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The general trend is that the older you are, the better your credit score. The average credit score for Gen Z is 678. That rises to 747 for baby boomers. This is largely because boomers have had more time to build a credit history. Your credit history shows how well you manage your debt over time and how much of a risk you are to a lender.

You can improve your credit score by paying bills on time, not using more than 30% of the credit available to you, and using a variety of loans responsibly.

Here’s an in-depth look at credit scores by age and how you can maximize your score regardless of age.

What Is a Credit Score?

Your credit score is a measure of how well you manage your debt. Lenders can access your credit score from the three main credit reporting agencies: Equifax®, Experian®, and TransUnion®. The scores you receive from each bureau vary because each bureau may have different information about your credit.

Your credit reports, on which your scores are based, show information such as loan-paying history and the status of your credit accounts. When you apply for a loan or financing, lenders use your credit score to establish how risky you are as a borrower. The riskier you are, the lower your score, and the more interest you may pay for a loan.

SoFi Coach℠ Chat is a tool designed to help you view and analyze your financial data, get personalized insights, learn about SoFi products, troubleshoot issues, and take certain actions in chat. Coach responses are information for you to consider and not financial advice. Coach responses are based on limited information from your connected accounts and may have inaccuracies. The insights are meant to help you think about your finances and options —they are not advice or recommendations, and they do not guarantee results. Coach may offer you options to explore SoFi products on which SoFi would earn revenue. You are solely responsible for any financial decisions you make. Coach is offered by Social Finance, LLC.

Recommended: How to Check Your Credit Score for Free

Average Credit Score by Age

Here’s the average credit score by age and generation as of the third quarter of 2025, according to Experian.

Generation	Age	Average Credit Score
Gen Z	18-28	678
Millennials	29-44	689
Gen X	45-60	709
Baby Boomers	61-79	747
Silent Generation	80+	760

How Does My Age Affect My Credit Score?

While age doesn’t have a direct effect on your credit score, older generations tend to have higher scores because they’ve had more time to establish a solid credit history. Factors that affect your credit score include your payment history, your credit utilization, the length of your credit history, your credit mix, and how often you’ve recently opened a new line of credit.

However, according to OpenLending and TransUnion’s “Financing the Future” report, Generation Z and millennials are more likely to move up to higher credit tiers at a faster rate than older generations because of their borrowing habits.

What Factors Affect My Credit Score?

There are five main factors that make up your FICO® credit score, each with varying weights.

Payment History

Your payment history makes up 35% of your FICO Score. It includes how promptly you pay your credit card bills, your mortgage, and any installment loans. A few late payments on credit cards or a mortgage won’t ruin your score, but any bankruptcies or collections may.

Credit Utilization

Your credit utilization makes up 30% of your FICO Score. It measures the amount of revolving credit you use versus the total amount of credit you have available (credit card limits, lines of credit, etc.).

Length of Your Credit History

The length of your credit history accounts for 15% of your FICO Score. The longer your credit history, the better, assuming you manage your credit well. Your credit history includes how long your credit accounts have been open, the age of your oldest account, the age of your newest account, and the average age of all your accounts.

Credit Mix

Your credit mix, or the diversity of your debt, accounts for 10% of your FICO Score. This includes credit cards, mortgages, home equity lines of credit (HELOCs), installment loans, student loans, and car loans. If you are successfully managing a variety of financing types, it will be reflected in your FICO Score.

New Credit Applications

When you apply for a new credit card, the lender will do a hard inquiry on your credit that could cause your score to dip slightly. New accounts also reduce the average age of your accounts, which could lower your score as well. On the flip side, a new credit card account increases the amount of credit available to you, which might lower your credit utilization rate. It might also diversify your credit mix, and if you make payments on time, it could help build your credit score.

Recommended: How Long Does It Take to Build Credit?

Average FICO Score by State

The state with the highest average credit score is Minnesota at 741, and the state with the lowest average score is Mississippi at 677, according to Experian. Average credit scores are typically influenced by demographics, unemployment rates, poverty levels, education, and income.

State	Average Credit Score
Alabama	689
Alaska	720
Arizona	709
Arkansas	693
California	721
Colorado	729
Connecticut	724
Delaware	713
District of Columbia	711
Florida	704
Georgia	692
Hawaii	730
Idaho	729
Illinois	720
Indiana	710
Iowa	728
Kansas	720
Kentucky	704
Louisiana	686
Maine	731
Maryland	714
Massachusetts	731
Michigan	717
Minnesota	741
Mississippi	677
Missouri	712
Montana	730
Nebraska	728
Nevada	699
New Hampshire	735
New Jersey	722
New Mexico	701
New York	719
North Carolina	707
North Dakota	730
Ohio	713
Oklahoma	693
Oregon	730
Pennsylvania	720
Rhode Island	719
South Carolina	699
South Dakota	731
Tennessee	703
Texas	692
Utah	728
Vermont	737
Virginia	721
Washington	734
West Virginia	699
Wisconsin	737
Wyoming	722

FICO vs VantageScore

FICO and VantageScore® are the two leading companies in the credit score industry. Both use slightly different criteria in their scoring models to determine your credit score.

The VantageScore models and the base FICO models are generic credit scores created for use by a wide range of creditors, such as private student loan companies, online lenders, and credit card issuers. FICO also creates industry-specific auto and bankcard scores, which are built on the same criteria as the base FICO Scores but are tailored for auto lenders and card issuers.

Both VantageScore and FICO update their scoring models regularly to keep up with technology and industry changes but also to ensure they remain predictive as consumer behavior changes.

With all credit scores, the lower your score, the more risk you pose to lenders. That’s why borrowers with the highest credit score get the best loan terms.

Both the base FICO Scores and the base VantageScores range from 300 to 850, while FICO’s industry-specific scores range from 250 to 900.

What Is a Good Credit Score?

According to Experian, 670-739 is considered good. Credit scores above 740 are very good, and scores above 800 are exceptional.

Here is how credit scores are categorized:

•   Poor: 300-579

•   Fair: 580-669

•   Good: 670-739

•   Very good: 740-799

•   Exceptional: 800-850

Average Credit Score by Income

Your income is not considered as part of your credit score. However, some studies, including a 2018 Federal Reserve study, found that your income may have a “moderate correlation” to your credit score.

Average Credit Score by Income (according to the latest data from American Express)
Annual Income	Average Credit Score
Low Income	658
Moderate Income	692
Middle Income	735
High Income	774

The reason your income might affect your credit score is that the higher your income, the likelier you will be able to pay your debts on time and build a strong payment history. For example, if you earn $120,000, it will be easier to pay down a debt of $10,000 than if you earn $50,000.

Nevertheless, you don’t have to be a high-income earner to build credit over time. Paying bills and debt payments on time is the most important thing.

Tips for Building Your Credit Score

•   Make on-time payments. Consistently paying bills on time is one of the most effective ways to build and maintain a strong credit score.

•   Keep credit utilization low. Aim to use no more than 30% of your available credit to show responsible credit management.

•   Limit new credit applications. Avoid frequent credit applications, as each inquiry can temporarily lower your score and indicate potential financial strain.

•   Pay down debt. Reducing outstanding balances on existing debts can improve credit utilization and positively impact your score.

•   Maintain old credit accounts. Keeping older accounts open contributes to a longer credit history, which is favorable for your score.

•   Review credit reports regularly. Check your credit report for errors and dispute any inaccuracies that could be lowering your score.

•   Use a mix of credit types. A blend of credit types, such as installment loans and credit cards, shows you can manage different forms of credit.

Practicing good fiscal management will help keep your credit score from dropping and slowly help to build your credit score over time.

The Takeaway

The general trend is that the older you are, the better your credit score. That’s because older individuals have had more time to demonstrate that they can use debt responsibly. With a higher credit score, lenders consider you less of a risk and may charge you a lower interest rate on a loan.

You can build your credit score by paying bills on time, not using more than 30% of the credit available to you, and using a variety of loans responsibly. Also, don’t apply for new loans too often, as this can lower your score.

Take control of your finances with SoFi Coach. You can easily view all of your accounts in one convenient dashboard: bank and investment balances, current debts, spending breakdowns, and credit score. Easily set up budgets and spot upcoming bills. And get personalized insights on everyday money questions and take action with Coach chat, the AI guide that’s powered by the playbooks of SoFi Financial Planners, so its guidance comes from expert knowledge.

Meet SoFi Coach, your smart personal guide to getting your money right.

FAQ

How rare is an 800 credit score?

According to Experian, nearly a quarter (22.9%) of Americans have a FICO Score of 800 or higher. The credit scoring company describes this as exceptional.

What is the average American’s credit score?

The average credit score in the U.S. was 713 in 2025, decreasing by two points from its 715 average in the third quarter (Q3) of 2024, according to Experian. Despite the slight decrease, consumers are still better off than they were 10-15 years ago.

Is 750 a good credit score for a 25-year-old?

Yes, a 750 credit score is excellent for a 25-year-old, showing responsible credit management at an early age. With this score, you’re likely to receive favorable terms on loans and credit products, setting a strong foundation for future financial goals.

What is a good credit score to buy a house?

While credit score requirements vary based on loan type, lenders generally require a credit score of at least 620 to buy a house with a conventional mortgage. Meanwhile, you can secure an FHA loan with a credit score of 580 with a 3.5% down payment or even a 500-579 credit score if you put down 10%.

What is a good FICO Score to buy a car?

You will likely need a credit score of 661 or above to get an auto loan at a good interest rate. If you have poorer credit, you can still get a loan, but you will probably have to pay more for it or find a cosigner.

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Photo credit: iStock/Jacob Wackerhausen

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

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An authorized signer is a person who has access to a bank account but doesn’t actually own the funds in the account. Their limited rights to the account differentiate an authorized signer from, say, a joint owner.

It could make sense to add an authorized signer to personal or business bank accounts if you’d like someone else to have access either for convenience or in case you’re unable to manage the account yourself. Here’s a closer look at what it means to be an authorized signer on a bank account and how to add one.

Definition of an Authorized Signer

An authorized signer on a bank account is someone who has the right to make transactions from the account at the discretion of the account owner. However, an authorized signer does not own the funds in the account. The account owner can choose to whom to grant authorized signer status, and they can revoke that designation at any time.

In addition, it’s worth noting that the account holder may be able to limit the authorized signer’s access. For instance, some financial institutions may allow the account owner to cap check-writing privileges at $500 or $1,000 for the authorized signer. Any amount above that could require two signatures on the check.

Online banks and traditional banks often allow customers to add authorized signers, and some may allow you to add more than one. A bank account authorized signer may be a:

•   Spouse

•   Adult child or grandchild

•   Parent

•   Sibling

•   Another relative

•   Friend

•   Business partner (if you’re adding someone to business bank accounts)

Some points to note:

•   Authorized signers are often added to business accounts so that the authorized signer can make deposits or write checks as needed.

•   Authorized signer status applies while the account owner is still living. You can’t be an authorized signer on, for example, a savings account after the death of the account owner, as your authority ends with their passing.

•   As briefly noted above, an authorized signer is different from a joint owner of an account. With a joint account, the parties each have access to as well as ownership of the money in the account.

Also, adding an authorized signer is not the same as opening a bank account for someone else. For example, a parent might open a bank account for their minor child. The parent is the primary account owner, while the child is a joint owner, or the account might be a custodial account. (This will depend on the financial product chosen.)

Roles and Responsibilities of an Authorized Signer

An authorized signer on a bank account typically has the right to:

•   Check account balances

•   Sign checks drawn on the account

•   Pay bills

•   Schedule transfers to other accounts

•   Use a debit card to make purchases or withdraw cash from the account

•   Deposit funds into the account

•   Stop payments

You may be able to add an authorized signer to a business account, checking account, or savings account. If state laws allow, an authorized user may also be able to close the account.

You may wonder why someone would add an authorized signer to a bank account. It could make sense in certain situations:

•   Seniors may choose to add their children as authorized signers to help them manage their money.

•   A business owner may add one of their employees to the account and delegate certain tasks, such as paying invoices or making deposits.

•   Someone who’s undergoing medical treatment for a serious condition may add a family member or friend to make sure their bills are paid so they can focus on their health.

An authorized signer has no right to any assets in the account after the account owner passes away unless they’re also listed as a beneficiary. If you’d like your authorized signer to be able to inherit your account, you’d need to fill out a beneficiary form with your bank.

Differences Between an Authorized Signer and Account Holder

The main difference between an authorized signer and an account holder is simple: The account holder owns the account, whereas an authorized signer doesn’t.

An authorized signer can’t make any changes to the account’s ownership. They don’t have any automatic right to the money once the account holder passes away. The account owner can revoke their authorized signer status at any time. Account holders are also legally responsible for anything authorized signers do with the funds in the account.

To recap:

•   Account owners (including joint account owners) own the funds in the account and have discretion over how the account is managed, including when to add or withdraw an authorized signer.

•   Authorized signers have the right to conduct certain transactions in the account, but they don’t own it, and their authority ends when the account holder dies. (In other words, there’s no access or rights for an authorized signer on a bank account after the death of the owner.)

•   Beneficiaries inherit funds in the account once the account owner passes away but have no rights to it during the account owner’s lifetime.

Another angle on this matter: The difference between an authorized signer and a joint owner bank account is that joint owners have equal ownership, control, and access with one another. They also share equal legal responsibility for account transactions.

A joint bank account owner may or may not automatically inherit a bank account when the other account owner passes away. If the account is held with rights of survivorship, the account becomes theirs. If it’s held as tenants in common, the share of the account belonging to the deceased owner passes to their heirs.

How to Add or Remove an Authorized Signer

Adding or removing an authorized signer typically requires you to fill out a form with your bank. You may add an authorized signer when you open a new bank account or after the account is established.

You’ll need to give the bank some information about the person you want to add, including their:

•   Name

•   Date of birth

•   Social Security number

•   Address and phone number

The bank may allow you to specify the level of access you’d like your authorized signer to have. This is similar to how credit cards may allow you to set spending controls for an authorized user. Your bank may also request an in-person meeting with your authorized signer to confirm their identity and create a signature card.

If you want to remove an authorized signer, you’ll need to let the bank know and complete any paperwork that’s required. You may be able to complete the process on your bank’s website or via its app. Once an authorized signer is removed, they no longer have any rights to transact in the account.

Legal Implications and Considerations

As the account holder or owner, you’re responsible for anything that an authorized signer does. That could lead to tricky legal situations if they engage in irresponsible or even criminal behavior, such as check fraud. At the very least, you could put yourself at risk for overdraft charges or other fees if the authorized signer mismanages funds in the account.

Before you add someone as an authorized signer, it’s important to consider how trustworthy they are and how comfortable you feel giving someone else access to your bank account. If your bank allows you to set controls on what an authorized signer can or can’t do, you may want to weigh the benefits of doing so. That way, you could likely minimize worries about an authorized signer overspending from your account.

Recommended: Savings Account Calculator

The Takeaway

Adding an authorized signer to a bank account may be something to consider if you’d like to have a backup person who could access your account if needed or someone to whom you could delegate some personal finance tasks.

If you’re interested in opening a new checking account or savings account and are exploring joint accounts, see what SoFi offers.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

Can an authorized signer withdraw money from the account?

Authorized signers can typically write checks on the account, use a debit card to make purchases, withdraw cash at ATMs, or make withdrawals in person at bank branches. If your bank gives you the option, you may be able to limit the types of withdrawals an authorized signer can make. For instance, you could possibly put a cap on ATM withdrawals or make it necessary to have two signatures on checks for more than $1,000.

Does an authorized signer have access to online banking?

An authorized signer can have access to online and mobile banking if the bank offers that feature. They would need to create a unique user ID and password to log in and access any accounts they have access to.

Can an authorized signer be held liable for account activities?

Account owners, not authorized signers, are legally responsible for any activity that occurs in the account. That’s an important legal point to consider if you’re thinking of adding an authorized signer to bank accounts you own. It’s wise to be sure that you feel they are a trustworthy individual.

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About the author

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Photo credit: iStock/miniseries

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

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A national bank is a large commercial bank that is supervised by the Office of the Comptroller of the Currency (OCC), which is an independent bureau of the U.S. Treasury. National banks, which include some of the best-known ones, can operate in any state, making them distinct from state-chartered banks. They play a pivotal role in the U.S. economy by offering a wide range of services, including savings and checking accounts, credit cards, and loans, on a national scale. Here’s a closer look at what national banks are and how they work.

Understanding National Banks

To understand national banks, it helps to know how they are officially defined, how the current U.S. system of banking came to be, and how national banks are regulated today.

Definition of a National Bank

In the U.S., a national bank is defined as a financial institution chartered and regulated by the federal government. National banks operate under a charter granted by the Office of the Comptroller of the Currency (OCC), an agency within the U.S. Department of the Treasury. They can legally operate in any state.,

National banks are members of the Federal Reserve System and authorized to provide a wide spectrum of banking services, including lending, taking deposits, and managing financial transactions., National banks typically serve a national clientele and offer services across multiple states, making them key players in interstate commerce.

National banks can include both online banks and traditional banks (the latter also being known as brick-and-mortar banks), and they typically have “National” in their names or “N.A.” (for National Association) listed after their names.

The OOC maintains a current list of all active national banks in the U.S. If you don’t see your bank on the list, it’s likely a state-chartered bank vs. a national one.

History and Origins

Now that you know the definitions of a national bank, consider how it came about. The national banking system as it’s recognized today was shaped by the National Banking Acts of 1863 and 1864, which were enacted to create a system of national banks, establish a national currency, and offer greater financial stability during the Civil War. Here are some details on how this unfolded:

•   In the decades prior to the Civil War, regulation of banks was in the hands of the individual states, and each bank issued its own currency. Banks were required to get a charter from their state government. But the increasing demand for banks led to corruption, with petitioners often bribing state legislators to obtain a charter.

•   To reduce corruption and to make the process of opening a bank easier, many states enacted free banking laws. This meant that virtually anyone could open a bank, provided they met certain basic criteria, such as having a certain minimum amount of capital and depositing bonds (or another type of security) with the state government to back the notes issued by the bank.

•   To create a more organized system, Congress passed the National Banking Act in 1863 (originally known as the National Currency Act). Under this system, banks could only issue a new kind of paper money —- national currency —- backed by government bonds. The Act also established the OCC to regulate national banks.

While the National Bank Act has evolved over the years, it continues to provide the basic governing framework for the operation and regulation of national banks in the U.S. today.

Regulatory Framework

Here are some important points about how national banks are regulated:

•   National banks in the U.S. are regulated by the OCC, which oversees their operations and ensures compliance with federal banking laws. As of 2025, the OCC oversees 970 national banks.

•   National banks are also members of the Federal Reserve System, which enables them to borrow from the central banking system to meet reserve requirements or to address a temporary funding problem.

•   In addition, national banks must belong to (and pay premiums to) the Federal Deposit Insurance Corporation (FDIC). This FDIC offers protection to account holders by insuring bank accounts up to $250,000 per depositor, per account category, per insured financial institution. (Co-owners of joint accounts at the same bank are each insured up to $250,000.)

This regulatory framework ensures that national banks remain financially sound, protect consumer interests, and follow guidelines for safe and effective banking practices.

Advantages of National Banks

National banks provide a number of benefits that make them attractive to customers. These include:

•   Stability: National banks must meet stringent regulatory requirements, including maintaining sufficient capital reserves, which reduces the risk of bank failure.

•   Oversight: Because they are supervised by the OCC and are members of the Federal Reserve System, national banks are held to high operational and ethical standards. This oversight reduces the risk of fraud and mismanagement.

•   Broad accessibility: If you have an account at a national bank, you can likely find branches and/or in-network ATMs throughout the U.S. and, in some cases, overseas.

•   Wide range of services: National banks often offer multiple checking and savings accounts, as well as a variety of loan products. Some also offer investment services. A national bank can be a good fit for those who prefer to do all of their banking in one place.

These are the key features that set national banks apart from others.

National Banks vs State-Chartered Banks

The key difference between national banks and state-chartered banks is whether their charter was granted by the state government or the federal government. The OCC charters national banks, while the state banking departments charter state banks.

National banks typically operate across state lines, providing a broader range of services on a national level. State-chartered banks, on the other hand, often serve local or regional markets, focusing on the needs of their specific communities.

Regardless of whether a bank is national or state-chartered, the way banking regulations work is quite similar. In addition, both national and state-chartered banks offer FDIC-insured deposits.

Becoming a National Bank

Becoming a national bank requires a financial institution to meet specific criteria and undergo a rigorous approval process. Here’s a look at the steps involved.

1.    Application for a federal charter: Institutions that want to operate as national banks must apply for a charter from the OCC. The application process involves submitting detailed information about the bank’s business plan, management structure, and financial health.

2.    Meeting capital requirements: National banks must meet minimum capital requirements, which ensure they have enough reserves to provide a safety net for their operations.

3.    Applying for FDIC insurance: Final approval for an application to establish a national bank is not issued until the OCC receives written confirmation by the FDIC that it will insure the accounts of the bank.

These steps are necessary to make sure that a bank is qualified as a national entity.

The Role of National Banks

National banks play three critical roles in the U.S. economy:

•   Provide financial services: National banks provide a wide range of essential financial services to individuals and businesses, including checking and savings accounts, loans, mortgages, credit cards, investment products, and wealth management services.

•   Facilitate interstate commerce: With their federal charters, national banks provide banking services to businesses and consumers throughout the U.S., facilitating transactions that drive economic activity on a national scale.

•   Promote economic growth: Without access to credit, many businesses would not be able to launch and grow. In addition, consumers would be unable to finance their education, cars, and homes. As a result, national banks play a crucial role in providing the credit necessary for economic growth.

In these ways, national banks play a crucial role in the U.S. economy and daily life.

Recommended: Guide to Commercial Banking

The Takeaway

Chartered under federal law, national banks play a vital role in the national economy. They offer a range of financial services to their customers, provide capital to support economic growth, and facilitate commerce across state lines.

National banks generally have more resources and a wider reach than state-chartered banks, which tend to offer more personalized, community-focused services. Which type of bank is the right fit for you will depend on your needs and personal preferences.

If you think a national bank would suit your needs, see what SoFi offers.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

Are national banks safer than state-chartered banks?

Whether a bank is national or state-chartered, it must adhere to strict regulations. National banks are chartered, regulated, and supervised by the OCC to ensure they conform to national laws. State banks are chartered and regulated under state laws and are supervised by a state agency. Both types of banks are insured by the Federal Deposit Insurance Corporation (FDIC), which protects deposits up to $250,000 per depositor, per account category, per insured institution.

What are the major national banks in the United States?

The four largest banks in the U.S, each with over $1 trillion in assets, are:

•   JPMorganChase

•   Bank of America

•   Wells Fargo

•   Citibank

As national banks, these institutions are able to operate across state lines and offer a wide range of services, including checking and savings accounts, credit cards, mortgages, and investment options. National banks are chartered and regulated by the federal government, which allows them to provide banking services on a national scale.

How are national banks regulated differently than state banks?

National banks must adhere to a uniform set of federal regulations, including membership in the Federal Reserve System. State banks, on the other hand, follow state-specific regulations, which can vary by jurisdiction. Both types of banks are insured by the Federal Deposit Insurance Corporation (FDIC).

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About the author

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Photo credit: iStock/georgeclerk

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

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

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Generative artificial intelligence (gen AI) is transforming industries, and the banking sector is no exception. Many financial institutions are developing or starting to use generative AI to enhance customer experiences, combat fraud, and streamline complex, time-consuming processes. Unlike traditional AI, generative AI has the ability to generate new content and solutions based on training data, opening up exciting opportunities for innovation.

This groundbreaking technology has the potential to significantly reduce costs, boost efficiency, and redefine customer service in banking. However, the use of gen AI in banking processes also comes with risks, such as generating inaccurate information or compromising sensitive customer data. Below, we’ll explore its key use cases, benefits, and potential challenges in the banking industry.

Personalized Customer Service and Chatbots

One of the best potential use cases of generative AI in banking is in customer service, particularly 24/7 chatbots. Chatbots are nothing new, of course, but chatbots driven by generative AI are able to provide more specific, actionable insights for customers so that they don’t need to visit a branch in person or spend valuable time on the phone trying to resolve issues.

Intelligent chatbots (also known as virtual assistants) are capable of going beyond the prior generation of scripted chatbots, which are more limited in what they can help customers with before pulling in true customer service agents. Generative AI can be trained on vast quantities of data and resources, allowing it to understand and generate natural-language text while taking context into account.

However, there is also the potential that a gen AI chatbot could share inaccurate information with a customer. As a result, many financial institutions are taking a cautious approach, initially implementing AI chatbots in non-customer-facing interactions or to help customer-facing employees offer insights and support to customers.

Fraud Detection and Risk Management

Another potential use of generative AI is to improve banks’ fraud detection and prevention strategies, and better protect customer bank accounts. The technology has the ability to analyze massive data sets and thus more easily detect when something is out of the norm, which could indicate fraudulent activity. Because generative AI is designed to become more accurate over time, the more data the system is fed, the more often it can potentially help fraud departments catch (and stop) bank fraud, including account takeover and even money laundering.

Gen AI can also be used to simulate potential cyber-attacks, which can further enhance fraud detection algorithms. This proactive approach could help improve online banking security and significantly reduce a bank’s risk of loss.

On the flipside, use of gen AI in banking also introduces new risks to data privacy and cybersecurity (further explored below), which need to be effectively evaluated and managed before banks fully embrace AI as a tool to manage security threats.

Automated Document Processing and Analysis

Banks deal with an enormous amount of paperwork, from compliance forms to contracts and legal documents. Generative AI can help automate document processing by analyzing text, extracting relevant data, and categorizing information, significantly reducing time and manual effort. For example, gen AI can quickly summarize regulatory reports, prepare drafts of pitch books, and generate financial reports. Similarly, gen AI can reduce the need for human data entry, freeing up staff to tackle higher value-added tasks.

At present, however, using gen AI in this way also introduces some risks. For example, the AI could potentially misunderstand or misinterpret important information and lead to errors in decision-making. In addition, AI systems may not always follow all the applicable laws and regulations when handling documents. As a result, many financial institutions are exploring use of AI as an aid to employees engaged in document processing and analysis.

Predictive Analytics for Financial Forecasting

Banks rely heavily on accurate forecasting to make strategic decisions, manage risk, and optimize their portfolios. Generative AI has the potential to enhance traditional predictive analytics by processing massive datasets, identifying patterns in customer behavior, and forecasting financial trends with higher accuracy.

In investment banking, for example, generative AI has the power to analyze historical data to predict stock performance or project economic trends. Retail banks can potentially use gen AI to anticipate customer needs, such as identifying a change in borrowing behavior or a growth in demand for high-yield savings accounts. These predictive capabilities could help banks to make more informed decisions and better tailor their products and services to customer needs.

Enhanced Credit Scoring and Loan Underwriting

Traditional loan underwriting requires a thorough review of applicants, which can take time, but AI is capable of taking mountains of data about an applicant and making a credit decision quickly, possibly in as little as 30 to 60 seconds. Gen AI can also assess a broader range of data, including nontraditional data sources like utility payments, employment history, and social data, to produce a more comprehensive view of a borrower’s financial health. This could help banks make wiser, less risky decisions when reviewing credit card and loan applications.

In addition, gen AI has the potential to help reduce bias in decision-making by providing a data-driven, objective assessment rather than relying on traditional methods that might overlook certain individuals. This could potentially open more opportunities for lending to underserved markets. On the flip side, however, generative AI models trained on biased data may also perpetuate and reinforce existing social biases (more on that below).

Recommended: What Is a Second Chance Checking Account?

Potential Risks of Using Generative AI in Banking

While generative AI offers numerous benefits, it also presents challenges and risks that must be addressed to ensure responsible and secure use of this technology. Here are some concerns to keep in mind.

•   Hallucinations and inaccuracies: Generative AI systems, especially large language models, may generate responses that are inaccurate or completely fabricated, known as “hallucinations.” In banking, where accuracy is critical, this can lead to misinformation and potentially damaging consequences, such as incorrect financial advice or inaccurate loan terms.

•   Regulation and compliance issues: Generative AI is still largely unregulated. As rules and regulations evolve to address generative AI, banks will need to ensure their AI systems comply with standards on data privacy, fairness, and transparency. Failure to comply with regulations could result in legal repercussions and significant fines.

•   Security: There are concerns about AI accessing sensitive customer information, particularly personally identifiable information (PII), which could violate customer privacy. In addition, widespread use of AI in banking could make it a potential target for cyber-attacks, where hackers may attempt to manipulate or deceive the AI systems.

•   Existing technology: Established banks may have a wealth of legacy technology systems that might not work with generative AI. Replacing this old tech can be costly and take some time.

•   Bias and fairness: AI models can unintentionally inherit biases present in the training data, leading to unfair treatment of certain customer demographics. If not managed properly, this bias could result in discriminatory practices, such as unfair loan rejections or inappropriate credit scoring. This could impact the bank’s reputation and compliance with regulatory standards.

The Takeaway

Generative AI has the power to transform the banking industry — and the world as a whole. As a fast-growing and ever-evolving tool, it’s important that gen AI advancements are balanced with risk mitigation to ensure the technology meets regulatory requirements, doesn’t violate customer privacy or rights, and works with the existing tech stack. That said, when used effectively — to make processes more efficient, to make better decisions, and to help customers resolve issues more easily — it has the potential to benefit both banks and their customers.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

Can generative AI help improve banking security?

Generative artificial intelligence (gen AI) may enhance banking security primarily through fraud detection. By analyzing large volumes of data, generative AI can easily spot transactions that seem out of the ordinary and flag them as fraud in real time. This allows banks and consumers to react immediately and, ideally, prevent the fraudulent transaction. AI systems can also simulate potential cyber-attacks and, in turn, learn how to anticipate and respond to these threats. This proactive approach can help banks better protect customer accounts and improve overall security in banking transactions.

Can generative AI help with financial advice?

Yes, generative artificial intelligence (gen AI) can enable chatbots and virtual assistants to provide people with personalized financial advice. By analyzing individual customer data, including spending habits and financial history, AI-powered tools can offer customized advice about how to spend, save, invest, and tackle debt. Generative AI can also simulate market trends and forecast potential financial outcomes, offering data-driven insights to customers.

While these tools are helpful, it’s essential for consumers to verify AI-provided advice with financial professionals, as gen AI may produce inaccurate or overly generic recommendations without a nuanced understanding of goals and risks.

What are the ethical concerns of using AI in banking?

There are several ethical concerns surrounding the use of artificial intelligence (gen AI) in banking. For one, AI systems require vast customer data, creating the potential risks of misuse or unauthorized data exposure. Another concern is that use of AI in lending decisions could result in some bias against particular groups of people, due to biases in AI’s training data or insufficient data. Transparency is another ethical challenge, as use of AI tools by banks can make it difficult for customers to understand decision-making processes.

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Photo credit: iStock/Boy Wirat

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

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Abbreviations on bank statements typically help identify different types of transactions and share information about your balance. While much of the information on your bank statement is straightforward, occasionally your bank statement may contain abbreviations that you don’t understand.

There are a few common bank statement abbreviations that are good to know, since understanding all of the information on your bank statement may help you to make financial decisions. The good news is that many of the most common bank statement abbreviations are fairly easy to understand. Once you know what each one stands for, it may help you get a better picture of the overall health of your bank account.

Understanding Common Bank Statement Abbreviations

If you have a checking or savings account, your bank almost certainly sends you a bank statement on a regular basis. This usually happens monthly, and you may receive your bank statement electronically or via a printed statement in the mail. Whether you keep your bank statements or not, it can be wise to review them carefully. Doing so can help you spot any errors or fraudulent charges and scan for bank fees.

As you review your bank statements, you may encounter abbreviations. Some of these may be familiar, but others may require clarification.

Why Banks Use an Abbreviation

There are a few reasons why banks might use an abbreviation for some items:

•   Technological requirement: Many banks rely on underlying financial systems that code certain types of information with abbreviations. These systems require shortened information for proper processing.

•   Standardization: Abbreviations can allow banks to use the commonly recognized terms for certain products and services in their records and communications. This uniformity can make organization and recognition easier for all parties involved in banking.

•   Saving space: Banks may need to display a lot of information in a relatively small space, and abbreviations can help with this.

•   Speed: Using universal abbreviations can help to facilitate faster communication within and between banks and between banks and individuals.

For these reasons, you may see shorter forms of banking terms as you conduct your personal finance business.

Recommended: Savings Calculator

List of Common Abbreviations in Bank Statements

Here are a few of the most common abbreviations you might find in bank statements relating to your checking account or other holdings:

ACH

An ACH payment is one that is processed through the Automated Clearing House. ACH transactions are usually transactions where money is sent to or received from another bank account via electronic networks.

ATM

ATM stands for automated teller machine, and it might signify a withdrawal of cash from or a deposit to your account at one of these devices.

CHK

CHK signifies a check transaction. When you write a check, you may see this abbreviation on your bank statement when the check is deposited and/or clears. Occasionally, this may be abbreviated as CHQ for financial institutions that prefer the spelling of cheque to check.

CR

CR — or sometimes CRE or CRED — is an abbreviation for a credit, which is usually an amount of money that is credited to your account at a traditional or online bank. This could reflect a direct deposit from a salary, a merchant refund, or any other form of account credit.

DR

DR indicates a debit to your account, such as when money is withdrawn, either from an electronic transfer, a debit card transaction, or a bill payment.

EFT

Electronic fund transfers, or EFTs, broadly refer to the digital transfer of money between accounts at financial institutions. An ACH payment is an example of a type of electronic fund transfer, for example.

However, take note not to confuse it with an ETF, which stands for exchange-traded fund, a type of pooled investment.

FEE

FEE is not actually an abbreviation at all, as this bank statement code just means a fee assessed to your account. This could be any number of bank fees, including maintenance fees, account fees, or nonsufficient funds fees.

INT

This bank statement abbreviation stands for interest that is credited to your account. Many checking or savings accounts pay interest to the account holder based on the total amount on deposit. When that interest is paid, it could be referenced on the bank statement with this abbreviation.

OD

OD typically stands for overdraft and means that your balance has dipped into negative territory. You might also see your balance expressed with a minus sign when you have overdrawn your account. In most cases, this means your account has been assessed overdraft fees, so it’s wise to get your account back to positive as soon as you can.

POS

POS stands for point of sale, and usually represents a purchase made with a debit card or credit card at a physical retailer. Confused by the phrase point-of-sale terminal? Think of it as the common term cash register in daily conversation.

TFR

TFR stands for transfer. When money moves between your bank accounts, you may see these three letters indicating that money has been transferred.

TLR

TLR indicates that a transaction was conducted with a bank teller at a branch. Those who have accounts at traditional vs. online banks are more likely to see this code because traditional banks typically offer in-person teller services at branches.

Importance of Knowing Bank Statement Abbreviations

While some bank statement abbreviations may seem obvious and others obscure, it can be important to understand these terms. They help you keep tabs on the money in your bank account and your financial progress.

It can be a good idea to regularly review your bank statements as they are received. That way, you can check for unexpected or possibly fraudulent transactions. Ideally, you should be able to recognize the transactions on your statement as ones that you initiated and/or authorized. If you see a transaction on your statement that you don’t recognize, you should contact your bank’s customer service department. You may be referred to their fraud protection team if necessary. This may help protect against bank fraud and the risk of identity theft.

Recommended: How to Write a Check

The Takeaway

Financial institutions regularly send bank account statements to their customers, usually on a monthly basis. These statements typically communicate a large amount of information, and they may include abbreviations that shorten and standardize details. By learning these abbreviations (such as ACH, EFT, and OD), you can better understand your account information and keep tabs on your money.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

How can you identify an unknown retailer abbreviation on your statement?

While many transactions on your bank statement include the name or other identifying information of the merchant in question, some transactions may not be identifiable. One way to identify an unknown retailer is by doing an internet search for the information that appears on your statement. Another may be to look for the same transaction on past statements of yours. Or contact your bank’s customer service department to see if they can help you with more information about the merchant.

What is included in a bank statement entry?

A bank statement usually includes a list of transactions made during the statement period. Each of these transactions is sometimes called a bank statement entry. A bank statement entry can contain the date of the transaction, the type of transaction, the amount involved, and a brief description of the retailer, merchant, or other party to the transaction, among other details.

Can your bank help decode bank statement transaction abbreviations?

Many bank statement abbreviations are straightforward, but there are some that may not be easy to decipher. If you’re unable to understand what a bank statement abbreviation means by reviewing your statement or doing an internet search, you may want to talk to your bank’s customer service department. They can likely help you decode the information on your statement.

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Photo credit: iStock/PIKSEL

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

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