College Students and Recent Grads

Does a Tuition Installment Plan Make Sense for You?

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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If you’re a student who is short on cash, but you want to avoid student loans, you might be considering a tuition installment plan, but before you enroll, read the plan agreement and do a bit of math. In most cases, the tuition installment plan is a bad deal for you.

What is a tuition installment plan?

A tuition installment plan allows you to pay your tuition in monthly payments that last twelve months or less (sometimes as few as three installments). You can expect to pay an enrollment fee, but you won’t pay interest. Universities limit the amount of money you can pay through tuition installment plans, so the remainder of your tuition bill needs to be covered in cash or by student loans.

What are the installment plan fees?

Enrollment fees vary by university, but you can expect to pay anywhere from $25-$100 to enroll in a tuition payment plan. For example, Virginia Commonwealth University charges a nonrefundable $25 application fee to enroll in the tuition installment plan, while Howard University charges a $45 fee, and Rutgers charges a $60 fee for an annual plan or $50 per semester. If you pay your installment late or incompletely, you can expect to pay a late fee of $10-$35 per installment.

What happens if I don’t pay?

If you don’t pay your installment payments, the university will roll your payments into an “emergency” loan where interest begins accruing immediately, and payments are immediately due. You may be able to take out student loans to pay off the emergency loan, but you may be stuck with the loan going forward.

Once your tuition installment plan converts to a loan, creditors view it like any other loan. This means that failing to pay it will lead to credit problems. Additionally, your school may put a hold on your credentials or not allow you to enroll in classes until the loan is current.

Information about what happens if you don’t pay will be available in an agreement that you need to sign prior to enrollment. Read the agreement prior to enrolling in a tuition installment plan.

Will Tuition Installment Plans save you money?

You won’t save much money paying through a tuition installment plan compared with subsidized student loans. Sallie Mae offers a calculator that calculates the amount of interest you will accrue on a student loan if the loan goes completely unpaid. Compare the accrued interest to the the tuition installment plan enrollment fee to see if you have the potential to save money.

Tuition installment plans sound like interest free loans, but they tend to be a bad deal for students. You’re locked into payments during school, and you save little (or nothing) compared to subsidized student loans. Since enrolling in tuition installment plans requires filling out a FAFSA, you won’t save time enrolling in TIP(s) vs taking out loans.

When should I consider Tuition Installment Plans?

Tuition installment plans have a useful psychological value. If a required payment keeps you from wasting money or from taking on debt for lifestyle purchases, then you should consider it whether or not you save money compared to student loans. If you have a moral or religious objection to debt, installment plans allow you to cover a small gap without interest bearing debt (but be aware that if you fail to pay, you’re taking on a loan).



What Credit Score Do You Really Need for a Mortgage?

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Young Couple Moving In To New Home Together

When it comes to qualifying for a mortgage, your credit score is everything.

If your credit score is below the minimum cutoff, you will be rejected. But even if you are approved, your exact credit score will have a big impact on the total cost of your mortgage. The higher your credit score, the lower the interest rate you will pay.

The vast majority of mortgages in America are either “conventional” (which means the mortgage will be purchased by Fannie Mae or Freddie Mac) or “FHA.” If you are applying for a conventional or FHA mortgage, this post applies to you.

We will explain:

  • Which version of FICO will be used to determine your score
  • Which credit score will be used when your score differs by bureau
  • Which credit score will be used if you have a co-signer with a different score
  • What minimum credit score you must have in order to qualify and what scores generally get the best interest rates
  • Why you could still be rejected even if your score is above the minimum required
  • What to do if you don’t have a credit score

Which Version of FICO Will Be Used

There are a lot of “free credit scores” available. You might see your “official FICO” on your credit card statement, or you could be a customer of Credit Karma. Unfortunately, none of these scores are being used by conventional or FHA mortgage lenders. Ironically (and almost shockingly), older versions of FICO are still being used to make lending decisions. The version of the FICO score depends upon the credit bureau, and most lenders will pull reports from all three bureaus. Here are the scores you need:

  • From the Equifax credit bureau: FICO Version 5 (also called Equifax Beacon 5.0)
  • From the Experian credit bureau: FICO Version 2 (also called Experian/Fair Isaac Risk Model V2SM)
  • From the TransUnion credit bureau: FICO Version 4 (also called TransUnion FICO Risk Score, Classic 04)

The only way to get access to the credit scores used by mortgage lenders is to purchase your credit score from FICO. For $59.85 you can make a one-time purchase of all of your credit scores, including the relevant mortgage scores at This is a steep price to pay, and for many people it is not necessary. Although the VantageScore (available at Credit Karma) and FICO Version 8 (which many credit card issuers share) are not the exact scores used in mortgage lending, they can be useful. If your credit score is above 740 on all of your “free” scores, you can feel highly confident that your mortgage scores will also be above 740. However, if your score is below 740, you might want to invest in knowing exactly what mortgage lenders will see.

Although FICO has made enhancements with each new credit scoring model (for example, there is now a FICO 9), the general rules have not changed. You will have a good score if you make your monthly payments on time, keep your credit card balances and utilization low, and avoid collection items and judgments. (You can learn more with our credit score guide).

What If My Score Differs Between Bureaus?

There are three national credit bureaus: Equifax, Experian, and TransUnion. Sometimes creditors or collection agencies do not report to all three bureaus. As a result, your credit score could be different at different bureaus. For example, a collection agency might have registered a collection item on only one credit bureau. As a result, your score could be 750 on one bureau (without the collection item) and 650 on the other bureau (with the collection item).

The rules are relatively simple:

  • If the mortgage company pulls a credit report from all three credit bureaus, it will use the middle credit score (not the lowest or the highest score). For example, if you have a 650, 680, and 710 across the three bureaus, the middle score of 680 will be used.
  • If the mortgage company only pulls two credit bureaus, the lower credit score will be used.

Most mortgage companies will not tell you their methodology. The only reason a mortgage company would limit the number of credit bureaus it uses is to save on costs. And it would not be in the interest of a mortgage company to advertise that it “does not pull from Experian.” If it did advertise that way, people with something to hide on the Experian credit bureau would apply in droves.

What If I Have a Co-Signer?

When two people apply for a mortgage, the rules are simple: the lower credit score is used.

A credit score will be assigned to each borrower, using the methodology described in the previous section (the middle of three scores or the lowest of two scores). The lower of those two scores would then be used.

Imagine two borrowers had the following scores:

  • Borrower A: 660, 680, and 700
  • Borrower B: 710, 720, and 730

Borrower A’s score would be 680 (the middle score), and Borrower B’s score would be 720 (the middle score). For the purpose of the loan application, the lower of the two scores would be used. So the official credit score for this application would be 680.

What FICO Score Do I Need to Qualify?

Each agency (Fannie Mae, Freddie Mac, and FHA) sets its own minimum credit score requirements. If your score is below the minimum, you will be rejected. However, having a credit score above the minimum does not mean you will automatically be approved. You will still have to pass other credit criteria (for example, debt burden and other rules).

Here are the minimum credit scores required by agency:

  • Fannie Mae and Freddie Mac: minimum credit score of 620.
  • FHA: minimum credit score of 500 with a 10% down payment. Once your score is above 580, you only need a 3.5% down payment.

In order to have the lowest rate, you will want your credit score to be above 740 and your LTV — loan-to-value ratio — to be below 60%. However, regardless of LTV, the lowest interest rates tend to go to people with scores above 740.

Lower credit scores become even more expensive when you have a smaller down payment. For example, if you have a 30% down payment and a 620 credit score, you would pay 1.25% more than someone with a 740 credit score. However, if you only have a 10% down payment, a 620 credit score will have a 3% higher interest rate than someone with a 740.

If you have a low credit score and a small down payment, it almost always pays to wait. Increase your down payment (by saving) and improve your credit score before applying, because the savings can be significant.

3 Reasons You Can Still Be Rejected for a Mortgage Loan

You might have a great credit score, but your mortgage application could still be rejected. Here are the three main reasons why:

  1. Many mortgage lenders have stricter requirements than the “minimum” set by the mortgage agencies. The government agencies (Fannie Mae, Freddie Mac, and FHA) set minimum standards. As a mortgage company, so long as your mortgages meet those minimum standards, you can sell the mortgages to the agencies. However, if too many borrowers of a mortgage company default, the government agency can stop working with the mortgage company. Even worse, the agency could sue the mortgage company. So (especially after the 2008 crisis), most mortgage companies have minimum score requirements that are a bit higher than the minimum. For example, one of the lowest FICO requirements for FHA mortgages is 540, even though — technically — a 500 score is allowed.
  2. Mortgage lenders set other credit policy rules. If your credit score is low because you don’t have a lot of history, you have a much better chance of being approved. However, if your credit score is low because you have a lot of negative marks on your credit report, it will be a lot harder to get approved. For example, a lender could have a minimum credit score of 640, but will not approve anyone who was 60 days or more delinquent in the last year. If your score is 640 because of a 60-day late payment, you are still out of luck.
  3. Down payment, verification, documentation, and all of the other requirements can still stop you. Just because you have a good credit score and pass all of the credit policy rules, there are still a number of other hurdles you need to jump over. You need to prove that you have sufficient income to handle the payments. You will need to have a down payment and sufficient reserves. And you will need to have a lot of documentation, especially if you are a freelancer.

You should think of the credit score as the minimum, first requirement. But don’t celebrate once you have the required score — there is still a lot more to do.

What If I Don’t Have a Credit Score?

If you do not have a credit score, you can still qualify for a mortgage. Just remember: there is a big difference between a bad score and no score. No score means that there is not sufficient information on your credit report to generate a credit score.

There is a special, manual underwriting process for people with no credit score. In general, you will have a higher burden of proof for both your income and your payment history. That means you will probably have to document proof of up to two years of income, and you will need to be able to document proof of payment. Some acceptable forms of payment history would include:

  • Rent payments made on time
  • Utility bill payments made on time
  • Phone or cable bills made on time

There are mortgage companies that specialize in helping people with no credit score. However, the best rates and easiest processes are available to people with scores above 740. If you want to start building your credit score now, open a secured credit card.


Life Events

3 Great Financial Planning Networks for Millennials

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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It’s often said that if customers speak, the market will listen. Well, when it comes to financial planning, millennials have spoken, and they’ve made it clear the planning and advisement services of generations past will not suffice.

And true to form, the market has responded. After years of shunning or altogether shutting out clients in their 20s and 30s, or at best, attempting to force-feed them the same services as their parents, the finance industry is in the midst of an about-face, as a host of new and innovative financial planning networks designed specifically for the younger generation are making waves in the marketplace.

It’s that last point that matters most. Millennials don’t want just any financial planning services. They want services designed specifically for them. So, what exactly does financial planning designed specifically for millennials look like? In keeping with the millennial spirit, there are no official guidelines, but when you build a shortlist of the best financial planning networks for millennials (we’ll do just that momentarily), you notice they generally revolve around a few core principles. For the most part, they’re all:

  • Millennials seem impervious to sales pitches and are highly cognizant of hidden costs. They want to know exactly how much they’re paying and what they’re getting in return. This means fee-based financial services are a must.
  • Inclusive and flexible. The best planning networks for millennials welcome clients regardless of how much they have to invest or where they’re investing it from. In other words, no required minimum deposits, and no geographic restrictions.
  • Education oriented. Millennials aren’t interested in being told what to do. They want financial advisers to be more like coaches — or better still, partners.
  • Digital and social. Suit-and-tie meetings behind the closed doors of a stuffy office are not for millennials. Millennials want to socialize, interact, and share ideas where they feel most comfortable — online and on their smartphones.

In some form or another, the best financial planning networks for millennials connect in ways traditional approaches never could.

Here are three standouts:

Society of Grownups

If you want proof that millennials have caught the eye of the finance industry, look no further than the Society of Grownups, an independent subsidiary of insurance company MassMutual (although you’d hardly be able to tell — they don’t sell any of their products). Heavily focused on providing educational content that’s practical, social, and engaging, Society of Grownups offers a host of classes and events designed to help young adults identify and achieve their financial goals. Everything from spending to investing to paying down debt is covered across a variety of classes, happy hours, group chats, and supper clubs. The organization is based in Brookline, Mass., but does offer free online classes for nonlocals looking to get in on the experience. For those who want to take the next step beyond just education, Society of Grownups has a team of fee-based financial planners. Clients can choose between high-level checkups that cost $20 per appointment (the first one is free), or full financial planning appointments that run $100 per session.

XY Planning Network

The XY Planning Network is a network of fee-only financial advisers who focus specifically on Gen X and Gen Y clients. There are no minimums required to get started as a client, and advisers in the XY Planning Network are not permitted to accept commissions, referral fees, or kickbacks. In other words, no high-pressure sales pitches or hidden agendas. Just practical financial advice doled out at a flat monthly rate. The organization itself is based in North Carolina, but they offer virtual services that enable any client to connect with any adviser regardless of where they reside.

Garrett Planning Network

A national network featuring hundreds of financial planners, the Garrett Planning Network checks many key boxes for millennials. All members of the Garrett Planning Network charge for their services by the hour on a fee-only basis. They do not accept commissions, and clients pay only for the time spent working with their adviser. Just as important for millennials, advisers in the Garrett Planning Network require no income or investment account minimums for their hourly services.

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Netspend Review: Lots of Fees, But You May Get Access to Your Paycheck Early

Advertiser Disclosure

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

If you’re in a position where you don’t have access to traditional banking, you may consider getting a prepaid card to manage your finances. It’s important to go into this decision with your eyes wide open: prepaid cards typically come with onerous fees that can eat into your already strained cash reserves.

Traditional checking accounts are almost always a better financial choice. But if you are unable to qualify for a bank account due to a poor banking history, you may not have that option. In that case, prepaid debit cards can be a helpful tool. Just be sure you’re aware of the fees before signing up.

We have already reviewed the RushCard. Today, we’ll look at NetSpend, another large prepaid debit card issuer in the U.S. We’ll walk you through how it works, what fees to look out for, and how to avoid those fees when possible.

Everything You Need to Know about NetSpend

NetSpend comes with three tiers of membership. The lowest is Pay-As-You-Go and comes with no monthly fee. You will be automatically put on this plan unless you call NetSpend to request an upgrade to their FeeAdvantage Plan.

This second plan tier, the FeeAdvantage Plan, comes with a $9.95 monthly fee. But the plan allows you to dodge other transactional fees that you would incur under the Pay-As-You-Go Plan.

The third tier, Premier FeeAdvantage Plan, requires larger direct deposit commitments. If you are enrolled in the second-tier FeeAdvantage Plan and have a direct deposit of $500 per month, you will be automatically upgraded to the NetSpend Premier FeeAdvantage Plan. This plan lowers transactional fees even further and only costs $5 per month. If you are at the first-tier Pay-As-You-Go level, you will have to call to request to be moved to the Premier tier when your direct deposit reaches $500 per month.

Here’s what it will cost you to do business under each of these tiers:

Direct deposit fees

There is no fee for direct deposit under any of the three plans. This is one of the best ways to load money onto your card.

Depositing and withdrawing funds

You can deposit and withdraw money at select NetSpend Reload Network locations. Fees vary by location, so if more than one reload location is accessible to you, it’s best to shop around. While all locations allow you to deposit money, not all of them will allow you to withdraw.

You can also withdraw money from financial institutions. If it is a Visa member financial institution, you will only have to pay a $2.50 fee for this service. If it is not, you will have to pay the $2.50 plus any fees the financial institution charges.

Loading funds onto the card


It’s easy to deposit checks through your NetSpend mobile app, but it will cost you. This process is managed by a service called Ingo Money, which carries heavy fees. If you are depositing a check that has a pre-printed signature, like a payroll check, you will pay the greater of $5 or 1% of the check’s value. If you are depositing any other check, you will pay the greater of $5 or 4% of the check’s value.

The only way to waive these fees is to agree to a longer processing time, by which you’ll receive your funds after 10 days.

You can add money onto your card via PayPal with zero fees.

When you deposit money, the most you can load via cash at any given time is $7,500 per day. The maximum you can load in a 30-day period is $15,000. Fifteen thousand dollars is also the maximum you can have on your card at any given time, though exceptions are sometimes made if your direct deposit makes it difficult to stick to that ceiling.


When you withdraw money from an ATM in the U.S., you’ll incur a $2.50 fee in addition to any fees the ATM operator charges.

All foreign transactions are charged a 3.5% fee per transaction. If you’re withdrawing money from an ATM outside of the U.S, you’ll be charged $4.95 instead of $2.50. If your transaction is denied, you’ll be charged $1, whether you’re at home or abroad.

Debit purchases

This fee applies to people using the first-tier Pay-As-You-Go Plan.

If you make a debit purchase with your NetSpend card, you will pay a $2 fee for each transaction. If you use it as credit, your fee will only be $1. If you have a FeeAdvantage Plan or NetSpend Premier FeeAdvantage Plan, these fees are waived.

Checking balances

You may end up paying a fee when you want to check your balance. If you check online, via text or email, there aren’t any fees aside from any that your cell provider may have for the text. When you check your balance at an ATM or over the phone, however, you will have to pay a $0.50 fee each time.

The fee for checking over the phone is waived if you’re a NetSpend Premier FeeAdvantage member. You will still have to pay when using a live customer service representative or an ATM.

Transferring funds


Your best option is to transfer funds between two NetSpend accounts through the website, which is free. Avoid calling customer service for help with transfers at all cost. If you call and complete the transfer with help from a NetSpend customer service representative, NetSpend will charge $4.95 per transfer.

You can also transfer money onto your NetSpend card from another financial institution. NetSpend does not charge a fee for this, but your financial institution might. Check before making any transfers.

Bill pay

It’s free to pay bills with your NetSpend prepaid debit card as long as you choose to use one of the no-cost, third-party service providers available in your online Account Center.

But if your payment is denied, you will be charged a $1 fee. Furthermore, if you decide to stop using ACH payments from your NetSpend card to pay bills, NetSpend will charge you a $10 cancellation fee for each bill.

Adding a new user

Sharing a NetSpend account with someone else will cost you. If you want to order a secondary card for an additional user, you will have to pay $9.95. If either of you needs to have your card replaced, you will be charged an additional $9.95 per card.

Standard shipping for replacement cards takes 7-10 days and is free. But if you need your card in a hurry, you can pay $20 to have it delivered in 3 business days or $25 to get it in 1-2 business days.

Other fees

If your account has been inactive for 90+ days, you will be charged a $5.95 account maintenance fee every month.


NetSpend has a cashback reward program setup that works with rotating merchants. When you use your card to shop with a featured merchant, you can earn cash back. You must register for each individual merchant offer in order to take advantage of this program.

If you refer a friend, NetSpend will give both of you $20 each after your friend has loaded $40 onto their card.

On top of offering budgeting tools, NetSpend also offers an FDIC-insured high-yield savings account. If your balance is $1,000 or less, you can currently earn a variable 5% APY. This is extremely high, although it’s worth reiterating that the rate is variable. Balances above $1,000 only earn 0.50% APY.

How to Set Up Your Card

You can open an account online, providing your name, address, and date of birth. NetSpend can also ask to see your driver’s license or another form of ID, so be sure to have these ready along with a way to upload photos of each. If you want to add a second cardholder to your account, you will need this information for them as well.

After you have successfully applied, you will need to activate and register your card before using it. To activate it, you’ll either need to call in or log in online. Then, they’ll ask you to verify your personal information in order to register.

You will be able to use your card anywhere Visa is accepted and to transfer money to other NetSpend members.

The Fine Print

While we’ve covered the fees, there is some more information you should know before opening an account with NetSpend.

Direct Deposit

With NetSpend, you can potentially get your paycheck a full two days before payday. When this works, it’s because your employer sent the information to NetSpend early and has approved the action. If your employer does not send your pay information early or does not approve of early distribution of funds, you will not be able to take advantage of this perk.

Maximum Transaction and Balance Limits

One-time ATM withdrawals are capped at $325. You can make up to six ATM withdrawals per day, with a total cap of $940. There may be even stricter limits imposed by the ATM owner.

If you are withdrawing money from a financial institution or NetSpend Reload Network location, the maximum you can withdraw is $5,000. This same limit applies to purchases.

Holding Funds

There are some situations where a merchant will request to hold funds. For instance, if you pay at the pump at the gas station, they can hold up to $100 until your final purchase goes through. If you are staying at a hotel or getting a rental car, the business may place a hold on your card up to 20% higher than the actual purchase price to account for any extra tips or damage charges you could potentially incur. This hold can last up to 30 days, meaning you won’t have access to that money until the hold is up.

Avoiding Fees

While the interest rate on NetSpend’s savings account is impressive, the fees on its prepaid card are numerous. Here are ways to avoid some of those fees:

  • Fees for reloading your card in person. Whether you go to a financial institution or a NetSpend Reload Network location, you’re going to incur fees. You can avoid these by staying as digital as possible, loading your card instead via direct deposit or PayPal.
  • Fees for mobile deposit of checks. The fees imposed by Ingo Money can eat away at your paycheck quickly. If at all possible, set up direct deposit so you don’t have to mess with paper checks, or be sure you can wait a full 10 days before having access to those funds.
  • Fees for transferring money between accounts. If you choose to transfer money to another NetSpend user via a customer service representative, you will incur a $4.95 fee. Avoid this fee by doing the transfer online.
  • ATM fees. NetSpend suggests avoiding ATM fees by asking for cash back when you’re making a purchase at a retailer. If this is possible for you, it could save you some money.
  • POS fees. When you make a point-of-sale purchase, you will be charged $1 to run the purchase as credit or $2 to run it as debit if you are on the Pay-As-You-Go Plan. This is not ideal, but upgrading to a plan where these fees are waived will cost you either $5 or $9.95 per month. Most people will make enough individual purchases to make upgrading worth it, but run your own numbers before making the switch.
  • Balance inquiry fees. To avoid these fees, make a habit of checking your balance exclusively online.
  • Foreign transaction fees. You can avoid these fees by only using your card domestically.
  • ACH fees. Unfortunately, making automatic bill payments with your NetSpend card will eventually cost you money if you ever have to stop the automatic payment. You’ll have to pay $10, but you can avoid this fee by manually paying all of your bills.
  • Fee for account inactivity. If you want to avoid a $5.95 fee, don’t let your account stay inactive for 90+ days.

Pros & Cons

Pro: NetSpend’s savings account has an incredibly high interest rate of 5% APY.

Con: That 5% APY rate only applies to a balance of up to $1,000, which is likely not even enough for a sufficient emergency fund. After that, rates drop to a modest 0.50% APY.

Pro: You can earn money for referring friends.

Con: You’ll be referring them to a prepaid card laden with fees. NetSpend is not alone; most prepaid cards come with a lengthy fee schedule. It may be more considerate to recommend a traditional checking account to your friend if they can get one.

Pro: Unlike many prepaid cards, NetSpend has a rewards program that can equate to cash back.

Con: You are rewarded for shopping with certain merchants, so you won’t earn cash back on every purchase. If this is your goal, there are plenty of credit cards that offer rewards regardless of what you’re purchasing where.

Pro: The maximum balance limit of $15,000 is decently high in the world of prepaid cards.

Con: This may not be the best card for big purchases, especially if you’re north of the $5,000 mark.

When to Transition Away from Prepaid Cards

While the 5% APY interest rate on NetSpend’s savings account is advantageous, the advantage only lasts until you hit the $1,000 mark. At most, you can earn $50 per month this way, and with all of its fees, NetSpend could potentially cost you more than your savings account would be earning.

If you can get a traditional checking account with low or no fees, it is likely to be better for you financially. That being said, there are a couple of reasons you may not be able to access one.

The first is if you have a poor banking history. If this is the case, don’t give up. Negative hits on your ChexSystems report, the reporting agency for checking a savings account, last a maximum of seven years, though most items are dropped after five. Use those years to demonstrate good behavior so that when the negative information falls off of your report, you’ll be ready for your traditional checking account.

If you don’t have access to a physical bank, consider online banking. You can easily have a traditional checking account in this way, and you’re not as likely to run into fees for things like depositing a check via mobile.

If you don’t have access to the internet via a computer or smartphone, check out the ConnectHome program. It provides internet and technology like computers at low or even zero cost. It’s not fully mature yet, so it may or may not be available in your area, but it’s something to keep tabs on. Check back frequently to see if they’ve expanded to your locale.

While you’re waiting, you’ll unfortunately have to look at less-than-desirable options, like prepaid cards. If you’re going that route anyway, though, you might as well earn 5% APY on your savings.


Building Credit

Minimize Rejection: Check if You’re Pre-qualified for a Credit Card

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Check if You're Pre-qualified for a Credit Card

Updated September 28, 2016

Are you avoiding a credit card application  because you’re afraid of being rejected? Want to see if you can be approved for a credit card without having an inquiry hit your credit score?

We may be able to help. Some large banks give you the chance to see if you are pre-qualified for cards before you officially apply. You give a bit of personal information (name, address, last 4 digits of your social security), and they will tell you if you are pre-qualified. There is no harm to your credit score when using this service. This is the best way to see if you can get a credit card without hurting your score.

What does pre-qualified mean?

Pre-qualification typically utilizes a soft credit inquiry with a credit bureau (Experian, Equifax, TransUnion). A soft inquiry does not appear on your credit report, and will not harm your credit score.

Banks also create pre-qualified lists by buying marketing lists every month from a credit bureau. They buy the names of people who would meet their credit criteria and keep that list. When you see if you are pre-qualified, the bank is just checking to see if you are on their list.

A soft inquiry provides the bank with some basic credit information, including your score. Based upon the information in the credit bureau, the bank determines whether or not you have been pre-qualified for a credit card.

If you are not pre-qualified, that does not mean you will be rejected. When they pull a full credit report or get more information, you may still be approved. But, even if you are pre-qualified, you can still be rejected. In my experience, over 80% of pre-qualified applications are approved. So, why would you be rejected?

  • When you complete a formal credit card application, you provide additional personal information, including your employment and salary. If you are unemployed, or if your salary is too low relative to your debt – you could be rejected. There are other policy reasons that can be applied as well.
  • When a full credit bureau report is pulled, the bank gets more data. Some of that incremental data may result in a rejection.
  • Timing: your information may have changed. The bank may have pre-qualified you a week ago, but since then you have missed a payment. Final decisions are always made using the most up-to-date information.

Where can I see if I have been pre-qualified?

We have put together a list of the main banks. This list is kept updated regularly.

CreditCards – CardMatch is a very good tool developed by that can match you to offers from multiple credit card companies without impacting your credit score. This is the best first stop.

Bank of America


Capital One (Click Credit Cards and then “See if you’re pre-qualified”)



Credit One  – This company targets people with less than perfect credit.


U.S. Bank

American Express – this one is a little roundabout. After following the link, click ‘Your Pre-Qualified Card Offers’ on the left hand side of the page.

Consider A Personal Loan (No Hard Inquiry and Lower Rates)

If you need to borrow money, you may also want to consider a personal loan. A number of internet-only personal loan companies allow you to see if you are approved (including your interest rate and loan amount) without a hard inquiry on your credit report. Instead, they do a soft pull, which has no impact on your credit score. Personal loans also tend to have much lower interest rates than credit cards. If you need to borrow money, personal loans are usually a better option.

You can use our online tool to see if you can qualify for a loan. You only need to fill in one application, and MagnifyMoney will check your rate with multiple lenders (and without hurting your score). Check your rate without hurting your score here.

Not pre-qualified but still want to apply?

We still believe that people are too afraid of the impact of credit inquiries on their score. One inquiry will only take 5-10 points off your score.

If you pay your bills on time, do not have a ton of debt (less than $20,000) and want to apply for a new credit card, an inquiry should not scare you. The only way to know for certain if you can get approved is to do a full application.

How We Can Help

Don’t forget to follow us on Twitter @Magnify_Money and on Facebook.

*We’ll receive a referral fee if you click on the “Apply Now” buttons in this post. This does not impact our rankings or recommendations You can learn more about how our site is financed here.


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Pay Down My Debt

What Happens When My Collection Item Gets Sold?

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Man Holding Overdue Notice bill debt

When you take out a loan or make a purchase with your credit card, you have a legal obligation to repay the money. However, there are many reasons why you might not be able to make a payment. Perhaps you lost your job, or you have other more pressing debts to pay.

Whatever the cause, if you don’t make a payment, you could be charged a late payment fee in addition to the accruing interest. If you continue not making payments, the original creditor might turn to a debt collection agency that will actively try to contact you and get you to repay the money. The agency could be a department within the creditor’s company, or it might be a third-party agency that is hired to collect your payment on the company’s behalf. Eventually, if the company doesn’t receive any money, it might sell the right to collect your debt to an outside debt collection agency.

You Now Owe the Collection Agency the Money

Once the debt buyer purchases your debt, the firm has a legal right to collect money from you. But why does this happen? Often the original creditor doesn’t feel that it’s worth the time to continue trying to collect the money from you, and they sell the account at a discount — sometimes just pennies on the dollar. The agency that buys the debt, often in large batches along with others’ debts, can make money even if it only collects a small portion of what you owe – although, of course, it will be happy to take the full amount.

You’ll See a New Account on Your Credit Reports

The three major credit-reporting bureaus, Equifax, TransUnion, and Experian, track and record activity related to your loans and credit accounts. When a collection agency buys your debt, the transfer of the debt’s ownership gets reported to bureaus. The bureaus will open a new account with the collection agency’s name and the amount owed on your credit report. The original creditor’s account’s status might change to something similar to “charged off,” “transferred,” or “paid.”

Rod Griffin, director of public education at Experian, says there could be a note on the account saying the debt was “sold to” or “transferred to” and the collection agency’s name. Likewise, the collection agency’s account on your credit report may have a note saying the debt was transferred or bought from the creditor.

In some cases, your debt could be sold from one collection agency to another. “[Experian’s] policy is that you only have one collection agency that can collect on that debt,” says Griffin. While the original creditor’s account remains on your report, the first collection agency might fall off and be replaced by the new collection agency. If it doesn’t, Griffin says you can file a dispute to get the first collection agency removed. Similarly, double-check the original account and report an error if it has an “open” account status.

The Derogatory Marks Fall Off Your Credit Reports at the Same Time

Many derogatory marks, including a collection account, can remain on your credit reports for up to seven years and 180 days from the date your debt is declared delinquent. Some people worry that when their debt is bought and transferred, the clock gets reset, but luckily that’s not the case.

The timeline is determined by the original date of delinquency, and by law, debt collection agencies must report the original delinquency date to the credit-reporting agencies. The date will stick with the debt, even if it transfers hands several times over.

Griffin says you might hear about other dates, the most recent update date or the reported date, for example. While those could change if you’re in contact with the collection agency, that won’t extend the time for a deletion. After seven years and 180 days, sometimes sooner, the original account and related collection accounts will be taken off your credit reports. They will no longer impact your credit score, although you might still be legally obliged to repay the money.

Consider Paying Off a Collection Account to Help Your Credit Score

FICO Score 9 and VantageScore 3.0, the most recent versions of FICO’s and VantageScore’s basic credit-scoring systems, ignore paid collection accounts when calculating a credit score. This is in contrast to previous scoring models that considered a collection account, even a paid one, a negative mark and adjusted your score accordingly. Most lenders rely on the previous credit-scoring models when screening applications, but it’s worth keeping the change in mind if you’re concerned about your credit score.

When you have an account that was sent or sold to a collection agency and is nearing the seven-year mark, it might make sense to wait and let the account drop off your reports. However, if you’re looking for a way to quickly improve your credit score, paying off a collection account could be an option.

Bottom Line

If you fall behind on your debt payments, your creditor might sell your past-due account to a debt collection agency. The transfer gets recorded on your credit reports, and you’ll now owe the agency money. Having an account sent or sold to collections can negatively impact your credit score. Although you might be able to improve your score by repaying the debt, you could need to wait up to seven years and 180 days from your first missed payment for the account and subsequent negative marks to fall off your credit reports.


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Lenny App Review: Offers Credit Lines, Credit-building Tools, and Free FICO Score Monitoring

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


If you’re looking to build credit history, the Lenny app offers a credit-building product that’s worth checking out. Lenny is a licensed lender of California that provides students and other candidates who have limited credit history access to credit lines.

Once approved for a Lenny credit line, you can transfer money to a connected bank account or send money to friends and family. The Lenny credit line account includes additional resources, such as a credit score monitoring tool. There’s also a Lenny Points program that rewards you for actions that have a positive impact on your credit score.

You won’t qualify for the credit line if you live in a state other than California. However, anyone in the U.S. can use the Lenny app to send and receive money from their own bank account. There’s also a waiting list you can sign up for that will notify you when the Lenny credit line becomes available in other states.

In this post, we’ll review what you need to know about the Lenny app before signing up, including:

  • How Lenny works
  • How to earn Lenny Points
  • How much Lenny costs
  • Pros and cons

How Lenny Works

After downloading the app to your device, setting up an account requires entering your name, Social Security number, and birthdate. You must provide personal information to use the Lenny app even if you’re not applying for a credit line because Lenny is a financial institution and has to verify your identity.

California residents have the option to apply for the Lenny credit line within the app dashboard. The credit application won’t impact your credit score. Once approved for a credit line, the account record and payments are reported to two credit bureaus, Equifax and TransUnion.

The credit line interest rate ranges from 7.90% to 14.99% APR, and the credit line is open-ending, which means you can revolve a balance from month to month.

The initial credit line offered is typically between $100 and $1,000 depending on your creditworthiness. The Lenny Points program allows you to earn points to unlock credit line increases as well.

How to Earn Lenny Points

lennyYou can earn Lenny Points when you pay bills on time, keep your credit utilization below 30%, or pay your bill off in full. You also earn 10 Lenny Points just for signing up.

Here’s the amount of Lenny Points you can earn for each action:

  • 2 Lenny Points for an on-time payment
  • 4 Lenny Points for a month-end credit utilization ratio under 30%
  • 4 Lenny Points for paying your bill in full

The actions that earn Lenny Points are the same actions that improve your credit score, so the rewards program enforces habits that will benefit you long term.

You can earn additional Lenny Points when you reach certain credit scores. For example:

  • 30 Lenny Points for reaching 670
  • 40 Lenny Points for reaching 740
  • 50 Lenny Points for reaching 800

Lenny Points never expire. You can get your first credit line increase when you reach 60 Lenny Points, the second when you reach 100 Lenny Points, and the third when you reach 140 Lenny Points.

Keep in mind, the purpose of Lenny increasing your credit limit isn’t so you can rack up more debt. A higher credit limit can increase your available credit limit, thus lowering your credit utilization rate and likely improving your credit score. Credit utilization is how much credit you’re using compared to how much is available to you.

To calculate credit utilization, divide the amount you owe by your credit limit and multiply by 100. For example, if you owe $500, and your credit limit is $1,000, your credit utilization is 50%. You always want to keep your credit utilization below 30%, and Lenny gives you a reward for doing so.

Lenny Costs and Terms

Lenny charges a $2 per month membership fee for the credit line account. Lenny does offer a referral program that can help you cover the cost. A referral gets you and the person you refer a $5 bonus.

The penalty fee for a late payment, returned payment, or returned check is $15. You get one late fee waiver per calendar year. If you pay your bill with a check, there’s also a $15 fee. According to the Lenny website, these fees can change without notice.

Pros and Cons

Lenny gives you a free FICO score Pro: Lenny gives you a free FICO score. FICO scores are still considered the industry standard of measuring creditworthiness, so having access to FICO score monitoring is a major benefit of this product. Lenny offers the FICO 8 score based on Experian data.

Con: The Lenny account isn’t free. You’ll need to set aside $24 per year for the membership fee.

Pro: The Lenny Points program. The Lenny Point system is innovative in the way it incentivizes you for actions that will build your credit. Lenny rewards you for paying your bills on time, keeping your utilization low, and paying off your balance in full, which can encourage good lifelong credit habits.

Con: It’s a credit line you may or may not need. You shouldn’t open this account or take out any form of credit on a whim, especially if you’re a student. Although building credit is necessary for future major purchases, taking out credit before you’re ready can do more harm than good. Make sure you’re at a place where you’re prepared to manage credit responsibly or are bringing in a steady income to pay the bill before opening an account.

Pro: Lenny comes with credit recommendations, and it’s easy to use. The credit education component of the Lenny credit line account is valuable. The dashboard gives you advice on actions you can take to improve your score. And even if you don’t use the credit line feature, Lenny could be an easy way to transfer money between friends.

Con: Only available in California. Non-California residents won’t qualify for the credit line at this time.

Other Ways to Build Credit without a Lenny Line of Credit

You need credit to build credit; there’s no way around this fact. The problem is financial institutions are often hesitant to give you credit unless you already have a positive credit history. Lenny serves consumers that may not be able to qualify for credit elsewhere, but it’s not the only option.

Here are a few other ways to build credit:

Appeal to a cosigner: A cosigner applies for credit or a loan with you and also assumes responsibility for your debt, which minimizes the risk for financial institutions and improves your chances of getting approved. Asking someone to cosign for you is no small favor since the account will also appear on their credit and negatively impact their credit score if you skip payments. For this reason, family and close friends will probably be the most willing to cosign for you.

Become an authorized user on another account: If you know someone who’s kept a credit card in good standing for a long time, you can ask to become an authorized user on their card. Becoming an authorized user makes their account appear on your credit history. The new record can lengthen your credit history and have a positive impact on your score.

Get a secured credit card: Secured credit cards are cards that require a deposit for your credit line. Once you build up enough credit history, you can start qualifying for regular forms of credit that don’t require a deposit. You can also get your deposit back from the card issuer. Check out secured card options here.

Who Will Benefit the Most from Lenny

The two standout features of Lenny are the Lenny Points reward system and the FICO score tracking tool. These features may be a great benefit to someone who’s unfamiliar with credit because of the credit education component. However, Lenny has an annual membership fee, and there are other methods of building credit on your own, such as applying for a secured credit card, that are free.

You can find a list of fee-free secured cards here. For the education aspect of building credit, you can always fall back on a site like Credit Karma that offers free credit scores, reports, and advice on how to improve your score.

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College Students and Recent Grads, Pay Down My Debt

19 Options to Refinance Student Loans – Get Your Lowest Rate

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19 Options to Refinance Student Loans - Get Your Lowest Rate

Updated: September 27, 2016

Are you tired of paying a high interest rate on your student loan debt? Are you looking for ways to refinance your student loans at a lower interest rate, but don’t know where to turn? We have created the most complete list of lenders currently willing to refinance student loan debt.

You should always shop around for the best rate. Don’t worry about the impact on your credit score of applying to multiple lenders: so long as you complete all of your applications within 14 days, it will only count as one inquiry on your credit score. You can see the full list of 19+ lenders below, but we recommend you start here, and check rates from the top 4 national lenders offering the lowest interest rates. We update this list daily:

LenderTransparency ScoreMax TermFixed APRVariable APRMax Loan Amount 



3.50% - 7.74%

Fixed Rate

2.22% - 6.02%

Variable Rate

No Max

Max Loan



3.50% - 7.45%

Fixed Rate

2.22% - 5.82%

Variable Rate

No Max

Max Loan



3.50% - 7.74%

Fixed Rate

2.22% - 6.02%

Variable Rate

No Max

Max Loan



3.25% - 8.22%

Fixed Rate

2.22% - 6.92%

Variable Rate

$125k / $175k

Max Loan

We have also created:

But before you refinance, read on to see if you are ready to refinance your student loans.

Can I Get Approved?

Loan approval rules vary by lender. However, all of the lenders will want:

  • Proof that you can afford your payments. That means you have a job with income that is sufficient to cover your student loans and all of your other expenses.
  • Proof that you are a responsible borrower, with a demonstrated record of on-time payments. For some lenders, that means that they use the traditional FICO, requiring a good score. For other lenders, they may just have some basic rules, like no missed payments, or a certain number of on-time payments required to prove that you are responsible.

If you are in financial difficulty and can’t afford your monthly payments, a refinance is not the solution. Instead, you should look at options to avoid a default on student loan debt.

This is particularly important if you have Federal loans.

Don’t refinance Federal loans unless you are very comfortable with your ability to repay. Think hard about the chances you won’t be able to make payments for a few months. Once you refinance, you may lose flexible Federal payment options that can help you if you genuinely can’t afford the payments you have today. Check the Federal loan repayment estimator to make sure you see all the Federal options you have right now.

If you can afford your monthly payment, but you have been a sloppy payer, then you will likely need to demonstrate responsibility before applying for a refinance.

But, if you can afford your current monthly payment and have been responsible with those payments, then a refinance could be possible and help you pay the debt off sooner.

Is it worth it? 

Like any form of debt, your goal with a student loan should be to pay as low an interest rate as possible. Other than a mortgage, you will likely never have a debt as large as your student loan.

If you are able to reduce the interest rate by re-financing, then you should consider the transaction. However, make sure you include the following in any decision:

Is there an origination fee?

Many lenders have no fee, which is great news. If there is an origination fee, you need to make sure that it is worth paying. If you plan on paying off your loan very quickly, then you may not want to pay a fee. But, if you are going to be paying your loan for a long time, a fee may be worth paying.

Is the interest rate fixed or variable?

Variable interest rates will almost always be lower than fixed interest rates. But there is a reason: you end up taking all of the interest rate risk. We are currently at all-time low interest rates. So, we know that interest rates will go up, we just don’t know when.

This is a judgment call. Just remember, when rates go up, so do your payments. And, in a higher rate environment, you will not be able to refinance to a better option (because all rates will be going up).

We typically recommend fixing the rate as much as possible, unless you know that you can pay off your debt during a short time period. If you think it will take you 20 years to pay off your loan, you don’t want to bet on the next 20 years of interest rates. But, if you think you will pay it off in five years, you may want to take the bet. Some providers with variable rates will cap them, which can help temper some of the risk.

Places to Consider a Refinance

If you go to other sites they may claim to compare several student loan offers in one step. Just beware that they might only show you deals that pay them a referral fee, so you could miss out on lenders ready to give you better terms. Below is what we believe is the most comprehensive list of current student loan refinancing lenders.

You should take the time to shop around. FICO says there is little to no impact on your credit score for rate shopping as many providers as you’d like in a single shopping period (which can be between 14-30 days, depending upon the version of FICO). So set aside a day and apply to as many as you feel comfortable with to get a sense of who is ready to give you the best terms.

Here are more details on the 5 lenders offering the lowest interest rates:

1. SoFi*: Variable Rates from 2.22% and Fixed Rates from 3.50% (with AutoPay)

sofiSoFi (read our full SoFi review) was one of the first lenders to start offering student loan refinancing products. More MagnifyMoney readers have chosen SoFi than any other lender. Although SoFi initially targeted a very select group of universities (it started with Stanford), now almost anyone can apply, including if you graduated from a trade school. The only requirement is that you graduated from a Title IV school. You need to have a degree, a good job and good income in order to  qualify. SoFi wants to be more than just a lender. If you lose your job, SoFi will  help you find a new one. If you need a mortgage for a first home, they are there  to help. And, surprisingly, they also want to get you a date. SoFi is famous for  hosting parties for customers across the country, and creating a dating app to  match borrowers with each other.

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2. Earnest*: Variable Rates from 2.22% and Fixed Rates from 3.50% (with AutoPay)

EarnestEarnest (read our full Earnest review) offers fixed interest rates starting at 3.50% and variable rates starting at 2.20%. Unlike any of the other lenders, you can switch between fixed and variable rates throughout the life of your loan. You can do that one time every six months until the loan is paid off. That means you can take advantage of the low variable interest rates now, and then lock in a higher fixed rate later. You can choose your own monthly payment, based upon what you can afford (to the penny). Earnest also offers bi-weekly payments and “skip a payment” if you run into difficulty.

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3. CommonBond*: Variable Rates from 2.22% and Fixed Rates from 3.50% (with AutoPay)

CommonBondCommonBond (read our full CommonBond review) started out lending exclusively to graduate students. They initially targeted doctors with more than $100,000 of debt. Over time, CommonBond has expanded and now offers student loan refinancing options to graduates of almost any university (graduate and undergraduate). In addition (and we think this is pretty cool), CommonBond will fund the education of someone in need in an emerging market for every loan that closes. So not only will you save money, but someone in need will get access to an education.

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4. LendKey*: Variable Rates from 2.22% and Fixed Rates from 3.25% (with AutoPay)

lendkeyLendKey (read our full LendKey review) works with community banks and credit unions across the country. Although you apply with LendKey, your loan will be with a community bank. If you like the idea of working with a credit union or community bank, LendKey could be a great option. Over the past year, LendKey has become increasingly competitive on pricing, and frequently has a better rate than some of the more famous marketplace lenders.

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In addition to the Top 4 (ranked by interest rate), there are many more lenders offering to refinance student loans. Below is a listing of all providers we have found so far. This list includes credit unions that may have limited membership. We will continue to update this list as we find more lenders. This list is ordered alphabetically:

  • Alliant Credit Union: In order to qualify, you need to have a bachelor’s degree. The minimum credit score is 680, and you need two years of employment and a minimum income of $40,000. Interest rates start as low as 3.75%. Anyone can join this credit union by making a $10 donation to Foster Care for Success.
  • Citizens Bank: To get the best deal, you should have at least a bachelor’s degree. They will look at your credit history, and want to make sure that at least the last three payments on your student loans have been made on time. If you don’t have your degree, you need to have made the last 12 payments (principal and interest) on time. You must make at least $24,000 per year. They offer fixed rates starting at 4.74% and variable rates start from 2.19%.
  • College Avenue: College Avenue offers fixed rates starting at 4.74% and variable at 2.50%, and only offers 15 year terms.
  • CommonWealth One Federal Credit Union: Variable interest rates start at 3.36%. You can borrow up to $75,000 and need to be a member of the credit union in order to qualify.
  • Credit Union Student Choice: This is a tool offered by credit unions. The criteria and pricing vary by credit union. The credit unions have restricted membership, but you can find out if you qualify on this site.
  • DRB Student Loan*: They will refinance undergraduate, Parent PLUS and graduate loans including MBA, Law, Medical/Dental (Post Residency), Physician Assistant, Advanced Degree Nursing, Anesthetist, Pharmacist, Engineering, Computer Science and more degrees. Variable rates as low as 3.64% and 4.20% fixed.
  • Eastman Credit Union: They don’t share much of their criteria publicly. Fixed rates start at 6.5% and you must be a member of the credit union. Credit union membership is not available to everyone.
  • Education Success Loans: You must be out of school for at least 30 months, and you must have a degree. You also need a good credit score, with on-time payment behavior. Variable and fixed loan options are available, with rates starting at 4.99%.
  • EdVest: They offer refinancing options for private loans used to finance attendance at a Title IV, degree-granting institution. If the loan balance is below $100,000 you need to make at least $30,000 a year. If your balance is above $100,000 you need to make at least $50,000. Variable rates start at 3.180%, and fixed rates start at 4.740%.
  • First Republic Eagle Gold. It’s hard to beat these rates – starting at 1.95% fixed and 1.87% variable. But you need to go in person to a First Republic branch to complete your account opening. They are located in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach, San Diego, Portland (Oregon), Boston, Palm Beach (Florida), Greenwich, and New York City. Loans must be $60,000 – $300,000 and you need a 750 or higher credit score with 24 months experience in your current industry.
  • IHelp: This service will find a community bank. Community banks can actually be expensive. You need to have 2 years of good credit history, with a DTI (debt-to-income) of less than 45% and annual income of at least $24,000. Fixed rates are available, starting at 4.65% fixed, and 3.21% variable.
  • Mayo Employees Credit Union: You need at least $2,000 of monthly income and a good credit history. Variable rates are available, starting at 5.15% and you would need to join the credit union.
  • Navy Federal Credit Union: This credit union offers limited membership. For men and women who serve, the credit union can offer excellent rates and specialized underwriting. Variable interest rates start at 2.89%.
  • RISLA: You need at least a 680 credit score, and can find fixed interest rates starting at 4.49% if you use a co-signer.
  • UW Credit Union: $25,000 minimum income required, with at least 5 years of credit history and a good repayment record. Fixed and variable interest rates are available, with variable rates starting at 2.23% and fixed rates starting at 4.04%. You need to join the credit union in order to refinance your loans.
  • Wells Fargo: As a traditional lender, Wells Fargo will look at credit score and debt burden. They offer both fixed and variable loans, with variable rates starting at 3.74% and fixed rates starting at 6.24%. Wells Fargo does not have a tradition of being a low cost lender.

You can also compare all of these loan options in one chart with our comparison tool. It lists the rates, loan amounts, and kinds of loans each lender is willing to refinance. You can also email us with any questions at

Don’t forget to follow us on Twitter @Magnify_Money and on Facebook.

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Many School Workers Can’t Afford to Live in the Communities They Serve

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Headshot angry woman with glasses skeptically looking at you

While you’re complaining about the traffic pileup as you drive past the local elementary school on your morning commute, you might not think about the bus driver who had to drive more than an hour to work that morning because he or she can’t afford to live in the school district.

That scenario is a reality for almost all bus drivers and a very similar experience for many other members of a school’s staff, according to a new study.

In Paycheck to Paycheck 2016, a study by the National Housing Conference’s Center for Housing Policy, researchers highlight the ability of five common school workers — the bus driver, child care teacher, groundskeeper, social worker, and high school teacher — to afford a median-priced home in more than 200 metro areas.

The Findings

High School Teachers Have It Best. On a median annual salary of $60,610, high school teachers could afford rent in 198 of the areas, or about 94%. However, they could only afford to pay mortgage for a median-priced two-bedroom home in just over half — 130 — of the 210 metro areas analyzed.

Bus Drivers, Not So Much. At the other extreme, the findings show that it’s virtually impossible for a bus driver making a median income in a single-income household to afford to rent or pay mortgage for a two-bedroom home in any of the 210 metro areas. The median annual national salary for bus drivers is $23,412, far less than the national median income of $53,483. The low wages make finding housing even more difficult.

Child Care Teachers. The study found that child care teachers, whose median national salary is $29,539, only make enough to afford rent on a standard two-bedroom home in 9 of the 210 metro areas, or only 4%. Living in the Bay Area in California, for example, would eat up about 75% of a child care teacher’s income in rent. Homeownership is almost equally difficult to achieve, with child care teachers at a median income unable to afford a mortgage in 94% of the metro areas.

Groundskeepers and Social Workers.
Groundskeepers earn a median $34,214, or 64% of the national median income, which makes them barely better off than child care teachers and bus drivers when it comes to affording housing. Groundskeepers could only afford to rent a home in 57 of the 210 metro areas and to own a home in only 25 metro areas.

Social workers, who may be assigned to multiple schools and sometimes multiple districts, are a little more housing-secure at a national median annual salary of $52,538. The average social worker could afford to rent a two-bedroom home in 90% of the metro areas, but could own a home in just above half, or 110 of the 210 areas.

Why We Should Care

Affordable housing for school workers matters, the study authors argue.

The consequences of unaffordable housing are more than an increased transportation expense for the school worker. Implications for a community can be numerous, ranging from losing good talent to having fewer extracurricular opportunities for kids in the district.

Janet Viveiros, the acting director of research at the National Housing Conference, noted that some school workers may reject a job offer from a school in a district with high housing costs simply because they won’t be paid enough to afford housing in the school district.

“If someone is facing a long commute every day, they may be unable or unwilling to take on additional responsibilities like coaching or mentoring,” Viveiros said. “Bus drivers may not be willing to take on an extra shift for extracurriculars.”

Measuring Housing Affordability

The researchers defined “affordable” as the ability to spend no more than 30% of the household’s income on rent and utilities or up to 28% of the household’s income on a mortgage.

When workers are able to keep housing costs below those limits, it “means that you have more money available for healthy food, for medical services” and other improvements to one’s quality of life, Viveiros said.

For the study, researchers only measured affordability for households where the school worker was the sole earner.

How Can School Workers Save?

Several federal and state-backed initiatives have been created to help school workers and other low-income workers afford housing in the communities they serve. Knowing your options and resources can help you save on housing costs.

Federal Help

For example, the HOME Investment Partnerships Program exists to subsidize new construction or rehabilitation of homes, or offer down payment assistance loans or grants. The assistance applies to households that make 80% or less of the area’s median income, a demographic which many of the workers in the study would fall into.

The Federal Housing Administration also offers low-cost financing for first-time homebuyers and lower-income households. FHA loans can lower the down payment to 3.5% of the home’s purchase price.

The Affordable Housing Program, run by the Federal Home Loan Banks, provides funding through member banks for the purchase, construction, or rehabilitation of homes owned by low- or moderate-income households.

The Housing Choice Vouchers Program (formerly Section 8) is the dominant federal rent subsidy program. It serves more than 3 million household and makes housing affordable by paying the difference between what a household can afford and the actual rent, up to a limit determined by the U.S. Department of Housing and Urban Development. However, the program is underfunded as only 1 in 4 households eligible are able to receive the help they need.

State Assistance

Multiple levels of programs and policies can be more beneficial to an area, as resources are slim and many programs lack sufficient funding for all who may qualify. Some states have their own programs as additional sources of assistance.

“There’s not one program at the federal level, state, or local level,” said Viveiros. “It’s really about pulling together a variety of policies and programs” from all levels of government.

Massachusetts has the ONE Mortgage Program, which combines down payment assistance to help first-time, low-income homebuyers save on fees and mortgage insurance. It also gives an interest rate buydown into a single mortgage. The state also has a Rental Voucher Program, which is a lot like the federal Housing Choice Vouchers Program.

In Minnesota, the Minnesota Housing Trust Fund assists with rental assistance for low-income households.

The Arizona Housing Finance Authority has a HOME Plus program, which assists households with good credit through grants toward down payments or closing costs.

Education-Specific Policies and Programs

Some state and local governments have created programs and policies that address the specific affordable housing needs of education workers in their area.

The Connecticut Housing Finance Authority has a program specific to educators called the Teachers Mortgage Assistance Program. The program gives below market rate loans to teachers who work in districts that have a hard time attracting teachers. In addition to the low rate, teachers under this program also automatically qualify for a down payment assistance loan from the CHFA.

The Texas State Affordable Housing Corporation’s program provides low-cost loans and down payment assistance to a variety of education professionals. The program also offers a first-time homebuyer tax credit that allows school workers to claim up to $2,000 of their annual interest payments as a tax credit each year.

In 2016, San Francisco — the most expensive metro area in the country — began Teacher Next Door. The program gives a forgivable loan to educators working in the city’s school district who are first-time homebuyers. Also in California — where we found the nine least affordable housing districts in the U.S. — the Los Angeles Unified School District is repurposing public land to create three housing developments to ensure its staff has affordable rental housing. The district’s program is open to all of its direct staff.

What More Can Be Done?

Viveiros said the key is “creating communities that offer housing affordable at a number of different income levels and offering housing of different types” to present a mix of affordable price points.

Thinking as a community can help create solutions, Viveiros said. She recommends that parents and other community members “lend their voice to the need for affordable housing in their community” by attending and speaking up at zoning meetings.





6 Things You Should Do Immediately If You Have a Yahoo Account

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Sunnyvale, CA, USA - Apr. 23, 2016: Yahoo Inc. Headquarters. Yahoo Inc. is an American multinational technology company that is globally known for its Web portal, search engine Yahoo! Search, and related services.

Yahoo says 500 million user accounts have been compromised, and they are telling users to change their passwords. That’s good advice, and below you’ll find better advice from security firm Sophos.

But first: For the next several days, or even weeks, beware emails that appear to come from Yahoo. Now will be a great time for phishers to trick users into following alleged “change your password” links that actually lead to hacker-controlled sites.

Now, onto the better advice:

  1. Change your Yahoo password immediately.
  2. Reset this password, if you’re reusing it on other online sites. Cybercriminals are now using tools that sniff out passwords reused on other, more valuable sites to make their work easier and to make the stolen passwords and other hacked data more lucrative on the dark web.
  3. Make all new passwords different and difficult to guess – yes, you need to create different passwords for every site you visit.
  4. Include upper and lower case letters, numbers and symbols to make passwords harder to crack – refer to the Sophos Password Quick Tips guide for creating stronger passwords.
  5. Don’t trust password strength meters – these are unreliable and inaccurate.
  6. In general, it’s always good practice to update your passwords, password manager and security questions if you hear of a potential data breach that might affect you. Even data breaches from several years ago could still impact you today.

I disagree about using a new password for every site. I mean, it’s a lovely idea, but it’s just not realistic.  Instead, I’m an advocate of having password families.

One simple password for throwaway accounts you don’t care about, like newsletters;  one medium-hard password for sites that require a registration, but don’t involve money; and then one really strong password for financial accounts that you change on a regular basis.

For that tough password, use something clever, like the first letter of every word in a sentence.  Like this: I Was Born on November 1 in North Dakota — IWBoN1iND (I wasn’t, by the way).  Change a number to a symbol and you are in good shape, like IWBoN!iND.

Now, as for how often you should change your password — I asked a bunch of experts that question not long ago and got some interesting answers.

Graham Cluley – Independent computer security analyst, formerly of Sophos and McAfee (more about him)

I only change my password if I’m worried a service has been hacked/compromised. I have different passwords for each site. In fact, I reckon I have over 750 unique passwords. I use password management software. I think requiring people to regularly change their password is a bad idea. it encourages poor password choices, (such as) ….passwordjan, passwordfeb, etc.


Mikko Hypponen – Chief Research Officer, F-Secure (more about him)

For your corporate network account? Several times a year. For an online newspaper that requires registration in order to read it? Never.  As always, it’s about threat modelling: Figure out which services are the important services FOR YOU. Then use a strong, unique password on those, and change it regularly. For non-important sites: who cares.

James Lyne, Global Head of Security Research at Sophos, speaking specifically about corporation passwords (More about him)

The requirement to change your passwords is a preventive measure that is designed to minimize the risk of your already stolen password being cracked and used. Over 2014 there have been a huge number of attacks which have led to the loss of password hashes (or other representations). These password ‘representations’ require time and effort for attackers to crack and reverse to their plain text form. Depending on the hashing scheme in use and the resources of the attacker this can take little, or a very long time. Changing your password regularly helps manage the risk of an attacker stealing your password hash from the provider (without you knowing) by increasing the probability you have changed it before they use it.

There is a real balance to be struck with password rotations. Some enterprises set painful rotation rules that require staff to regularly learn a new password and commit it to memory – ironically this can lead to staff producing poor passwords to meet the requirement which again ironically makes it much easier for the attacker to break. Providing the service provider does their part and secures your password with an appropriate storage mechanism often using a significantly longer, complex and hard to guess password is a much better defence. Good luck to the cybercriminal going after a 128 character password stored as a (moderately poor) SHA1 hash.

Password managers help you generate long and complex passwords that will be hard to crack even if lost, that said, if you go this far and implement a manager you may as well rotate your passwords once in a while as you don’t need to remember them and it helps minimize the risk of attackers using stolen credentials (particularly on sites that store your password poorly).  Most enterprises would do well to consider how to improve their password storage security and the strength of the original password over a 30 day rotation period.

Harri Hursti – independent security researcher, famous for “The Hursi Hack” of voting machines (more about him)

This is not (an easy question) … because also changing the password too often can become a security risk

It greatly depends. Passwords I use more often, over the internet and are in sensitive sites are changed 2-3 times a year. Then there are very important passwords which are either used very seldom or are used in more secure environment and those I change once a year, or not even then.

Chester Wisniewski and Paul Ducklin, senior security advisors at Sophos. (More about Chester and Paul)

The answer, loosely, is this.

Change a password if any one of these is true:

  1. You suspect (or know) it has been compromised.
  2. You feel like changing it.
  3. You have been re-using passwords and have decided to mend your ways.

We explain better in the podcast “busting password myths,” I think.

The podcast is 15 minutes, however, the first two minutes address this very question and may be worth your time.


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