Tips for Maintaining a Good Credit Score

Tips for Maintaining a Good Credit Score

Learning how to achieve and maintain a good credit score is a crucial part of your financial health. Not only can it be a badge that says your financial life is in good shape, it can also help you access credit and get approved for loans and insurance at more competitive rates. Being approved for lower interest rates and premiums can in turn save you tens of thousands of dollars over your lifetime.

A solid credit score can also have other perks, such as helping you get approved for products with better features, such as rewards credit cards.

While there’s no one size fits all solution on how to keep a good credit score, there are some best practices you can follow. Read on to learn more about this topic and actual tactics, including:

•   What is a credit score?

•   How can you maintain a good credit score?

•   What are tips to keep your credit score high?

•   How can new credit card users establish a credit score?

What Is a Credit Score?

A credit score is a three digit number ranging from 300 to 850 that is an indicator of your credit behavior. Your score is calculated based on your credit history from all three credit bureaus — Experian, Equifax, and TransUnion — and is based on how lenders may perceive your risk as a borrower.

What exactly does that mean? By reviewing your past use of credit, your score reveals if you are more or less likely to pay back your loans on time. If you are more likely to repay your debts in a timely manner, the less risky you are.

The higher your credit score, the more creditworthy you are in the eyes of lenders.

What Affects Your Credit Score?

Several factors can affect your credit score, such as your payment history, the number of loan or credit applications submitted, and the age of your accounts you hold. There are also different scoring models, such as FICO vs. VantageScore. Each weighs factors differently to arrive at a credit score. Meaning, there may be some differences in your credit score.

Lenders may look at one credit score or all of them, plus different qualification criteria when deciding whether to approve you for a loan and at what interest rate.

How Is Your Credit Score Calculated?

Though there are different credit scoring models, most use similar financial behaviors to calculate them.

They’re grouped in the following categories:

•   Payment history: This factor is one of the most important factors in your credit score as it assesses whether you’re likely to pay your loan on time. Credit scoring models will look into current and past account activity, including any late or missed payments.

•   Amounts owed or available credit: The percentage of the available balance you’re using is your credit utilization. The more you are using available credit in your revolving accounts (like your credit cards and lines of credit), the more it could appear you rely too much on credit. This can make you look like a risky person to whom to lend.

•   Age of credit history: The longer your credit history, the more a lender can look into your credit behavior. It’s usually considered good to have a long credit history vs. a very short or recent one.

•   Account types: Having a different mix of loans offers more insight into how you handle various accounts. Credit-scoring models may not, however, use this as a major factor when calculating your score.

•   New or recent credit: The more recent applications you submit for new loans or credit accounts, the more risky you may appear to be. That’s because it may look like you need to rely on credit; that you are quickly trying to acquire different forms of access to funds.

(There are some exceptions, such as shopping around for mortgages within a short span of time.)

8 Tips for Maintaining Your Credit Score

Understanding the importance of a good credit score and what goes into it can help you protect the one you have. The following are eight suggestions on how to maintain a good credit score.

1. Pay Your Credit Card Bills on Time

Ensuring you’re on top of your bills (not just your credit cards) will help keep a positive payment history in your credit reports. This is the single biggest contributing factor to your credit score at 30% to 40%. Consider setting up automatic payments or regular reminders to ensure you’re paying on time.

2. Keep Your Credit Utilization Low

Your credit utilization is the percentage of the available limit you’re using on your revolving accounts like credit cards. Basically, you don’t want to spend close to or at your credit limit. A good rule of thumb to follow is to now use more than 30% of your overall credit limit.

So if you have one credit card with up to $10,000 as the limit, you want to keep your balance at $3,000 or lower.

3. Maintain Credit History With Older Credit Cards

Even if you don’t use your older credit cards that often, keeping them open means you can maintain your long credit history. Consider charging a small or occasional amount, whether an espresso or gas station fuel-up, to ensure your account stays open. This can reassure prospective lenders that you have been managing credit well for years.

4. Apply for a New Card Only When Important

Consider this as you try to keep a good credit score: Go slow. Since credit-scoring models look at the number of times you apply for new credit, only open one when you really need it. Stay strong in the face of offers to get free shipping or 10% off if you sign up for a card that many retailers promote.

Spreading out your applications is a good idea rather than regularly or heavily putting in a lot of card applications. By moving steadily and choosing a credit card and other types of funding carefully, you likely won’t raise red flags, such as that you need to rely heavily on credit.

5. Frequently Check Your Credit Reports for Errors

Mistakes can happen, and errors in your credit reports could negatively affect your score. You can get your credit reports for free at AnnualCreditReport.com from all three credit bureaus.

It’s wise to check your credit scores regularly, which won’t impact your score. If you see an error — whether it’s an account you don’t own or a bill marked unpaid that you know you took care of — dispute it as soon as possible.

6. Make Payments in Full When Possible

Making payments in full will help you maintain a positive payment history and lower your credit utilization. Both of these can maintain your creditworthiness and save you money on interest charges.

7. Don’t Close Old Credit Cards

Closing your old credit cards could shorten your credit history. It could also increase your credit utilization because it will lower your available credit limit. Even if you make the same amount in purchases, your credit utilization would go up when your credit score updates.

For example, if you currently have an overall credit limit of $28,000 and you have $7,000 in credit card balances, your credit utilization is 25%. If you close a credit card which had a $7,000 limit, you then lower your total available credit to $21,000 your credit utilization will go up to 33%.

8. Live Within Your Credit Means

It can be hard to say no to an invitation to try a pricey new restaurant or not tap to buy when scrolling through social media. But when you let your spending get out of hand, you may use your credit cards too much. It can feel like free money in the moment — but you still have to pay it back. If you overextend yourself, you may find it hard to pay your balance on time and risk a late or missed payment.

Instead, spend only what you can afford and try to avoid lifestyle creep (having your spending rise with your pay increases or even beyond them). That can help provide some guardrails for using credit cards responsibly.

Establishing a Credit Score for New Credit Card Users

Trying to establish a credit score can be a challenge since, ironically enough, you need credit to build credit.

If you are in this situation, there are several options to pursue, such as the following:

•   Open a secured credit card: A secured credit card is one where you’ll put down a refundable cash deposit that will act as your credit line. You can use this to establish credit and apply for an unsecured credit card. Some issuers will upgrade you once you make consistent on-time payments for a predetermined amount of time.

•   Apply for a credit builder loan: These types of loans are specifically geared towards helping you establish and build credit over time. Instead of getting the loan proceeds like a traditional loan, the funds are held in an escrow account until you pay back the loan in full.

•   Become an authorized user: You can ask a loved one, like a parent or even a close friend, if they’re willing to add your name on their credit card account. Doing so means the credit account will go in your credit history. Of course, that doesn’t give you access to use their account without restraint. The guardrails can be established between you and the original card holder.

The Takeaway

Maintaining a good credit score (and keeping that score high over time) comes with perks such as increasing the likelihood of getting approved for loans at more favorable terms. You might qualify for lower interest rates, saving you a considerable amount of money over time.

Using a credit card wisely is one of the ways you can build and maintain your credit score. But that’s not all there is to opening a credit: You also likely want one with great perks.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How can I maintain my credit score?

You can maintain your credit score by consistently making on-time payments, keeping a low credit utilization, and limiting applications for new credit.

Why is it important to maintain a good credit score?

Maintaining a good credit score can help increase the chances of getting approved for loans with more favorable rates and terms. It can also mean lower insurance premiums.

How can I maintain a good credit score without debt?

You can maintain a good credit score by paying off all your credit card balances each month so you don’t carry that kind of debt. Keeping older accounts open and using them occasionally can also contribute to a good credit score.

What can I do to build a good credit rating?

You can build a good credit rating by ensuring you’re making payments on time, not using all your available credit limit, and being careful in applying for new loans (that is, don’t apply for too many lines of credit too quickly). These are some of the best ways to achieve and maintain a good credit rating.


Photo credit: iStock/PeopleImages

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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What Are Credit Card Rewards? How to Take Advantage of Them

Credit Card Rewards 101: Getting the Most Out of Your Credit Card

If you’re like many Americans, you swipe and tap your way through your day, using your credit card for everything from that morning latte to that late-night movie download. And, of course, for other purchases and services, from plane tickets to Pilates classes. That spending can add up, but using a rewards credit card can help make those expenditures pay off.

How rewards credit cards work: They pay the cardholder back with bonuses based on a small percentage of the amount spent. You’ll find different offers from credit card issuers in terms of how you can earn and redeem rewards, so you may want to review a variety of programs to see which ones best suit your style and needs.
In this guide, you can get a good grounding in how these programs work, including:

•   What are different types of credit card rewards?

•   How can you make the most of credit card rewards?

•   How do you redeem credit card rewards?

Types of Credit Card Rewards

What credit card rewards are, specifically, depends on the type of rewards your specific credit card pays out. The credits earned for making purchases can come in the form of cash back, points, or airline miles.

By reviewing the options below, you can better understand what kind of rewards might suit you best. This can help you get ready to apply for a new credit card.

Cash Back

For cash back rewards cards, reward earnings are based on a percentage of the amount charged to the card. The rate of earnings can typically range from 1% to 5%. In some cases, you’ll earn a higher rate for an introductory period or on a particular category of spending for a specific period of time.

Calculating what the rewards rate equals as money back can be simple for cash rewards: Just apply the cash-back percentage to total spending on the card.

•   Example: If you had a credit card that offered 2% cash back on all purchases, you’d earn $2 back for every $100 you spent using your card.

In some cases, cardholders will earn a flat rate across all purchases made with the card. But a rewards credit card may offer tiered earnings, as briefly noted above. This means the percentage back will vary depending on the category of purchases or the total amount spent during the year.

Recommended: What is a Charge Card

Travel Miles

As the name suggests, this type of rewards credit card allows you to earn airline miles in exchange for your spending responsibly with a credit card. You can either get a card affiliated with a specific airline or a more general travel rewards credit card.

It’s possible to earn a fixed rate of miles for every dollar spent, or you might earn more miles through spending in certain categories.

•   For instance, you might earn a mile per every dollar spent. Or you could get one mile per $1 in all purchase categories with the exception of travel costs, where you’d earn three miles per every dollar spent.

While they’re called miles, these rewards don’t necessarily translate to airline miles traveled. Rather, you typically redeem the miles you’ve earned to help cover the cost of flights or other travel-related expenses, such as hotel stays.

Unlike cash back rewards, where the value is pretty straightforward, the valuation of airline miles can vary by card. This is worth evaluating when deciding between credit card miles or cash-back rewards. The value of an airline mile can usually range from just under one cent per mile up to around two cents.

Points

Another way to earn credit card rewards is by getting a certain number of points for every dollar spent using the card. You can then redeem those points in a variety of ways, such as in the form of cash back, merchandise, travel purchases, gift cards, and even events.

Credit cards that reward cardholders through credit card points will pay out a certain number of points for every dollar spent on the card. Some considerations:

•   They might offer bonus categories, where cardholders can earn more points for every dollar spent in that particular category.

•   For some cards, earned rewards points may have a set redemption value — for example, every 10,000 points might be worth $100 in flight or merchandise redemptions. However, redemption rates can depend on the type of reward you choose. For instance, there might be different points requirements for flights as opposed to merchandise.

Given these scenarios, cardholders may have to be strategic. They may want to consider the type of reward they select and the actual cost of their selections to get the best bang for their buck.

How to Optimize Credit Card Rewards

It’s clear that the returns you can earn when using a rewards credit card can vary tremendously. But in addition to choosing a rewards card with the best earnings rate, there are other ways to take maximum advantage of credit card rewards.

Find the Best Card Based on Individual Spending Habits

Some rewards cards accrue points on a flat-rate basis. This means points or miles are awarded at the same rate regardless of what an individual charges to their credit card.

Others, however, offer higher levels of earning for different spending categories. For instance:

•   Some cards may offer more points per dollar spent on groceries or gas.

•   Other rewards credit cards may provide more miles back when an individual spends on flights or hotels.

For people who tend to concentrate spending on specific categories, some cards may offer added value back. Before signing up, it’s worth taking the time to assess the different types of credit cards you may qualify for and which will be most valuable given your spending habits and the kind of rewards that would be most beneficial.

Max Out Available Promotions

Some rewards credit cards offer higher introductory earning rates, as noted above. This means you can earn more points than usual for a set amount of time or up to a specific spending threshold.

Other promotions may be offered as well, such as greater earnings during a specified time period. Enjoying credit card bonuses like these is key to making the most of credit card rewards.

For instance, you may want to time big-ticket items and other purchases to take advantage of those greater returns.

One important caveat: While offers to earn more rewards certainly seem attractive, it’s wise to ensure that spending is within your budget. That’s because carrying a credit card balance may incur interest and/or penalties that can cancel out the value of any increased earnings. Avoiding interest on credit cards requires paying off your balance in full.

Be Strategic About Redemptions

Given the variability in the value of rewards points, it’s a good idea to crunch the numbers before redeeming. This is especially true because fluctuating prices and redemption promotions can help to stretch earned rewards further. And who doesn’t want to squeeze as much value as possible from their rewards?

•   Get the timing right for your needs. For example, using points to book a $200 short-haul flight may not optimize the value of your reward. But booking that same route at the last minute may be considerably more expensive. In such a case, if you have to travel ASAP, using those points may yield considerably more value.

•   You might also use points for a statement credit redemption. This means the points can be translated into cash that is applied to your credit card balance.

This can be especially helpful if there’s a month where money is tight and you are concerned about meeting your minimum payment. Applying your rewards could help you keep your account in good standing.

•   Be aware that rewards programs may have redemption minimums. This could mean that, say, you need to accrue a certain dollar amount or number of points so you can use your reward. For instance, maybe you have $20 in rewards that you want to use to help meet your credit card statement’s minimum payment. If your card only allows you to redeem rewards when you reach a threshold of $25 or 2,500 points available, you will be out of luck. You’ll need to earn more rewards before you can use them.

•   Also look for redemption promotions or opportunities to redeem for the highest-value choices. This can help you get the most out of a rewards credit card.

Redeeming Credit Card Rewards

Once you’ve racked up some credit card rewards, it’s time to redeem them. Here’s how:

1.    Log into your credit card app or portal. You can usually find your rewards listed somewhere on the main page, though the exact placement depends on your credit card issuer.

2.    Click on your rewards balance. You should be able to see your total available rewards, as well as your options for redemption.

3.    Choose how you want to redeem your rewards. Options for redemption may include a statement credit, a check, merchandise, gift cards, or travel, depending on your specific credit card.

4.    Move ahead with redeeming your rewards. Once you select the option to redeem your rewards, that amount will get deducted from your balance. How long it takes to receive your rewards will depend on how you chose to redeem them.

Do Credit Card Rewards Expire?

It is possible for credit card rewards to expire. However, whether your rewards will expire — and how soon their expiration date will arrive — depends on the type of credit card rewards and your credit card issuer.

•   Airline miles and hotel points often expire (though not always).

•   Points or cash back earned through your issuer’s program are less likely to expire.

•   In some cases, your rewards might even get automatically credited to your account if you forget to redeem them or haven’t used your account in a while.

Check your credit card’s terms and conditions to find out how your credit card works and what the rules are for your credit card rewards.

Once you know the details, you will likely want to stay aware of any expiration date, just as you probably pay attention to when your credit card payments are due.

The Takeaway

Getting rewards — whether in the form of cash back, points, or travel miles — when you spend money is an attractive proposition. However, when it comes to how to take advantage of credit card rewards, you’ll need to do more than just swipe your card. You’ll want to be strategic about earning and redeeming your points to get the most benefit. You’ll also likely want to make sure to max out any promotions that are available.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.



Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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man on laptop with credit card

Negotiating a Credit Card Debt Settlement

There is a sinking feeling in your gut that comes with credit card debt, especially when it starts to feel unmanageable. While negotiating a credit card settlement might not sound like a fun solution, there are scenarios when it may make sense. Let’s dive in.

The Difference Between Secured and Unsecured Debt

First, let’s talk about the type of debt a credit card typically is. When a credit card company issues a credit card, it’s taking a big chance on getting its money back, plus interest. It’s more than likely that the credit card you have is considered “unsecured.”

All that means is that it isn’t connected to any of your assets that a credit card company can seize in the event that you default on your payments. Essentially, the credit card company is taking your word for it that you are going to come through with the monthly payments.

Secured debt works a bit differently. They’re backed by an asset, like your car or home. If you default on a secured debt, your lender could seize the asset and sell it to pay off your debt. Mortgages and auto loans are two common types of secured debt.


💡 Quick Tip: With lower fixed interest rates on loans of $5K to $100K, a SoFi personal loan for credit card debt can substantially decrease your monthly bills.

Credit Card Debt Negotiation Steps

The process of negotiating credit card debt usually begins when you have multiple late or skipped payments — not just one. A good first step is to find out exactly how much you owe, and then research the different options that may be available to you. Examples include a payment plan, an increase in loan terms or lowered interest rates.

Once you have that information, you’re ready to negotiate. You can start by calling your credit card company and asking for the debt settlement department. Or, you can send a note by email or regular mail.

You may have to go through a number of customer service reps and managers before striking a deal, but taking the initiative can show creditors that you are handling the situation honestly and doing what you need to do.

When you do reach an agreement, be sure to get the agreed-upon terms in writing.

Types of Credit Card Debt Settlements

Lump Sum Settlement

This type of agreement is perhaps the most obvious option. Essentially, it involves paying cash and instantly getting out of credit card debt. With a lump sum settlement, you pay an agreed-upon amount, and then get forgiveness for the rest of the debt you owe.

There is no guarantee as to what lump sum the credit card company might go for, but being open and upfront about your situation could help your cause.

Workout Agreement

This type of debt settlement offers a degree of flexibility. You may be able negotiate a lower interest rate or waive interest for a certain period of time. Or, you can talk to your credit card issuer about reducing your minimum payment or waiving late fees.

Hardship Agreement

Also known as a forbearance program, this type of agreement could be a good option to pursue if your financial issues are temporary, such as the loss of a job.

Different options are usually offered in a hardship agreement. Examples include lowering interest rate, removing late fees, reducing minimum payment, or even skipping a few payments.

Why a Credit Card Settlement May Not Be Your Best Option

Watching your credit card balance grow each month can be scary. Depending on your circumstances, a settlement may be the best solution for you.

However, it’s not without its drawbacks. For starters, a settlement may result in your credit card privileges being cut off and your account frozen until a settlement agreement is reached between you and the credit card company.

Your credit score could take a hit, too. This is because your debt obligations are reported to the credit bureaus on a monthly basis. If you aren’t making your payments in full, this will be noted by the credit bureaus.

That said, by negotiating a credit card settlement, you may be able to avoid bankruptcy and give the credit card company a chance to recoup some of its losses. This could stand in your favor when it comes to rebuilding your credit and getting solvent again.

Solutions Beyond Credit Card Debt Settlements

Personal Loan

Consolidating all of your high-interest credit cards into one low-interest unsecured personal loan with a fixed monthly payment can help you get on a path to pay off the credit card debt. Keep in mind that getting a personal loan still means managing monthly debt payments. It requires the borrower to diligently pay off the loan without missing payments on a set schedule, with a firm end date.

For this reason, a personal loan is known as closed-end credit. A credit card, on the other hand, is considered open-end credit, because it allows you to continue to charge debt (up to the credit limit) on a rolling basis, with no payoff date to work towards.


💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi personal loans come with no-fee options, and no surprises.

Transferring Balances

Essentially, a balance transfer is paying one credit card off with another. Most credit cards won’t let you use another card to make your payments, especially if it’s from the same lender. If your credit is in good shape, you can apply for a balance transfer credit card to pay down debt without high interest charges.

Many balance transfer credit cards offer an introductory 0% APR, but keep in mind that a sweet deal like that usually only lasts about six to 18 months. After that introductory rate expires, the interest rate can jump back to a scary level — and other terms, conditions, and balance transfer fees may also apply.

Credit Consumer Counseling Services

Credit consumer counseling services often take a more holistic approach to debt management. You’ll work with a trained credit counselor to develop a plan to manage your debt. Typically, the counselor doesn’t negotiate a reduction in debts owed. However, they may be able to have your loan terms increased or interest rates lowered, which would lower your monthly payments.

A credit counselor can also help you create a budget, offer guidance on your money and debts, provide workshops or educational materials, and more.

Many credit counseling agencies are nonprofit and offer counseling services for free or at a low cost. You can search this list of nonprofit agencies that have been certified by the Justice Department.

The Takeaway

When credit card debt starts to become unmanageable, negotiating a credit card debt settlement may be an option to consider. There are different types of settlement options to consider. Understanding what’s available to you — and what makes sense for your financial situation and needs — can help you make an informed decision. If a settlement isn’t right for you, there are other solutions, such as a personal loan or credit counseling services, that may be a better fit.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.


SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.



SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Consumers Fear Credit Card Fraud, Still Get Lazy About Security

Think for a moment about all the personal information floating around online: We chronicle our activities on Insta and TikTok, send payments to keep the lights and WiFi on, and order up a storm of gifts, groceries, and impulse buys with a few quick clicks.

Sure, our digital lives are fast and fun, but there’s a downside — you might say a dark side. Many of us have online habits that can leave us wide open to the growing ranks of hackers and scammers. Cybersecurity is becoming an increasingly common concern, and getting hacked — or just the fear of it — can be one more stressor in an already anxious world.

SoFi took on the topic with a survey of 1,000 U.S. adults who self-identified as credit card holders, conducted online in February 2023. It revealed some surprising statistics about who’s been hacked, how worried people are, and what steps they are (and aren’t) taking to avoid becoming a victim.

SoFi's survey result

Over Half of People Believe They’re Doomed to Be Hacked

With the average person spending more than 6.5 hours per day online, there’s a lot of sharing going on of ideas, feelings, funny memes… And highly personal data.

Perhaps you’ve made a flurry of purchases on social media or discussed embarrassing symptoms via text and then thought, Uh-oh, I hope that was secure.

You aren’t alone. According to SoFi’s survey, 59% of people believe their credit card information or personally identifiable information will be stolen at some point, if it hasn’t been already.

That means the majority of people who participated in our survey expect to be hacked or already have been. When you consider how the number of data breaches is rising, it makes sense. Cybercrime is projected to almost triple between 2022 and 2027. No wonder we’re worried!

Less Than Half of Respondents Say They Know How to Outsmart Hackers

Frankly, most of us don’t have a clue as to what is really involved when you fall victim to cyber crime. Less than half of respondents in SoFi’s study believe they understand the risks of credit card fraud and different types of identity theft very well. In fact, only 45% of respondents said they understand very well how to protect themselves from online crime.

Most Respondents Are Working Hard to Defend Their Data and Assets

No one wants their most personal info kicking around on the dark web. Nor does anyone relish checking their credit card bill and seeing that someone charged $600 worth of baby clothes to their account when they are most definitely not a parent.

Most popular online security measures

Here’s what SoFi’s research found about how people are playing defense. Check out how many people use these protective tactics to avoid becoming an identity theft or credit card fraud statistic:

•   82% of people check their credit reports regularly.

•   82% use multi-factor authentication, or MFA. (A good sign: Only 3% of people don’t have a clue what MFA is.)

•   63% avoid using public WiFi.

•   41% use a VPN, or virtual private network. That said, 8% don’t know what a VPN is.

•   61% use a password manager.

•   86% avoid sharing personal information online.

•   60% use a credit monitoring service.

More of Us Should Be Monitoring Our Credit

That last move, using a credit monitoring service, is an important one. It can make mobile banking safer and help protect other aspects of a person’s digital life.

Steve Tcherchian quote

“Credit monitoring and identity theft protection work. If you don’t have this in place, do it now. With the size of the last few mega breaches and the companies they have affected, assume your data is exposed and you’re at risk. Everyone is required to purchase insurance for their car and house. Why not have the same for your most critical asset: your identity?” —Steve Tcherchian, CISO and Chief Product Officer at XYPRO, a cybersecurity solutions company

In addition to using the tactics above, the SoFi survey respondents have also deployed these moves to protect themselves from credit card fraud and other cybercrimes:

•   Using strong passwords

•   Clearing browser cookies and cache frequently

•   Not sharing their location in browsers or apps

•   Checking their account activity frequently

Most people (90%) check their credit card statements at least once per month. 44% of people check their statements at least once a week.

More Than Half of Respondents Admit to Recycling Passwords

Most people have good intentions when it comes to protecting themselves from the bad guys trying to swipe their financial or personal data. But hello, we’re all human. And that can mean sometimes recycling passwords because it’s just too complicated to come up with a new one. Or logging onto WiFi at a cafe or in a hotel because those Taylor Swift tickets are about to go on sale and you cannot, cannot live without them.

Risky online behaviors

More Than 1/3 of Respondents Use Public WiFi Without a VPN

Here, the SoFi survey respondents admit to risky online behavior:

•   53% have used the same passwords for multiple accounts.

•   34% have used public WiFi without a VPN.

•   29% have stored credit card information in their browser.

•   27% have provided credit card info over the phone.

•   26% have stored confidential information on a cloud server, such as Google Drive or Dropbox.

•   20% have shared credit card information with others (either in person or not secured online).

•   18% have downloaded software from unsecure websites.

•   13% have left their phone or computer unattended in a public space.

•   11% have responded to emails from unknown senders that asked for personal information.

“When logging onto public WiFi that doesn’t require a password for access, know that hackers can track your internet activity and intercept passwords and other sensitive data that is exchanged. If you must use an unprotected public WiFi network, avoid entering your social media, email, or bank credentials while connected.” —Brandon King, founder of Home Security Heroes, an identity-security advisory service

Not everyone realizes the very real risks of playing fast and loose with their personal data. More warnings about the consequences of getting hacked or scammed could be a huge help.

“Education and awareness campaigns need to be implemented at all levels, including schools, workplaces, and public forums. Financial institutions can play a significant role in providing customer education on safeguarding personal information. And social media platforms can spread awareness and provide tips on preventing fraud and identity theft.” —Andrew Lokenauth, founder of Fluent in Finance, a financial education platform

With the right information, many people might avoid becoming an identity theft statistic.

14% of Respondents Are Using Their Birthday or Their Pet’s Name as Their Password

You don’t need to confess, but many people are guilty of using shockingly simple passwords. One like your first name plus the digits of your birthday. Or your phone number. Or even the dreaded password1234.

And, making matters even worse, lots of busy people reuse their passwords with abandon. It’s easy to understand why: You might be prompted to create an account when shopping online so you can unlock a discount or free shipping, so you fall back on your old favorite. Or perhaps you need to create a password to access info on your vet’s website, so of course your doggo’s name is an easy to remember password, right?

Dumb password moves

Whatever the reason, there’s no doubt that there are plenty of people who aren’t following password security best practices. Here are some of the missteps the SoFi survey revealed:

•   14% use passwords that include their pets’ names or birthdays

•   13% use passwords that include their childrens’ names or birthdays

•   11% use passwords that include their significant other’s name or birthday

•   10% use use passwords that relate to a band or song they like

•   7% use something easy to remember like “12345” or “password”

•   7% use something easy to type like “QWERTY”

On the flip side, 16% use auto-generated, secure passwords provided by a password manager. High-five to those folks!

No More Lame Passwords: Pro Advice

Brandon King quote

Some advice from experts on this super-important subject:

•   Buckle down and “use different passwords for each login or account. If you reuse passwords, hackers can access your accounts more easily” in the event of a security breach. “By using separate passwords for each account, you can rest easy knowing that even if one of your accounts is compromised, the rest will remain secure.” —Brandon King, Home Security Heroes

•   “Keep a close eye on credit card balances, and immediately report any discrepancies to the bank or credit card company” to minimize your liability. —Andrew Lokenauth, Fluent in Finance

•   “Don’t write down passwords!” —Monica Eaton, founder of Chargebacks911, a chargeback management company

And need we mention that writing your PIN on the back of your debit card is a real no-no?

44% experienced fraudulent

44% of Respondents Have Had Bogus Credit Card Charges

Sometimes, you get lucky, and your bank or credit card company pings you asking whether that’s really you trying to pay for a lavish dinner in SoHo, NYC, when you are actually sitting on your couch in Santa Cruz. Fraud protection can be a wonderful thing, but it doesn’t catch every scammer. Learn more about threats to credit card security:

Older Respondents Are More Than 2x As Likely to Endure Credit-Card Fraud

Here’s what SoFi survey participants told us about experiencing examples of credit card fraud in the form of unauthorized charges:

•   44% of people have experienced fraudulent charges on their credit cards.

◦   Nearly two-thirds of this group (63%) have experienced fraudulent charges more than once.

◦   For most people (84%), the unauthorized charges were less than $500.

◦   6% of people said their most recent fraudulent charge was $1,000 or more.

•   4% of respondents have experienced fraudulent charges five or more times.

•   53% of respondents ages 55 and older have experienced fraudulent charges on their credit cards, showing that older age seems to correlate with being scammed more often.

◦   Perhaps that’s why confidence in one’s credit card security seems to wane with age: 26% of those aged 55 or older said they had been or expected to be hacked, versus 10% of those aged 18 to 24.

•   Almost three-quarters (74%) of those who experienced fraudulent charges said their credit card company notified them of suspicious activity.

Who Knew? Where Scammers Shop

Curious about where credit card scammers go shopping? People who experienced fraudulent charges and knew where their stolen credit card numbers were used said the purchases were made in these types of environments:

•   Big box retailers and grocery stores like Walmart, Target, Sam’s Club, Costco, Whole

•   Foods

•   Online retailers like Amazon and eBay

•   Smaller ecommerce sites

•   Gas stations and convenience stores

Monica Eaton quote

How can you better protect yourself?

“Opt for the latest payment innovations. Contactless payments, for example, can protect you against credit card ‘shimming’ [in which scammers insert a thin device into the slot of card readers to steal your data], as can digital wallets like Apple Pay, which deploy tokenization technology just like an EMV [which stands for Europay, Mastercard, and Visa] chip card does.” —Monica Eaton, Chargebacks911

Ouch: 15% of Respondents Have Been Victims of Identity Theft

It’s a scary fact that identity theft is on the rise. It can be deeply upsetting to have someone steal your personal information and credentials and use them for nefarious purposes, opening accounts and making purchases that you would never dream of. It can be similarly troubling to have to unravel the damage done and reclaim what is rightfully yours.

34% of Victims Lost Money Due to Identity Theft

Personal impact of identity theft

Unfortunately, the SoFi survey revealed the following identify theft statistics:

•   15% of respondents have been victims of identity theft.

•   Most often, this group found out about identity theft because they noticed fraudulent charges on their bank statements (21%).

•   Other common ways people found out:

◦   12% said they were getting suspicious emails, calls, and text messages.

◦   12% said their tax return was incorrect or filed by someone else.

◦   12% said there were inaccuracies on their credit report.

◦   10% said they were unexpectedly denied credit.

•   The most common impacts that people described as a result of identity theft were:

◦   52% said it made them angry or frightened.

◦   36% had to set up new online accounts.

◦   34% lost money that was never recovered.

◦   26% said their social media accounts were hacked.

◦   25% reported that their credit scores were hurt.

•   More than half of all respondents (51%) said they know someone who has been a victim of identity theft.

Those who are concerned about the possibility of identity theft can subscribe to services designed to help protect one’s information and send alerts about any evidence of this kind of activity. It can help provide peace of mind as this kind of crime increases.

92% of Respondents Are Confident Companies Can Protect Their Data

Learning about all the risks of credit card and identity theft out there can be troubling and make a person feel as if they have a big bullseye on their back, tempting hackers to target them.

But of course, that’s not the case. Steps are being taken to protect consumers from identity and money scams and new techniques are emerging. Most people recognize that it’s not all doom and gloom out there.

Consumer confidence in corporate data protections

In general, people are cautiously optimistic about how well their information is and can be safeguarded.

•   92% of people are somewhat confident or very confident in companies’ abilities to protect their personal information.

•   8% of respondents said they’re not confident at all in companies’ abilities to protect their information

◦   However, people realize there is only so much that can be done to protect information. 69% of this group believe all systems are vulnerable to hacking, regardless of the security measures that are implemented.

◦   On the flip side, 25% of this group believe companies don’t spend enough resources on cybersecurity.

Yes, we all may be at risk, but by adopting smart strategies and partnering with top-notch, security-focused financial institutions and other businesses, we can minimize the odds of falling prey to cybercriminals.

The Takeaway

As SoFi’s survey reveals, credit card fraud and identity theft are growing concerns for Americans. But there are proven and emerging ways to stay ahead of the scammers. By doubling down on smart tactics and taking steps to safeguard your personal information, you can protect yourself from serious damage.

To learn more about options for protecting your credit cards and tips for managing your accounts, explore our credit card guide.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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How Do Student Loans Affect Your Credit Score?

Student loans don’t just help you pay for your college education. They also allow you to build a credit history, which can be useful when it comes time to get a mortgage or take out a car loan. The key, though, is to make regular on-time payment – or you may wind up with the sort of credit history that negatively impacts your ability to borrow money in the future.

Here’s a look at how student loans can affect your credit score.

How Is My Credit Score Calculated?

First, it can be helpful to know how your credit score is calculated. There are several types of credit scores, but FICO scores are the most commonly used by top lenders.

Your FICO score is calculated using five categories of data found in your credit reports, which each category weighted differently.

Category

Weight in Scoring

Payment History 35%
Amounts Owed 30%
Length of Credit History 15%
New Credit 10%
Credit Mix 10%

Based on these calculations, there are a few ways you can build good credit and maintain a good credit score. Paying your bills on time is a big one, since your payment history is the most heavily weighted factor. Paying down existing debt and keeping credit card balances low will also have a big effect. Less impactful, but important strategies, also include diversifying the types of credit you have, avoiding opening too many new accounts at once, and keeping accounts open to lengthen the average age of your credit history.

Serious savings. Save thousands of dollars
thanks to flexible terms and low fixed or variable rates.


What Student Loan Factors Affect My Credit Score?

Now that you know how credit scores generally work, you might be wondering how your student loans specifically impact your score.

Again, one of the biggest ways your student loans can affect your credit is whether or not you pay them on time. If you’re a responsible borrower who continually makes on-time student loan payments, you will see positive shifts in your credit score over time.

But if you fail to repay a loan or continually make late payments, your credit score will likely see a dip. If you default on your student loan, your credit score could drop significantly. The lender may also send your account to a collections agency, and you may have a more difficult time securing credit in the future.


💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

How Does a Late Student Loan Payment Affect My Credit Score?

Making payments on time is important, but what you might not realize is exactly how damaging late payments can be. Even if your credit history is pristine, it only takes one report of 30 days past due to change your score. Once a late payment is reported to the credit bureaus, it could remain on your credit report for up to seven years.

To help ensure your payments are on time, you might want to set up an automatic payment plan. Most lenders will even give you a small discount on your interest rate for doing so. If you know you can’t make a payment on time, talk to your lender or loan servicer right away. The Department of Education, which is the lender for four types of Direct Loans, and even some private lenders, offer loan deferment or forbearance. These options allow a borrower to temporarily suspend payments, which will minimize the impact on their credit score.

Does It Hurt to Pay Off Student Loans Quickly?

Repaying student loans quickly will always improve your credit score, right? Not necessarily. In fact, you could even see a small, temporary dip in your credit score right after paying off a loan. There are several reasons for this. If student loans are your primary source of open credit, closing those accounts means you’re no longer building payment history. Prematurely paying off a loan can also change your credit mix or credit utilization.

But credit score is just one factor to consider when deciding how quickly to pay off a student loan. You may want to think about how much extra interest you’d pay by leaving the account open. Carrying a high loan balance could also make it harder to qualify for new loans, which is something to keep in mind when it comes time to buy a home or car.

Notorious Big Bad D’s: Delinquent and in Default

Student loans affect credit scores in a variety of ways, but the worst thing you can do is ignore your monthly loan payment. If you’re even one day late with a payment, you’ll be considered delinquent and may be charged a penalty.

Once a missed payment is more than 90 days delinquent, your loan servicer will report it to the three major national credit bureaus. This could lower your credit score and hurt your ability to get a new credit card or qualify for a car loan or mortgage.

After 270 days of a missed student loan payment, your status changes to default and your student loans are due in full along with any accrued interest, fines, and penalties.

(Note that the on-ramp that’s in place for federal student loan repayment from October 2023 through September 2024 temporarily shields borrowers from the most immediate consequences of delinquency and default.)

Will Rate Shopping Different Student Loan Lenders Hurt My Credit?

When you’re shopping around for the best interest rate possible on a private student loan, lenders may pull your credit file. This is called a hard inquiry, and each one could temporarily knock a few points off your credit score.

To help protect your FICO score, try to finish shopping for rates and finalizing your loan within 30 days. Researching rates and getting quotes ahead of time can give you a good idea of whether you’ll qualify for a loan before you formally apply.

You may also want to ask lenders if they can tell you the interest rate you would receive without doing a “hard” credit pull, which might affect your score. You can’t get a loan without an eventual hard inquiry, but getting prequalified allows you to compare interest rates without impacting your credit score.

Will Refinancing Student Loans Help My Credit?

Because refinancing involves taking out a new loan with new terms to pay off existing debt, refinancing student loans affects your credit score—both positively and negatively.

In the short-term, refinancing will involve a hard credit inquiry and may cause a temporary ding to your credit. Again, as long as you keep your loan shopping to a short period, multiple inquiries will be treated as one, and should have a minimal impact on your score.

In the long-run, refinancing student loans at a lower interest rate can have an indirect positive effect on your credit. For example, if refinancing lowers the amount you pay each month, you may be more likely to make payments on time. You may also pay off your loans faster, which can help you reduce your overall debt and improve your score. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.)

If you refinance federal loans with a private lender — in effect, turning your federal loans into a private loan — rest assured that credit bureaus don’t view these two types of loans any differently. However, when you refinance your federal loans, you will lose certain federal protections, such as income-driven repayment plans, deferment or forbearance, and loan forgiveness programs.

Do I Need a Good Credit Score to Take Out a Student Loan?

Your credit score may be a factor when you’re applying for a student loan. It all depends on the type of loan you’re planning to take out. Most federal loans don’t have a minimum credit requirement, which is why nearly every borrower gets the same interest rate regardless of their financial profile. However, federal PLUS loans for parents require that borrowers do not have an adverse credit history.

Credit scores are typically more of a factor with private student loans. Lenders often consider your score when determining student loan approval and interest rate. In general, the better your score, the better your rate will be.


💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.

Which Credit Scores Do Private Lenders Use?

When considering your student loan application, most private lenders look at your FICO® score. This score, which ranges from 300 to 850, helps lenders determine whether to extend credit and at what interest rate.

Because FICO is used widely throughout the lending industry, including by mortgage lenders and credit card providers, it gives lenders an apples-to-apples comparison of potential borrowers.

The Takeaway

Student loans can help borrowers establish a solid credit history, which can ease the way for future borrowing opportunities and attractive interest rates. The key is to pay what you owe on time, every time.

Paying a loan off early or shopping around for rates could cause a small, temporary dip in credit scores. Being late with a payment — or stopping payment altogether — may lower your credit score and hurt your ability to qualify for another loan.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.


With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Do student loans help build credit?

Student loans are an opportunity for borrowers to build credit and establish a solid credit history, which can help when it’s time to get a mortgage or take out a car loan. The key is to make regular, on-time payments.

How can I improve my credit score if I have student loans?

Payment history is one factor of your overall credit score, so making regular, on-time payments on your student loans can help you build credit.

How is my credit score determined?

Your credit score is calculated using five different categories of data. These include payment history, amounts owed, length of credit history, new credit, and credit mix.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.


SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.


Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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