Because of recent data breaches and increased security concerns, many consumers taking steps to protect their personally identifiable information (PII) from unwanted disclosure. When a consumer places a “credit freeze” on their credit profile with the credit bureaus, credit activity such as a credit inquiry cannot be performed unless they give additional consent.
According to Federal Student Aid, since a credit check is part request process for a Direct PLUS Loan or borrower Endorser application borrowers or endorsers with an active credit freeze may not be able to fully complete either process and may receive an error message when the credit check is run. The borrower or endorser must remove the credit freeze first; this action cannot be done by the school or Federal Student Aid.
FSA implemented messaging on the website back in October to inform borrowers and endorsers that those who have a credit freeze on their credit profile will need to remove it before completing a Direct PLUS Loan Request or the Endorser Addendum.
Schools using the “Quick Credit Check” on the COD Web Site could experience an error or “timeout” response as a result of a borrower’s credit freeze. In some cases, Federal Student Aid will not be able to return a credit check response with the origination record and will reject the record with COD Reject Edit 996 (Invalid Value). Again, when troubleshooting a credit issue with a borrower or endorser, schools may want to see if the credit freeze situation may apply. If you have additional questions about credit check processing, FSA recommends that you contact the COD School Relations Center.