How Does a Gas Credit Card Work?

Gas credit cards are an option that can help cut the costs of getting around. There are a few different types of gas credit cards to consider: branded gas cards that only work at specific gas stations, branded gas credit cards that you may be able to use elsewhere, and regular rewards credit cards that offer cash back or other incentives at the pump.

If you’re curious about the pros and cons of these cards, read on.

Key Points

•   Gas credit cards can provide savings or rewards on fuel purchases.

•   Types of gas cards include branded, cobranded, and traditional rewards cards.

•   Applying for a gas credit card can affect your credit score.

•   Closed-loop gas cards are limited to use at specific gas stations; other types of cards can be used at a variety of retailers.

•   Paying the balance in full each month avoids interest charges.

What Is a Gas Credit Card?


The term “gas card” can refer to a variety of different products (more on that in a moment). But at its most basic level, a gas credit card is a credit card that allows the cardholder to save money on gas, either with per-gallon discounts, cash back rewards, or other incentives.

Given the fluctuations in the average price of gas, these cards can be an excellent way to lower your overall transportation costs, especially if you drive often. However, like any credit card, they do come with both risks and benefits

Types of Gas Cards


As mentioned above, “gas credit card” and “gas card” can actually refer to several different products. Here’s a closer look.

Closed-loop gas cards


What is known as a closed-loop gas card is a card that can only be used at a specific gas station brand. They earn the cardholder discounts or rewards on money spent on that brand of fuel. They cannot be used at other gas stations or stores. This can make them convenient for those people who almost always go to the same gas station.

Of course, that limitation can also be too restrictive. Some people may want a card with more flexibility and capabilities. In addition, closed-loop gas cards can come with high interest rates, so if you don’t pay off your balance in full each month, you may actually end up spending more on gas overall.

Cobranded Gas Station Credit Cards


Gas station credit cards vs. gas credit cards are cobranded. That means they bear the logo of both the gas station and a major credit card issuer, such as Visa or Mastercard. These cards may offer specific rewards at the pump. However, because they’re part of a major card network, they can also be used elsewhere.

These credit cards offer the benefit of being available for more general, all-purpose use. Of course, they also make it more possible to rack up debt on non-gas-related expenses, like cool shoes, the latest mobile device, or just about anything. As is true with any credit card, paying off your balance on time and in full each month is the best way to avoid paying interest on your purchases, which can quickly eclipse any rewards you might earn.

Recommended: Understanding Purchase Interest Charges on Credit Cards

Traditional Gas Rewards Credit Cards


Finally, regular rewards credit cards may offer cash back, miles, points, or other rewards at the pump and elsewhere. Some rewards credit cards may allow borrowers to choose specific categories in which they’ll earn rewards at a higher rate, and the fuel pump might be one of those categories.

Traditional rewards credit cards can offer significant flexibility in how and where you get rewarded for spending your money, so this could be an excellent choice for those whose budget fluctuates over time.

For instance, perhaps you spend a lot on gas over the summer because you’re taking road trips, but less so during the fall and winter. A traditional rewards credit card may allow you to choose gas stations as a category for part of the year — and another, more relevant category (like grocery stores) for the rest.

However, like all credit cards, they do come with the risk of falling into debt by carrying an ever-larger revolving balance.

How Do Gas Credit Cards Work?


Here’s how a gas card works in most situations: Although there are several different types of gas credit cards, they typically sync up with how any credit card works. You use the card at the point of sale to purchase gas and reap rewards or discounts. Usually this is done by swiping or tapping the card at the fuel terminal or, if it’s not a closed-loop card, at another point-of-sale system.

With non-closed-loop gas credit cards, you may also be able to use the card to make online purchases by typing in the relevant card information. (Always make sure the website you’re purchasing from is legitimate and secure before supplying your credit card number to avoid credit card fraud.)

Like any credit card, gas credit cards usually charge interest on revolving balances; that is, money you charge on the card and don’t pay off at the end of the statement period. Interest rates can be hefty — upwards of 20% APR (annual percentage rate) — which is part of what makes falling into credit card debt so possible. That’s why paying off your balance in full and on time, each and every month can be crucial.

If you can’t, you might consider consolidating your debt with a 0% balance transfer or personal loan or you might work with a skilled credit counselor.

Things to Consider Before Applying for a Gas Credit Card


While a gas credit card can help you save money at the pump, like any other credit card, it can also put you at financial risk, especially if you’re already struggling to make ends meet and pay down debt.

In addition, applying for a gas credit card will result in a hard inquiry on your credit report, which can lower (although usually only in the short-term) your credit score and possible shift your credit score range.

How to Get a Gas Credit Card


In terms of how to get a gas card, it’s similar to applying for a credit card of any kind. There will be information you need to share about yourself and your finances on a gas card application.

You can usually apply for gas credit cards at the gas station offering one or online. The application process will typically require basic demographic information, like your name and address, as well as financial information such as your employment situation and annual income. Once you’re approved for the card, you’ll receive it in the mail and can start using it for gas purchases — and, if it’s a major network credit card, purchases elsewhere, too.

Putting Money on a Gas Card


In addition to gas credit cards, there are also reloadable prepaid gas cards which are not credit cards. They’re more like debit cards in that you can use them only to access a finite amount of preloaded money on the card. These types of cards can be a useful tool for managing gas spending and controlling your budget. You can load them with money at the gas station or online.

How to Pay With a Gas Card


How to pay for gas with a card works just as it would with any other card. You use it at the point-of-sale system (or present it to the person at the pump, if you’re in New Jersey).

If you’re using a refillable gas card, you’ll need to load money on it ahead of time. If you’re using a credit card, you’ll get a monthly statement listing everything you’ve spent over the billing period and will have the opportunity to pay it off in full, which is a wise move vs. paying the minimum amount.

Is a Gas Credit Card Right for You?


If you find yourself spending a lot of money at the fuel pump, a gas credit card could help you pinch some pennies and get where you’re going for less. But like other credit cards, the risk of going into debt — or at least paying more than you need to after interest — is real. A prepaid credit card for gas could be a good middle-ground option to help you stick to your transportation budget and manage your gas money budget more easily.

The Takeaway


There are multiple different types of gas credit cards, but they all generally have the same benefit: making the cost of gas more affordable by providing discounts or rewards at the pump. Whether you opt for a gas credit card or a reloadable gas card, this kind of product can make budgeting simpler, as long as used wisely.

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


What is the difference between a gas card and a credit card?


People may use the term “gas card” to refer to prepaid gas cards or gas credit cards specifically designed to offer the cardholder rewards at the pump. A regular credit card doesn’t necessarily offer any specific fuel savings, but a gas credit card can.

Does a gas card affect your credit?


If you apply for any credit card, the issuer will run a hard inquiry on your credit history, which may have a short-term negative effect on your credit score. In addition, late payments and high balances can drive your score down, as well, but paying off your debt in full and on time can help create a healthy credit history.

Can you buy other things with a gas card?


That depends on the particular gas credit card you have. Some are cobranded by Visa or Mastercard and can be used for other purchases. However, some may be used strictly for gas purchases at certain outlets.

Can you get cash back from a gas card?


Some gas credit cards offer cash back rewards. You can also find unlimited cash back rewards credit cards that aren’t specifically designed for gas savings but can still help you earn back a percentage of every dollar you spend.


Photo credit: iStock/Eleganza

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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 .

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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Apply for a Credit Card and Get Approved: Step-By-Step Guide

Apply for a Credit Card: Step-By-Step Guide

Applying for a credit card is an important step in many people’s financial lives. It typically involves three steps: gathering your information, filling out your application, and waiting for approval and the potential impact on your credit score.

Here’s the lowdown on the key things to know to apply for a credit card — and most importantly, to get approved for a credit card.

Key Points

•   Typically, applying for a credit card requires three steps: gathering information, filling out forms, and handling any credit impact.

•   Gather necessary information before applying, including income, address, employment status, and financial details.

•   Understand credit card terms like balance, APR, and fees to make informed decisions.

•   Check credit score to assess approval chances and creditworthiness.

•   Applying for a card can temporarily lower a credit score due to a hard inquiry.

What to Consider When Applying for a Credit Card

Before you worry about how to get a credit card, it’s helpful to first understand what a credit card is. As the first word in its name suggests, a credit card is a line of credit, which is a type of flexible loan that enables you to borrow money up to a fixed limit.

When an individual charges a transaction at a business that accepts credit card payments, the credit card company pays the merchant. The cardholder must then pay back the credit card company by a designated date. Otherwise, they’ll incur interest charges.

This basic premise of how credit cards work means the card company is taking a risk when extending credit to any individual. They assess that risk via an application that determines not only whether the individual gets approved for a credit card, but also factors like their credit card limit and annual percentage rate (APR) on a credit card.

Before applying, there are some important considerations that can help improve your chances of getting approved for a credit card.

Recommended: Tips for Using a Credit Card Responsibly

Learn About the Terms Associated with Your Credit Card

Evaluating different types of credit cards can feel overwhelming for a newbie, so it’s a good idea to get familiar with some basic credit card terms that are common across all credit cards. Here are some common terms you might run into in a credit card application and as you begin to use your new card:

•   Balance: Your balance is the amount of money you owe on your credit card. This can include purchases (even paying taxes with credit card) as well as any fees, balance transfers, and cash advances.

•   Balance transfer: A balance transfer is when you move money from one credit card to another credit card, ideally one with a lower APR. This can allow you to pay off your debt more easily, though you’ll often pay a balance transfer fee to move over the balance.

•   Billing cycle: A credit card billing cycle is the period of time between the regular statements you receive from your credit card company. Usually, billing cycles occur on a monthly basis.

•   CVV: The card verification value, or CVV number on a credit card, is a three- to four-digit number that appears on a physical credit card. It serves as an additional layer of security in transactions that occur over the phone or online.

•   Expiration date: A credit card expiration date represents when a credit card is valid until. Usually shown as a month and a year, you can use your credit card up until the last date of that month in that year.

•   Late fee: The late fee is a charge you’ll incur if you miss making at least your minimum payment by your payment due date. To avoid this fee, it’s important to always pay on time, even if you’re in the midst of disputing a credit card charge, for instance.

•   Minimum payment: The credit card minimum payment is the least amount you must pay each month on your outstanding balance. This can be a flat amount or a percentage of your outstanding balance.

•   Purchase APR: The APR for purchases represents the total annual cost of borrowing money through purchases made with your credit card. This APR applies only on remaining balances after the statement due date.

Decide on the Type of Credit Card You Need

There are a number of different types of credit cards out there that can serve different needs. For instance, there are:

•   Travel rewards credit cards

•   Cash back credit cards

•   Credit builder credit cards

•   Balance transfer credit cards

While most of the above types of cards are unsecured credit cards, meaning no deposit is required, there are also secured credit cards. These do require a deposit, though they may also be more accessible to those with limited or low credit.

Different types of cards offer different benefits, and they may also vary when it comes to things like annual fees or average credit card limits.

There may also be differences in the requirements for getting approved. It’s not so much a question of how old you have to be to get a credit card — rather, cards may have varying requirements for minimum income or credit score needed to qualify.

Before applying, it’s a good idea to do some comparison shopping to find a card that not only fits your needs but also that you’re eligible for.

Check Your Credit Score

Your credit score is a number that indicates the likelihood that you’ll repay a debt. It’s based on your credit history, and banks use it as a tool for evaluating credit card applications and deciding whether to approve them.

Here are some common factors that can affect your credit score:

•   Payment history, including on-time payments, missed payments, and having an account sent to collections

•   Credit utilization, or how much one owes relative to their total available revolving credit

•   Length of credit history

•   Types of credit accounts

•   Recent activity, such as applying for or opening new accounts

Generally, the higher an individual’s credit score, the more creditworthy they’re considered. If using the FICO® scoring model, here’s a general breakdown of what various scores mean:

•   300-580: Poor

•   580-669: Fair

•   670-739: Good

•   740-799: Very good

•   800-850: Exceptional

It’s a good idea for an individual to know their score and their chances of getting approved before applying for a credit card. The minimum credit score for a credit card will vary depending on the type of card it is.

For example, rewards credit cards, which come with big perks, tend to require at least a good credit score. But some types of credit cards, such as secured credit cards, may be more accessible to those with lower credit scores because they pose a lesser risk to lenders. This can make the latter category more appealing if, for instance, you’re getting your first credit card.

It’s worth noting that pulling one’s own credit information is considered a “soft inquiry” and does not negatively impact their credit score. When you apply for a new credit card, however, it will generate a “hard inquiry,” which can lower your credit score temporarily.

Where to Apply for a Credit Card

Credit cards are offered through banks, credit unions, retailers, airlines, colleges and universities, and a host of other institutions. This means that there are a variety of places where one can apply for a credit card — and often a number of ways to apply.

You can apply for a credit card in person, such as at a bank branch or retail location. Or, you may apply over the phone. Most credit card issuers also offer online applications, which add convenience to the process.

How to Apply for a Credit Card in 3 Steps

Ideally, by the time you sit down to actually apply for a credit card, you’ll have done the necessary homework to determine if you should get a credit card. This includes checking your credit score and potentially getting preapproved (though more on that later).

1. Gather the Necessary Information

The application process will be easier — and likely quicker — if you’re prepared. This means gathering any necessary documentation (more on what you’ll usually need in the next section) and having relevant information on hand, such as your income and Social Security number.

2. Fill Out and Submit an Application

Next, it’s time to fill out the application. There are a few ways you can do this: online, over the phone, or through the mail. It’s generally quickest to complete an application online.

You’ll need to fill in the requested fields and upload (or make copies of) any necessary documents. Once you submit your application, you should hear back within a few weeks at the most — sometimes, you’ll hear back almost the same day.

3. Be Ready for the Credit Impact and Repayment

As you wait for your credit card to arrive in the mail, you should take stock of the recent hit you took to your credit from the hard inquiry (typically, this will lower your score by several points for a brief period of time). It’s generally advised to avoid applying for multiple credit cards or loans within a short period of time to minimize the credit impact.

Also start to consider your strategy for how you’ll repay your credit card balance once you start swiping. Consider setting up automatic payments from your bank account each month to make sure you’re not late, or you might set a reminder on your phone or in your calendar.

What Do You Need to Apply for a Credit Card?

While application requirements will depend on the credit card issuer, what you need to apply for a credit card generally includes:

•   Annual income

•   Address and length of time at that address

•   Date of birth

•   Phone number

•   Social Security number

•   Employment status and sources of income

•   Financial accounts and/or assets

•   Financial liabilities

•   Country of citizenship and residence

Credit Card Preapproval and Prequalification

Getting prequalified or preapproved for a credit card means you’ve been prescreened for a credit card and meet at least some of the eligibility requirements. The two terms can be used interchangeably, though preapproval might carry slightly more weight in terms of your odds of eventual approval.

You’ll still need to go through the formal application to get approved for a credit card though, as neither preapproval or prequalification means you’ve been approved. The formal application process will involve a hard inquiry, whereas prequalification and preapproval generally only involve soft inquiries.

Still, preapproval or prequalification can be a good way to suss out potential credit card options and likelihood of getting approved before you move forward with an application and risk the impact to your credit.

What Happens If Your Application Is Turned Down?

Getting turned down for a credit card is indeed disappointing. When a credit card application is declined, you have the right to know why. You can request details about your application in the form of an adverse action letter, which includes the reason for the denial, details about your credit score, and notice of the right to dispute the accuracy of information provided by the credit reporting agency.

This can serve as helpful context for understanding why an application was declined. It can also help in determining what the appropriate next steps are for improving one’s chances of approval, if and when you apply for another credit card. For instance, you may consider applying for a credit card that has less stringent credit requirements, or you may take steps to build your credit score and try again at a later date.

Secured and Prepaid Credit Cards

If you were turned down for a credit card, you might take some steps to build your credit before trying again, or you might consider other options. Two alternatives you might look into are secured credit cards and prepaid credit cards.

With a secured credit card, you put down a deposit, which serves as collateral and usually acts as the card’s credit limit. Because there’s collateral there for the credit card issuer to fall back on if you fail to make your payments, secured credit cards are generally easier to get approved to than the more traditional, secured credit cards.

Prepaid debit cards don’t help you build your credit, as you’re not actually borrowing funds. Rather, you load the card with funds that you can then use in person or online. This can offer some of the convenience that a credit card offers over cash, without the application and approval process.

The Takeaway

Applying for a credit card can be a simple three-step process of gathering the required details, submitting an application, and handling the likely credit impact. You will probably have many options when selecting a card, so take your time to find the right fit.

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 do I choose a credit card?

Choosing a credit card is a personal decision that depends on your needs, preferences, financial habits, and eligibility. Before applying for a credit card that appears to fit your needs, it’s a good idea to check your credit score and any other requirements, such as minimum income, to improve your chances of getting approved.

How long does it take to get a credit card?

The length of time it takes to get a credit card can depend on a number of factors, including the eligibility requirements and how an application is submitted. Some online credit card applications offer fast or even instant approval, although it can take some additional time for the credit card to arrive in the mail.

Does your credit get pulled when applying for a credit card?

Generally, a credit card company will do a hard credit inquiry before extending final approval. However, there may be some scenarios where a credit card issuer may only do a soft inquiry, such as if an individual has been preapproved for a credit card or already has a banking relationship with the credit card issuer.

What are the requirements needed to get a credit card?

The requirements to get a credit card will typically vary from card to card. However, you’ll generally need to provide information on your annual income, your employment status, and your current debt obligations. Your creditworthiness also comes into play, though credit score requirements will differ depending on the card.

Can you get a credit card with no credit history?

It is possible to get a credit card with no credit history, though your options may be more limited. You may have an easier time getting approved for a secured credit card or a basic, no-frills credit card.


Photo credit: iStock/Dome Studio

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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 .

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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woman on laptop

41 Things to Do With Your Tax Refund

If you got a tax refund this year, you may be tempted to spend it all on something fun. And, there’s certainly nothing wrong with that.

But before you get too impulsive, you may also want to think about how that refund might be able to help you get to the next level in life. In fact, smart use of your tax refund check may draw you closer to reaching financial security.

So what should you do with the refund you received? Read on for a mix of smart, practical, and also fun, ways to spend your tax refund.

How Should I Spend my Tax Refund?

With the average taxpayer getting a refund of roughly $3,000 for each of the past several years, you may have a nice lump sum of money to play with. Here are a whopping 41 “how should I use my tax refund?” ideas to consider for both your long-term and short-term financial goals.


💡 Quick Tip: If you’re opening a brokerage account for the first time, consider starting with an amount of money you’re prepared to lose. Investing always includes the risk of loss, and until you’ve gained some experience, it’s probably wise to start small.

1. Unloading Your High-Interest Debt

If you have credit card or other high-interest debt, a tax refund can be a great way to reduce your balance, or even wipe it out completely.

Doing this will help you stop throwing money away on interest charges each month. And, if you manage to wipe out that debt completely, you’ll have one less financial responsibility to deal with monthly.

2. Starting an Emergency Fund

How are you fixed for life’s unexpected emergencies? If you were to lose your job, would you have about three-to-six months of living expenses at the ready? How about a car or home repair? Would you be able to cover that? Taking that tax refund and stashing it away in an emergency fund may save you in a pinch. Your future self may thank you.

3. Saving for Your Kid’s College Education

If you have kids, using your tax refund to start a 529 college savings plan could be a great first step toward dealing with the rising cost of college education. Money in these funds grows tax-free.

Additionally some states and 529 savings plans enable you to deduct your contributions from your state income taxes, so these contributions could save you tax dollars in the future.

4. Improving Yourself

When you get your tax refund, you could use it to make yourself more marketable to future employers. That could mean investing in additional or new career training, attending conferences, joining professional organizations, earning an MBA, or pursuing networking events.

This could all work toward creating a new you, and possibly a bigger paycheck with bigger tax refunds in the future.

5. Planning for Retirement

Does your company offer to match your retirement savings in your 401(k)? If so, you could take advantage of this “free money” by investing your tax refund in your retirement plan. Doing this could potentially increase your contribution level to maximize the benefit your employer offers.

If you don’t have a 401(k), you could use your tax refund to open an Individual Retirement Account (IRA), or add to an existing one, keeping in mind that there are annual limits to how much you can put into a retirement account each year.

6. Becoming a Homeowner

You could also use your tax refund to help fund a down payment on a new home. Offering a larger down payment will reduce your mortgage, which means you’ll pay less in interest. That could translate into lower monthly payments and paying less for the home overall.

7. Making Much-Needed Repairs

Already own a house? You might consider using your refund to make repairs and/or upgrades that could make your home more functional and also more re-sellable.

8. Starting an Investment Plan

If you’ve been putting off any serious investing until you have some available cash, now might be your chance. Of course, it’s important to do your research before making any investments, but this could be the time to start financially planning for the future.


💡 Quick Tip: How to manage potential risk factors in a self-directed investment account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.

9. Paying Monthly Fees Up Front

Do you have subscriptions to streaming services? How about a gym membership? If possible, you could pay the annual fee in one fell swoop, which is often cheaper than paying month-to-month. It will also mean one or two less bills to pay each month.

10. Gifting a Loved One

The IRS sets a limit on the gifts you are able to give to family members and others without having to pay a gift tax. That limit is $18,000 for 2024 and $19,000 for 2025 per recipient.

This means that you can give the person up to that much without triggering taxes.

11. Going on Vacation

If you’re thinking about what to do with a tax refund that might also be fun, consider taking a trip with some of the money. Then, you won’t get stuck paying for your vacation on a credit card like you might have in the past — and potentially paying even more due to interest charges.

12. Buying Things That Will Save You Money

If only you had a smart thermostat in your home, you could save on your electricity, A/C, and heating every month. Or, if you got a good oven, you would cook more and wouldn’t eat out as much. If you purchased a set of weights, you could cancel your expensive gym membership. You may want to think about ways you can spend your tax refund that will end up saving you money on an everyday basis, and then make those investments.

13. Making Appointments You’ve Been Putting Off

When thinking about what to do with your tax refund, you might consider spending it on services that you may have been delaying but could improve your life. For instance, if you’ve had some back pain and need to get it checked out, you could use the money to see your doctor or chiropractor. Using your tax refund to take care of your health is generally always a good idea.

14. Funding Your Business Idea

Have you always wanted to start a small business? Then now may be the time. When you’re thinking about what to do with a tax refund, you might want to put it toward getting your business up and running. You may even be able to avoid taking out a loan to start your venture.

15. Donating It

If there’s an organization you believe in and want to support, you might consider donating your tax refund to that group. You’ll not only be doing good, but you may also be able to deduct your donation on your taxes next year for a win-win.

16. Making Extra Mortgage Payments

If you’re contemplating what to do with your tax return, you could always make extra payments towards your mortgage (just be sure it goes toward the principal, not interest). Reducing your principal can help you save significant money in interest over the long haul.

17. Purchasing Life Insurance

Signing up for a term life policy when you have the resources to do so can be a smart idea, especially if you are married and/or have children. That way, you will know that your loved ones are protected should anything happen to you.

18. Hiring an Estate Planning Attorney

This is another way you can plan for the future. If you have a spouse or young children, an estate planning attorney can help you devise an estate plan that protects them in the event that you pass away. This could include designating guardians and setting up a trust for your children.

19. Purchasing Renter’s Insurance

While your landlord is protected if something happens to their property, you are not. If you’re thinking about what to do with your tax refund that could save you money in the long run, you might consider buying a renter’s insurance policy.

This kind of policy will typically cover the cost of your belongings should anything happen, and also help protect you if someone gets injured in your home, since they can make a claim with the insurance company instead of coming after you.

20. Paying for a Subscription-Canceling Service

A subscription-canceling service can help you figure out which subscriptions you can cancel, and may even be able to negotiate with your service providers to lower your monthly bills. The fee for this service might ultimately save you money — not to mention all that time you would have spent on hold trying to do this yourself.

21. Taking a Class

Education can improve your life in so many ways. You could take a class in a subject that interests you, or to learn a new hobby, like photography or watercolor painting. If you look for courses at your local community college or adult ed program, you may be able to save significantly on tuition.

22. Hiring a Financial Advisor

If you don’t know what to do with money when it comes to saving, investing, and becoming financially stable, you may want to use your tax refund to hire a financial advisor. To find an advisor, you can ask family and friends for recommendations. You can also consult industry associations, such as the National Association of Personal Financial Advisors and the Financial Planning Association.

23. Signing Up for a Meal Subscription Service

Do you eat out all the time? Then it might make sense to put your tax refund towards a meal service that sends you ingredients and simple recipes each week. While it’s typically not as cheap as going to the grocery store, these services can make cooking at home easy and convenient. Eventually, after you learn some good recipes, you can likely cancel and switch to completely DIY meals instead.

24. Saving for Holiday Gifts

During the holidays, are you always short on cash to buy gifts for your family and friends? Even if you get your tax refund early, you might want to put some of it aside in an interest-bearing account until your favorite stores and websites are running sales. For example, you can save big by waiting for Amazon Prime Day, Black Friday, or Cyber Monday.

25. Investing in Your Health

When it comes to what to do with a tax refund, you might want to use it to improve your health and wellness. You could sign up for a gym, hire a nutritionist, purchase exercise equipment, or get a personal trainer. You may end up saving much more in the long run on your healthcare bills.

26. Investing in Your Children’s Needs

If your children need new clothes or school supplies, or you think they could benefit from summer camp or after-school lessons, then you may want to put your tax refund towards those costs.

27. Investing in Your Pets

Does your dog need a teeth cleaning? Have you been putting off getting your cat an MRI because it’s too expensive? Then you could finally take care of some of their needs with your tax return. You could also purchase pet insurance, which could save you money on your vet bills.

28. Purchasing a Car

Is your car always breaking down? Does it guzzle gas? Do you normally use Ubers? Then purchasing a new or used car with your tax refund could save you money over time. If you currently rely on public transportation, owning a car can also open you up to new job opportunities that may have been inaccessible before.

29. Paying Off Your Car Loan

If you’re wondering what to do with a tax refund, you could always make advance payments on your car loan. If you’re paying high interest every month, paying the loan off early could save you significant money. And, if you pay it off in full, you won’t have to worry about that annoying monthly payment anymore.

30. Investing in a Second Income Stream

You can take your tax refund and start making money with it by investing in a new income stream. For example, you could start drop shipping with Amazon, which involves buying items at a discount from a wholesaler then selling them at a profit. Or, you could fix up your spare bedroom and start renting it out on Airbnb.

31. Investing in REITs

If you want to start investing in real estate but don’t have the funds to buy a property, you could invest in real estate investment trusts (REITs) instead. REITs are companies that own, operate, and finance real estate that produces an income. If you put your money into the right REIT, you may see healthy returns. Just remember that no investment is risk-free. Research the pros and cons of REITs before you decide to go this route.

32. Investing in Crowdfunded Real Estate

Another way to get into real estate with your tax refund is to consider investing in crowdfunded real estate. On crowdfunded real estate platforms, you can generally invest for less and potentially reap the benefits of buying into the real estate market. However, there is also the possibility you could lose money, so weigh the benefits and drawbacks carefully. If you decide to go ahead, just be sure to thoroughly investigate any platform before investing on it.

33. Funding a Startup

While investing in startups can definitely be very risky, the rewards could potentially be high. When you’re looking into what to do with a tax refund, you might want to check out services that let you invest in small businesses. Again, make sure you do due diligence and check out the service fully before you sign up with it.

34. Saving for Next Year’s Tax Payment

If you do freelance work or you’re an independent contractor, you may have to make estimated payments every quarter. You could get a head start on your taxes by saving your refund and then using it to make those estimated payments on time.

35. Hiring an Accountant

If you believe you could have gotten a higher tax refund this year, then you may want to put aside your refund so you can use it to hire a good accountant to help you file next year’s tax return. The additional tax savings could far exceed the accountant’s fee.

36. Moving to a Better Rental

In the past, it may have been hard to move to a better rental because you didn’t have the funds necessary — like the first and last month’s rent and security deposit — to make it happen. Now that you have your refund, you might be able to make it a reality. You’ll want to make sure, however, that the rent works with your budget.

37. Getting Dental Insurance

You may have been delaying going to the dentist because it’s too expensive. Or, you might need dental work done, but can’t afford it. If so, you may want to put your tax refund towards purchasing dental insurance for the year. Then, you can take care of your teeth.

38. Buying New Clothes

The right clothes can make a big difference in your day. You not only have to wear the right clothes in a professional setting, but being comfortable in what you’re wearing can give you more confidence as well. It can be a good idea to look for deals, however, so you don’t spend your entire tax refund on a fancy pair of shoes or designer coat.

39. Purchasing Stocks

While investing in the stock market can be risky, if you buy shares in a company with a solid track record that pays dividends, you may end up making money on dividends as the company grows. You can always talk with your financial advisor about how to carefully invest in stocks.

40. Investing in Bonds

If you want to invest your tax refund, but don’t have much tolerance for risk, you might consider investing the money in bonds such as Treasury bonds. These are fixed-income investments that typically make regular interest payments to investors. On the maturity date, your principal investment will be returned to you.

41. Pampering Yourself

Whether you filed on time or missed the deadline and filed late, tax time can be stressful. If you have some tension to work out, you may want to use some of your refund to reward yourself for getting it all done. You could get a massage to help release tension in your shoulders, or splurge on a day at the spa.

The Takeaway

While your tax return may feel like “free money,” it’s really your money given back to you by the government. Uncle Sam was merely holding on to it for a while. It’s yours, so it can be a good idea to be smart with it. For instance, you could use it to save for a house or to invest in your future.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).


Invest with as little as $5 with a SoFi Active Investing account.


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Average Credit Score for 20-Year-Old

The average credit score for a 20-year-old is 681, according to 2024 data from Experian. This is considered a “good” score and signals to creditors that you can manage credit responsibly, increasing the likelihood you’ll get approved for a loan or a credit card. However, you may not get the best interest rates or most favorable terms — those are usually extended to people with higher credit scores.

Find out what a credit score is, how a 681 score compares to the average American’s, and steps you can take to bolster your score.

Key Points

•   The average credit score for 20-year-olds is 681, categorized as “good.”

•   Payment history, credit utilization, length of credit history, credit mix, and new credit influence scores.

•   Strategies include becoming an authorized user, reporting rent, and opening a secured credit card.

•   Paying bills on time and keeping credit utilization low are crucial for building credit.

•   Reporting rent and utility payments can help establish a positive payment history.

What Is a Credit Score?

A credit score is a three-digit number lenders use to help them determine how likely you are to repay a loan on time. It’s based on information from your credit reports, including your payment history, length of credit history, amounts owed, and credit mix. The higher your score, the more attractive you are to lenders — and the more likely you are to get approved for a loan or credit card.

Lenders typically report information to credit bureaus on a monthly basis, and in general, your credit score updates every 30 to 45 days. This means your score will likely fluctuate over time.

You may also have more than one credit score, depending on which credit scoring model a lender uses. The two primary models are FICO®, which is used in most lending decisions, and VantageScore. As you’ll see below, scores are categorized slightly differently in FICO vs. VantageScore.

FICO Score Ranges:

•   Poor: Less than 580

•   Fair: 580-699

•   Good: 670-739

•   Very good: 740-799

•   Exceptional: 800-850

VantageScore Score Ranges:

•   Subprime: 300-600

•   Near prime: 601-660

•   Prime: 661-780

•   Super prime: 781-850

Check your credit score for free. Sign up and get $10.*

and get $10 in rewards points on us.


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Average Credit Score by Age 20

As we mentioned, the average credit score for a 20-year-old is 681, which is a good credit score, especially for someone that age. After all, most 20-year-olds are still relatively new to the credit scene, and it takes time to build up credit.

What Is the Average Credit Score?

The average 20-year-old has a lower credit score than the typical American — but not by that much. As of 2024, the national average FICO Score is 717, which falls within the “good” range. By comparison, the average American’s VantageScore is 702 as of 2024, which the credit scoring model classifies as “prime.”

Recommended: FICO Score vs. Credit Score

Average Credit Score by Age

While age doesn’t directly impact your credit score, it can play a role. Credit scores tend to rise with age, as older borrowers generally have more time to establish a strong payment history and demonstrate responsible credit usage. In the chart below, notice how average FICO Scores rise from one generation to the next.

Age Group

Average Credit Score

Gen Z (18 to 26) 681
Millennials (27 to 42) 691
Generation X (43 to 58) 709
Baby Boomers (59 to 77) 746
Silent Generation (78+) 759

Source: FICO

At What Age Does Credit Score Improve the Most?

As the chart above shows, the biggest jump in credit scores is between those in Generation X (43-58) and the Baby Boomers (59-77). With the average Gen X credit score at 709, and Baby Boomers at 746, there’s a 37 point increase between the two age groups.

What’s a Good Credit Score for Your Age?

Regardless of your age, a “good” FICO Score is anywhere from 670 to 739. If you fall between those numbers — or exceed them — you’re on solid footing.

That said, many 20-year-olds are just starting to build their credit. As a result, their starting credit score most likely won’t be in the “good” range, but it also won’t be zero (no one’s credit score is) or at 300, the bottom score. Often, a starting credit score is in the good or fair credit score range (580-669).

Keep in mind that it can take up to six months before you even get your first credit score. Once you’ve established a track record of staying on top of your finances, you’ll likely see your score begin to increase. (Need help managing your money? A money tracker app can be a useful tool.)

Factors Influencing the Average Credit Score

Individuals who want a higher credit score can benefit from learning about the five key factors that affect your credit score. Some have more impact than others, but even the least-impactful factor can bring your credit score down.

What Factors Affect My Credit Score?

According to FICO, here are the factors that influence your credit score, in order of importance:

Payment History

This accounts for 35% of your credit score and carries the most weight. Prioritize making on-time payments, even if it’s just the minimum amount due. And practice smart budgeting, either with a spending app or a DIY method, so you can stay on top of monthly payments.

Credit Utilization

This refers to the amount of credit you’re using compared to what’s available to you, and it figures into 30% of your score. Lenders want to make sure you can handle your debts without being spread too thin or maxing out your available credit.

Length of Credit History

How long you’ve had credit makes up 15% of your score. The longer you’re able to show lenders that you’re responsible with credit, the higher your score will likely be.

Credit Mix

Having a diverse mix of credit contributes to 10% of your credit score and indicates to lenders that you can responsibly handle different kinds of debt.

New Credit

The amount of new credit accounts you open, and how quickly you do so, counts toward 10% of your score. Note that seeking out additional lines of credit means the lender will likely do a hard credit inquiry, and each hard credit check can temporarily lower your score by up to five points.

How Are Credit Scores Used?

Potential lenders use your credit score information as the basis for their decision whether to extend you credit. People with scores in the “good” or higher range generally have a better chance of being approved for a mortgage, loan, or credit card, than those who are in the “fair” or “poor” categories.

Your credit score may also be important in other areas of your life. For example, a landlord may run a tenant credit check before renting you an apartment or hoouse, and some employers may check your credit score during a background check.

How Does My Age Affect My Credit Score?

As we mentioned, credit scores tend to increase as people get older. This is most likely because they have a longer financial history and have adopted healthy financial habits along the way. But more impactful than age is the way someone manages their debt. For instance, a 50-year-old with a history of late payments will likely have a lower score than a 30-year-old with a spotless payment record.

How to Build Credit

When it comes to how to build credit, there are many strategies you can try. Here are some to consider:

•   Become an authorized user on someone else’s credit card. If you have a family member with a high credit score, you may want to ask if they can add you as an authorized user on their account. This allows you to use their credit card for purchases (without being liable for the payments) and begin establishing a credit record.

•   Look into getting your rent and utility payments reported to the credit bureaus. There are several services out there that will report your rent and utility payments to the credit bureaus.

•   Open a secured credit card. With this type of card, you put down a deposit that acts as your credit limit. Credit card issuers will report your payments to the credit agencies, allowing you to build your score by making on-time payments.

•   Get a store credit card. A credit card that can only be used at a particular retailer (think gas station or department store cards) can allow you to build credit, as long as the activity is reported to the major credit bureaus. Compared to traditional credit cards, store cards will have lower credit limits and may be easier to obtain.

How to Strengthen Your Credit Score

Whether or not you’re in the early phases of understanding how long it takes to build credit, there are steps you can take now to help bolster your credit score. Here are a few strategies to explore:

•   Pay your bills on time. As previously discussed, this is the most influential factor in your credit score. Setting up automatic payments from your bank account can help ensure you don’t miss a due date.

•   Keep credit utilization low. If you can’t pay your credit card balances off each month, strive to keep your total outstanding balance at 30% or less than your total credit limit. For example, if your credit card has a $1,000 limit, you’ll want to have a maximum balance of $300.

•   Ask for an increase in your credit limit. Doing so could raise your credit score as it can improve your credit utilization ratio. But be careful: Running up a balance on a card with a higher limit will defeat the purpose.

•   Avoid applying for too many credit cards or loans in a short period of time. With each application, a lender will likely perform a hard inquiry, which can lower your score temporarily. Multiple applications in a short time frame may also indicate to creditors that you’re a financial risk because you’re seeking a substantial amount of credit.

Credit Score Tips

Along with all of the aforementioned suggestions for building and strengthening your credit score, it’s important to monitor your score regularly by checking your credit report and disputing inaccuracies. You can get a free weekly copy of your credit report from each of the three credit bureaus via AnnualCreditReport.com.

Additionally, you can also use a credit score monitoring service to track any changes to your credit report and credit score.

Recommended: Why Did My Credit Score Drop After a Dispute?

The Takeaway

What is the average credit score for a 20-year-old? According to FICO, it’s 681, which is considered “good.” Handling credit responsibly is important in order to maintain — and eventually increase — this credit score. Making on time payments, not applying for too much credit at once, maintaining a diverse credit mix, keeping credit utilization low, and building a strong credit history are all important financial habits that will help a 20-year-old build and strengthen their score.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

Can a 20-year-old have a 700 credit score?

Technically, yes, it’s possible. But it’s more likely that someone this early on in their credit journey will have a score somewhere in the mid-to-higher 600 range.

What is a bad credit score for a 20 year-old?

FICO categorizes any score under 580 as “poor” credit. The score would make it challenging to get credit cards or be approved for loans. If you are approved, you can expect higher interest rates and more restrictive terms.

Is 760 a good credit score for a 20 year-old?

A credit score of 760 is in the “very good” range and is only 40 points away from the top category of “exceptional,” per FICO. Achieving this high of a score usually requires a long history of responsible credit usage, which most 20-year-olds haven’t achieved yet.

How rare is an 825 credit score?

Having an 825 credit score is fairly unusual, since it’s in the top tier and only 25 points away from the highest score you can obtain. Arriving at and maintaining this credit score signals you have near-flawless credit.

Is a 900 credit score possible?

No. The highest possible credit score you can get is 850.

Can I buy a house with a 735 credit score?

Yes, you can buy a house with a 735 credit score. In fact, a 735 credit score exceeds the usual qualifications for all types of mortgage loans.


Photo credit: iStock/FG Trade

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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 .

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.

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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Guide to Student Loans for H-1B Visa Holders

If you’re in the U.S. on a H-1B visa, which allows skilled workers from abroad to be temporarily employed by U.S. companies in specialized occupations, you might be considering attending graduate school to further your career while you’re in the country. You might also need student loans to help pay for school, since the average cost of earning a master’s degree is $62,820.

Here’s what you need to know about student loans for H1-B visa holders, including where to get them, the application steps, and potential challenges to navigate, plus other college financing options to consider.

Key Points

•   H-1B visa holders can apply for private student loans but not federal ones.

•   Challenges include limited U.S. credit history and being seen as high-risk borrowers.

•   H-1B visa holders may need to add a cosigner to a student loan in order to qualify.

•   The loan application process for H-1B visa holders includes gathering documents, comparing lenders, and submitting a completed application.

•   Alternatives to student loans for international students include scholarships and grants.

Can H-1B Visa Holders Attend School in the U.S.?

H-1B visa holders are allowed to attend school in the U.S. So if you are an H-1B visa holder and you’ve been wondering, can you study on an H-1B visa while working in the U.S.?, the answer is yes, as long as you maintain your employment and H-1B status while going to school.

Another question that often comes up among visa holders is: Can H-1B holders study part-time? International students with H-1B visas can enroll in degree programs or nondegree programs, such as a post-grad certificate program, on either a part- or full-time basis. This way they can work and go to school.

Can International Students Apply for Student Loans?

Given the high cost of education in the U.S., many individuals, including international students, use student loans to attend college. But obtaining student loans as an H-1B visa holder can be challenging. International students have fewer financing options than American students to pay for college tuition.

Federal student loans are reserved for U.S. citizens and eligible noncitizens, which includes individuals in the following categories:

•   Permanent resident, also known as green card holder

•   Arrival-Departure Record (I-94) Record holder

•   Citizen of the Federal States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau

•   You or a parent has T-1 nonimmigrant status

•   You or a parent are a battered immigrant-qualified alien

If you are ineligible for federal student loans, as many H-1B visa holders are, you can look into scholarships and grants to help pay for college. In addition, you may qualify for other types of financing, including private loans for college.

Private Student Loans

If personal savings, scholarships, and grants aren’t enough to cover the cost of school, H-1B visa holders can apply for private student loans to fill the gap.

Private student loans are offered by banks, online lenders, and credit unions. They can help borrowers cover the cost of attendance at college. Private student loan interest rates may be fixed or variable, and borrowers are charged interest on their loans while they’re in school. H-1B visa holders can shop around for international student loans and compare multiple lenders to find the best rate and terms.

Student loan requirements vary by lender, but borrowers are typically evaluated based on their ability to repay the loan. Lenders consider your financial situation, such as your credit score and income. They may also ask for visa documentation as well as confirmation that you’re enrolled at an accredited school or qualified educational program.

If you get approved for a student loan, keep in mind that you can always choose to refinance student loans in the future, ideally when you might be able to qualify for a lower rate and more favorable terms. With refinancing, you replace your current loans with one new loan that has one monthly payment, which may be easier to manage.

Recommended: Refinancing as an International Student

What to Expect When Applying for an International Student Loan

Preparing in advance and organizing the materials you’ll need can help streamline the application process for an international student loan. Compile proof of income, such as pay stubs or a letter from your employer, as well as visa documentation and your U.S. address. And be sure to add up your anticipated education expenses so you’ll know exactly how much of a loan to apply for.

As mentioned, lenders will consider your credit history in the U.S. when you apply for an international student loan. If your credit history isn’t robust enough, finding a cosigner for the loan could improve your chances of qualifying and securing more favorable loan rates and terms.

How to Get a Student Loan as a H-1B Visa Holder

There are multiple steps in the application process for a student loan. Here are the actions H-1B visa holders need to take.

Gather Documentation

Although the specific process can be different from lender to lender, there are certain documents you will likely need to provide. Make sure to have on hand:

•   Acceptance letter or proof of enrollment from a college or graduate school

•   Anticipated graduation date

•   Loan cosigner name and information if applicable

•   Pay stubs and financial statements

•   Transcripts from any prior higher education

•   Valid passport with an expiration date beyond your anticipated graduation date

•   Visa documentation

Compare Lenders

Loan terms can vary between lenders, so it’s important to compare offers. To do that, prequalify with multiple lenders to help find the best deal. You can typically complete prequalification on a lender’s website.

Once you have several offers, look at the interest rate of each one, since it impacts how much you’ll pay over the life of the loan. Also, note whether it’s a fixed or variable rate.

Fixed interest rates are locked in for the entire loan term, so your monthly loan payment stays the same. Variable rates fluctuate with the market, which can change your monthly loan payments, making variable rate loans riskier and harder to budget for.

As you’re comparing lenders, check to see if there are any loan fees you’ll need to pay and explore what the repayment options are. For example, some private lenders may offer different term lengths to pay off the loan.

Submit an Application

After determining which lender best suits your needs, submit a loan application. Go over the form carefully to make sure you’ve completed it accurately and that you’ve supplied all the necessary information to avoid delays or having your application denied.

Review the Offer and Sign the Loan Agreement

The lender will inform you once they’ve made a decision, which could take up to several weeks. Review the loan agreement to verify that the terms, including the interest rate and repayment plan, are correct.

If the loan terms meet your satisfaction, sign and return the agreement — typically called a promissory note — to the lender.

Possible Challenges for International Students

While international students can secure financing to help pay for college in the U.S., there are challenges involved. These are some of the most common ones.

Limited Credit History in the U.S.

H-1B visa holders may not have had a chance to build up a credit history in the U.S. Lenders might consider them to be high-risk borrowers, which could mean that they get a loan with a higher interest rate or need a cosigner to qualify.

Recommended: 10 Strategies for Building Credit Over Time

Finding a Cosigner

If an international student does need to add a cosigner to qualify for a student loan, they will have to find a person who agrees to take on that obligation.

Since a cosigner is legally required to repay the loan in the event the student can’t, finding someone willing to assume this responsibility can be difficult. A cosigner should be someone with a solid credit history, and they must also be a permanent resident of the U.S.

Time Limits on an H-1B Visa

International students might be considered high-risk borrowers by lenders since their stay in the U.S. is temporary. They can have their H-1B status extended up to a total of six years until they must leave for at least a year before re-entry into the country. Lenders will consider this timeframe when evaluating a student’s loan application.

The Takeaway

A private student loan for H-1B visa holders may be an option to help pay for college or graduate school while working in the U.S. International students often need a cosigner to qualify for student loans, unless they have an established credit history in the country.

Other options international students can explore to help pay for college include applying for scholarships and grants. And if H-1B visa holders do obtain private student loans with terms they consider less than ideal, they can explore refinancing at some point to see if they might qualify for a lower interest rate or more favorable terms.

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

Can you get student loans on H-1B?

Yes, it’s possible to get a student loan on a H-1B visa. Although H-1B visa holders are generally not eligible for federal student loans, they can apply for private student loans. But they may need a cosigner to qualify for these loans unless they have a strong credit history in the U.S.

Can H-4 visa holders get student loans?

H-4 visa holders, who are typically spouses and children of H-1B visa holders, are not eligible for federal student loans. However, they might qualify for private student loans. While not all private lenders offer loans to H-4 visa holders, some do. Look for a private lender that works with borrowers with an H-4 status, and be aware that you will likely need a cosigner on the loan.

Can international students get education loans in the USA?

International students aren’t eligible for federal student loans, but they can apply for private student loans from a private lender like a bank, credit union, or online lender. Lenders look for borrowers with a strong credit history in the U.S., so if an international student doesn’t have that kind of credit, they may need to add a cosigner to the loan in order to qualify.


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SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.


SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).

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.


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 .

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.

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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