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How to Avoid or Recover from Identity Theft: Resilience Education

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Newswise — Identity theft is scary. Experiencing the situation is not only unpleasant, you may have to experience the repercussions for a long time to come.

What happens if it goes on for a long time and you aren’t aware? Some people don’t have the ability to monitor their accounts or receive notices when new accounts are opened in their names.

A PREVALENT EXAMPLE: AN AT-RISK POPULATION  

Imagine this: After 27 months, you have finally finished your prison sentence. In order to begin the process of rebuilding your life and reintegrating into society, you request a credit report to see where you stand. What you learn from the report is that “you” opened several accounts while you were incarcerated, and “you” failed to file a tax return for the income “you” earned during those 27 months incarcerated, which is simply impossible. You are thousands of dollars more in debt than when you went into prison 27 months ago. Your identity has been stolen, and you are not alone; identity theft of prisoners happens much more than you might expect.

While anyone might wake up to find their identity has been stolen, the incarcerated are particularly at risk. Prisoners typically are not allowed to use or monitor their financial accounts, nor do they receive notices of new accounts opened in their names.

According to The Wall Street Journal article outlining the issue, in 2012, “false returns filed with prisoners’ Social Security numbers had surged to about 137,000 … from 37,000 in 2007.”  Identity theft of prisoners is prevalent. Their lack of access to their own financial accounts combined with their vulnerability of having their personal information in the system makes them perfect candidates for an identity thief, and the numbers reflect this. 

A STACKED DECK

For prisoners, with the deck already stacked against them upon release in areas such as the job and housing markets, low credit or debt incurred from identity theft while they were incarcerated adds even more barriers to reintegration into society. A bad credit score impacts one’s life in more ways than this, including but certainly not limited to affecting insurance rates, apartment application approvals, employment opportunities, and even personal relationships, as employers, landlords and banks all have access to credit scores.

These, combined with a prison sentence on your record, can all but assure a struggle to start over, which increases the likelihood of re-incarceration.

Darden Professor Gregory Fairchild wanted to ensure that the students in Resilience Education — a prison business education program he co-founded with Tierney Fairchild — were not only alerted to the dangers of identity theft, but also offered tools to recover their financial lives.

A partnership between the UVA Darden School of Business and Columbia Business School, Resilience Education sends MBA volunteer instructors into prisons to teach cases on entrepreneurship, financial capability and business foundations. These topics provide students the skills, confidence and practical knowledge they need for a successful reentry into society. To date, 93 percent of program graduates, formerly incarcerated, have remained out of prison.

WHAT TO DO ABOUT IT: A GUIDE FOR EVERYONE

An original Resilience Education case offers these four tips to protect yourself against identity theft and five steps to recover from a stolen identity.

IDENTITY THEFT PREVENTION: 4 TIPS

  1. Use only secured websites for shopping (the URL should start “https://”), and avoid giving out sensitive information while using public Wi-Fi. For example, do not log in to your bank account while on a public Wi-Fi connection.
  2. Your passwords need to be hard to guess: ideally, a random combination of letters, numbers and characters. Keep these passwords in a secure place.
  3. Request a free copy of your credit report each year, and check it thoroughly for any accounts you did not open.
  4. Consider subscribing to a reputable credit monitoring company, like one with your bank or credit card company. Keep track of any alerts they sent about new accounts opened or potential identity theft issues.

IDENTITY THEFT RECOVERY: 5 STEPS

  1. Create an initial fraud alert, informing credit bureaus about the identity theft to stop the thief from opening any more accounts.
  2. File an identity theft report with the Federal Trade Commission, also known as a complaint report. This information will form an Identity Theft Affidavit.
  3. File a report with your local police and any locations listed on your credit report.
  4. Call the Internal Revenue Service’s Identity Theft Protection Unit and complete any necessary paperwork. Repeat the same steps with the state income tax office.
  5. Depending on your circumstances, alert the credit card companies, banks and/or employers with whom there has been fraudulent activity in your name:
  • For credit card fraud, contact each credit card company, review all accounts and charges made in your name, and send each company a copy of your identity theft report.
  • For bank fraud, contact each bank to request any applications submitted in your name and to send a copy of your identity theft report.
  • If someone has been working using your social security number, contact the Social Security Administration to report the misuse, and ask employers for any related information (addresses, phone numbers) to pass along to police.
  • Be sure to forward any new information you receive to the police.

For more information, the Federal Trade Commission offers further free resources, including templates for reporting identity theft.
Gregory B. Fairchild, Tierney Fairchild, Christina Black and Liz Ivaniw Jones wrote the case Tentacles (Identity Theft) (Darden Business Publishing).

This article was developed with the support of Darden’s Institute for Business in Society, at which Rebecca Little is a research assistant.



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Cleaning up your credit safely

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TUCSON, Az. (KGUN) — Americans who are dealing with financial hardship because of job loss and aftermath caused by the pandemic could be struggling to make ends meat and in some cases they might be racking up credit card debt or they’re simply late on paying bills.

KGUN 9 caught up with Sean Herdrick with the Better Business Bureau of Southern Arizona who says there are ways to get your credit fixed but you have to be careful about who’s handling your situation because they can take your money and leave you with bad credit.

“To see how many 1-star ratings there are for credit companies is frightening. They promise you they will do all of this stuff for your credit, get things taken off. Negotiate with your creditors. They’ll ask for a fee up front, you send them the fee and they never come back to you,” Herdrick said.

According to the BBB you can check their website to find out details about how a company operates. And while there are three common ways to fix your credit. It’s also a good idea to get schooled on extra fees.

“We vet the companies we accredit and if you find an accredited credit business chances are they’re doing a good job and they’re going to help you out. Credit counseling and that’s probably the best way. There’s also debt relief or settlement companies where they offer to settle your debts for you or come up with a plan to do that and a debt consolidation company they will offer a loan at a lower interest rate to help pay off all of your debts at once,” Herdrick said.

The U.S Department of Commerce released data that says Americans are spending their stimulus checks on clothing and sporting goods while others are using it for bills to fend off financial ruin and get their credit back on track.

“Do your research make sure the company you hire can give you what you need,” Herdrick said.

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Taking A Joint Home Loan Can Benefit You. Here’s Why – Forbes Advisor INDIA

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In India, buying a home is mostly the single largest investment made by an individual during their lifetime. As our families expand, we plan for the future and plan to invest in bigger homes that can comfortably accommodate and protect a growing family. However, such dream houses come at a significant cost, warrant access to huge funds, and hence, require key financial planning.

In most cases, individuals need to opt for home loans to fulfil the cost obligation associated with buying a house. Considering the amount and type of loan taken, there are certain eligibility criteria that one needs to be aware of before initiating applications. 

At the time of taking a home loan, your lender or you may wish to add another applicant, also called co-applicant, to your home loans for various reasons and the structure of having a co-applicant is referred to as a joint home loan. 

Let’s understand when and why should you take a joint home loan. 

Role of a Co-applicant in a Joint Home Loan

A lender while considering applications simply wants to check if the borrower can repay the home loan along with their household expenses and existing loans. Therefore, while calculating your eligibility they generally keep aside a certain fixed portion of your income that covers your existing expenses. An individual’s eligibility is decided on the basis of the discretionary amount left post calculating their interest repayments and monthly instalments. 

In a joint home loan, you can add another co-applicant or applicants who becomes liable to pay the home loan along with the primary applicant. Liability of the loan is a collective responsibility on both or all the co-applicants as well. Generally, immediate family members, including father, mother, spouse, children, and brother, are most eligible to become co-applicants in joint home loans. 

With such arrangements the question that mostly arises is whether the co-applicant is also the co-owner of the home being considered. Co-applicant or co-applicants may or may not be the co-owner of the property, however they have a liability to pay back the loan. The co-owner of the property is a joint owner along with other owners. 

As a safeguard and prudent underwriting practice, lenders ask all co-owners to also become co-applicants in home loans, however, the reverse need not be true. This is a decision the pros and cons of which should be carefully considered by the primary applicant while choosing joint home loans.

Why Choose a Joint Home Loan Over Any Other Loan 

There are a number of additional advantages in considering taking a joint home loan as compared to an individual home loan. These include higher loan amount eligibility, lower interest rates and other income tax benefits. 

Higher Loan Amount Eligibility: When you add an income-earning co-applicant to a loan, the lender considers the income level of all the applicants and calculates an eligibility amount higher than that of only one individual applying for a home loan. This allows applicants or families to take a larger home loan amount or purchase a more aspirational home since the room for increasing an applicant budget is possible. 

Lower Interest Rates: In order to avail lower interest rates individuals can add their spouses or mother as co-applicants for a joint home loan and as a joint property owner. This is useful as most lenders in India offer a lower rate of interest to women borrowers. It is up to 10 to 25 basis points lower than the interest rate for male borrowers. 

Tax Benefits: Tax benefits can be enjoyed by all the co-applicants separately. For this to happen, co-applicants should be property owners as well and should contribute to the payment of monthly instalments towards the repayment of the home loan. 

Income Tax benefits that are available to the all co-applicants include: 

  • Benefit under Section 80 C of the Income-Tax Act for the loan’s principal payment up to a maximum limit of INR 1.50 lakh per year. 
  • Benefits under Section 24 of the Income-Tax Act for interest paid on a home loan up to INR 2 lakh per year. 
  • In a joint home loan, both the applicants can claim the above amounts individually and use this as an effective tax planning tool

Co-applicants and first-time loan applicants can utilise the joint home loan as a great tool to improve their credit score, thereby easing the process for future loan applications as and when required for various other purposes. 

Necessary Documents Needed for a Joint Home Loan

Documentation is the most cumbersome and tiring part of taking any loan. However, it is a critical part of any lender’s operations as they would want to make sure that their borrower meets income eligibility and supporting documents are provided. 

There are a number of regulatory guidelines for the know your customer (KYC) and property-related documents, where it is imperative that all accurate documentation is shared to avoid unnecessary rejections and thereby delaying the availability of funds. 

For any home loan, typically an applicant needs to provide the following: –

  • KYC documents which include:
    • Identity Proof
    • Address Proof 
  • Income proof documents including but not limited to:
    • Salary slips, Form 16 issued by your employer or
    • Income tax returns (especially for self-employed) of the last three years
  • Property related documents such as: 
    • Agreement to sell, a sale deed or a registry 
    • Previous sale deed for the property (typically all transactions done on that property in the last 13 years) 
    • Few property or location-specific documents like a no-objection certificate (NOC) from relevant authorities or from your bank if the project is funded by any financer in case you are buying new property from a builder.

All applicants need to provide their KYC documents regardless of whether they earn an income or not or whether they even co-own the property. 

If you are applying for a joint home loan mainly for higher eligibility wherein the income of other applicants also needs to be considered, then income documents of all the applicants will be required to be shared with the lender in addition to KYC documents.  

If your purpose is to save on stamp duty charges by adding a female member of the house as a co-owner of the property, then you must make sure that the draft agreements and final sale deed or the registry documents have relevant members stated clearly as co-owners. 

If you are a nonresident Indian (NRI), you can issue a registered power of attorney (POA) in favour of a trusted family member for them to execute the necessary documentation on your behalf. However, you must ensure that the exact purpose of the required transactions are mentioned in the POA, thereby easing the process for compliance and reducing chances of rejection.

Factors to Consider Before Applying for a Loan

Before even applying for a joint loan, it is important to fully understand the lenders’ conditions, which differ depending on the provider you’re considering to approach. 

Lending Conditions

  • If the property has co-owners, in such a case, the lender, in all likelihood, insists all co-owners to become co-applicants as well. 
  • The lender may also insist any or one of your family members become co-applicants in the case of an NRI loan. 
  • If you have given the power of attorney to any of your family members, the lender is likely to insist one of the family members is available in the country as co-applicant for follow-ups and communication purposes to minimize repayment risks.

Credit Score Reports

It is always better to check your and the other co-applicant’s credit score and bureau report prior to applying. This will help to ensure that you are aware of all your past and current loans along with their performance over time. 

In some cases, if it is observed that you may have an old credit card with some minor payment overdue or incorrect reporting by any financial institution, it may lead to the possibility of hampering your overall credit score, reducing the chances of approval.

In India, there are primarily four credit bureaus via which you can check your credit report. Any bureau after paying relevant fees, which is about INR 500, will process your credit report. These credit bureaus include CIBIL, Equifax, CRIF Highmark and Experian.  

When to Avoid Taking a Joint Home Loan?

When a co-applicant already has significant loan obligations and is not left with sufficient income to be eligible for a higher home loan amount, it is generally advisable to reconsider taking a joint home loan and instead consider an individual home loan.

Healthy credit history is very important for lenders while considering applications and a co-applicant who has a bad credit history or poor track of repaying past loans is a major factor while assessing the eligibility of a new loan. 

If your income is sufficient to cover costs with no additional benefits available in terms of tax write-offs, it is suitable for you to avoid a joint home loan and keep the responsibility of your liability limited.

Joint home loans are also best avoided if there is a plan for taking on a larger liability or loan in the near future as the joint loan may impact the eligibility criteria of future loans due to existing liabilities.

Bottom Line

A joint home loan is a beneficial financial tool with the potential of helping the borrower secure higher loan amounts. 

It can aid individuals significantly improve their spending power and investing threshold while buying a larger and more comfortable home and at the same time keeping the primary applicant’s liabilities manageable by sharing the repayment burden with other co-applicants. 

If utilized correctly, it can help you enjoy higher tax benefits, while simultaneously reducing overall tax outgo on a yearly-basis. 

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Fixed-rate student loan refinancing rates inch up, but still hover near record low

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Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

The latest trends in interest rates for student loan refinancing from the Credible marketplace, updated weekly.  (iStock)

Rates for well-qualified borrowers using the Credible marketplace to refinance student loans into 10-year fixed-rate loans hit another low during the week of April 12, 2021.

For borrowers with credit scores of 720 or higher who used the Credible marketplace to select a lender, during the week of April 12:

  • Rates on 10-year fixed-rate loans averaged 3.78%, up from 3.73% the week before and down from 4.81% a year ago. The record low for 10-year fixed rate loans was 3.71%, during the week of Feb. 15, 2021.
  • Rates on 5-year variable-rate loans averaged 3.26%, up slightly from 3.13% the week before and down from 3.28% a year ago. Variable-rate loans recorded a record low of 2.63% during the week of June 29, 2020.

Student loan refinancing weekly rate trends

If you’re curious about what kind of student loan refinance rates you may qualify for, you can use an online tool like Credible to compare options from different private lenders. Checking your rates won’t affect your credit score.

Current student loan refinancing rates by FICO score

To provide relief from the economic impacts of the COVID-19 pandemic, interest and payments on federal student loans have been suspended through at least Sept. 30, 2021. As long as that relief is in place, there’s little incentive to refinance federal student loans. But many borrowers with private student loans are taking advantage of the low interest rate environment to refinance their education debt at lower rates.

If you qualify to refinance your student loans, the interest rate you may be offered can depend on factors like your FICO score, the type of loan you’re seeking (fixed or variable rate), and the loan repayment term. 

The chart above shows that good credit can help you get a lower rate, and that rates tend to be higher on loans with fixed interest rates and longer repayment terms. Because each lender has its own method of evaluating borrowers, it’s a good idea to request rates from multiple lenders so you can compare your options. A student loan refinancing calculator can help you estimate how much you might save. 

If you want to refinance with bad credit, you may need to apply with a cosigner. Or, you can work on improving your credit before applying. Many lenders will allow children to refinance parent PLUS loans in their own name after graduation.

You can use Credible to compare rates from multiple private lenders at once without affecting your credit score.

How rates for student loan refinancing are determined

The rates private lenders charge to refinance student loans depend in part on the economy and interest rate environment, but also the loan term, the type of loan (fixed- or variable-rate), the borrower’s credit worthiness, and the lender’s operating costs and profit margin. 

About Credible

Credible is a multi-lender marketplace that empowers consumers to discover financial products that are the best fit for their unique circumstances. Credible’s integrations with leading lenders and credit bureaus allow consumers to quickly compare accurate, personalized loan options ― without putting their personal information at risk or affecting their credit score. The Credible marketplace provides an unrivaled customer experience, as reflected by over 4,300 positive Trustpilot reviews and a TrustScore of 4.7/5.

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