt for College Grads
Related video on YouTube

If You Can’t Afford Your Old Student Loans, Why Would You Borrow More? (dailyfinance.com)
Here’s How to Get Your FICO Credit Score Free (askamoneyexpert.com)

Does it make sense to transfer my Sallie Mae loans?

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Author: The Money Coach

Q: I Have Four Stafford Loans With Sallie Mae – Three are Subsidized and One is Unsubsidized. I Also Have One Student Loan with Direct Loan. I am Considering Transferring the Sallie Mae Loans to Direct Loan. Does it Make Sense to Transfer These Loans?

A: When you say “Direct Loan,” I believe you are referring to the U.S. Department of Education’s Direct Loan Program (http://www.dl.ed.gov), where you can transfer and consolidate your federal education loans into a single, new loan which offers lower monthly payments. Whether or not it makes economic sense to transfer the loans depends on a host of factors, including: how manageable (or unmanageable) your monthly payments are; how many payments are left on your existing loan; the amount of time and interest you are willing to pay over time; and the interest rates on your current loans.

If you have variable rates on those Stafford Loans, it may be helpful to consolidate them in order to get a fixed rate. On a Direct Consolidation Loan, the rate is based on the weighted average of all your combined loans, rounded up to the next highest 1/8th of a percent. Your loan rate can never go above 8.25%. There are two quick and easy ways to see the financial ramifications of transferring/consolidating your loans. You can use this online calculator provided by the Department of Education. Or you can simply call the Department of Ed at 800-557-7392 and a customer service representative will be able to tell you your new payments — as well as how much extra you will pay in interest charges by consolidating.

Should I Repay my Stafford Loans Early? (studentloannetwork.com)
Zero Debt for College Grads

Can I walk away from my student loan if I can’t afford to pay it off?

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Author: The Money Coach

Q: I Have a School Loan for Me and My Daughter from 1994. I Have Paid Interest Only and Currently the Balance is $68,000+. My Monthly Payment is $375. I Have Deferred Payments at Least Twice the Past 4 Years. What Options Do I Have Other Than Walking Away From the Loan?

A: Unfortunately, student loans aren’t like mortgage debt. You can’t simply “walk away” from student loans — at least not without very, very severe consequences, and not without those loans haunting you, literally, for the rest of your life. You see, student loans have no “statute of limitations.” So your lenders (whether private lenders or the federal government) can come after you and/or your daughter forever to try to collect. Read this article on how to pay student loans fast, and the links on these posts on student loans too, for some ideas about how to eliminate that student loan debt.

Ask The Money Coach

Posts Tagged ‘Student Loans’