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A car loan, a mortgage, student loans, credit cards. It might feel like a dark debt cloud is looming over you sometimes. If you carry some debt on your personal balance sheet, you’re not alone.

The Federal Reserve’s most recent report shows that total household debt in the U.S. has reached more than $15.84 trillion. That includes everything from mortgages to credit cards to student loans. We’re a heavily indebted nation, and for some, it may take a psychological toll. If that’s you, here’s the comforting news: There are some tried-and-true strategies for paying back outstanding debt.

What Is Considered Outstanding Debt?

What is outstanding debt? Outstanding debt refers to any balance on a debt that has yet to be paid in full. It is money that is owed to a bank or other creditor.

When calculating debt that’s outstanding, add all debt balances together. This could include credit cards, student loans, mortgage loans, payday loans, personal loans, home equity lines of credit, auto loans, and others. You should be able to find outstanding balance information on your statements.

How to Find Outstanding Debt

When paying off outstanding debt, you first might need to track it all down.

As you move throughout the debt payoff journey, you may find it helpful to start a file for your statements and correspondence. Also, you could create a list or input information into a spreadsheet. Organizing your information is necessary for building a debt payoff strategy.

Build a list of all debts with the most useful information, such as the outstanding balance, the interest rate, the monthly payment, the type of debt, and the creditor. If you have an installment loan, such as a personal loan, the principal amount of the loan is another helpful piece of information.

What if I Can’t Find All My Outstanding Debts?

If you feel as though you’ve lost track of some debts, you may want to start by requesting a credit report from at least one of the three major reporting agencies, Experian®, TransUnion®, or Equifax®. You are legally entitled to one free copy of your credit report from each of the three agencies per year. It’s easy to request a credit report from AnnualCreditReport.com .

A credit report includes information about each account that has been reported to that particular agency, including the name of the creditor and the outstanding debt balance.

It is possible that some outstanding debts may have been sold to a collection agency. The name of the original creditor may be included on the credit report. If that is not the case, you may need to investigate further.

Recommended: Statute of Limitations on Debt: Things to Know

Some outstanding debts may not appear on a credit report. Creditors are not required to report to the agencies, but most major creditors do. That said, a creditor could choose to report to none, one, two, or all three of the agencies. If you’re in information-collecting mode, you may want to consider requesting reports from more than one agency, or all three.

Outstanding Debt Amounts

Aside from how a debt is structured — revolving or installment debt — it can also be thought of as good debt or bad debt.

Generally, if borrowing money, and thus incurring debt, enhances your net worth, it’s considered good debt. A mortgage is one example of this. Even though you might incur debt to purchase a home, the value of the home will likely increase. As it does, and as you pay down the mortgage balance, your net worth has the potential to increase.

Bad debt, on the other hand, is debt taken on to purchase something that will depreciate, or lose value, over time. Going into debt to purchase consumer goods, such as cars or clothing, will not enhance your net worth.

Each person has a unique financial situation, level of comfort with debt, and ability to repay debt. What one person may be able to justify may be completely unacceptable to another.

How Does an Outstanding Debt Impact Your Credit

One thing lenders may consider during loan processing is the applicant’s debt-to-income ratio (DTI). Lenders will look at this number to determine their potential risk of lending. Different lenders have different stipulations about this ratio, so asking a potential lender about theirs is a good idea.

Calculating DTI is done by dividing monthly debt payments by gross monthly income.

•   Monthly debt payments can include rent or mortgage payment, homeowners association fee, car payment, student loan payment, and other monthly payments. (Typically, monthly expenses such as utilities, food, or auto expenses other than a car loan payment are not included in this calculation.)

•   Gross income is the amount of money you earn before taxes and other deductions are taken out of your paycheck.

Someone with monthly debt payments of $1,000 and a gross monthly income of $4,000 would have a DTI of 25% ($1,000 divided by $4,000 is 25%).

Generally, a DTI of 35% or less is considered a healthy balance of debt to income.

Should I Pay Down Outstanding Debt?

Barring extenuating circumstances, it’s a good idea to make regular, consistent payments on your debt. Whether or not you decide to pay the debt back on an expedited schedule is up to you.

Some may not feel the need to aggressively tackle their outstanding debt. They may be just fine to continue paying off a balance until the loan’s maturity date. This may apply to people with manageable debt payments, those who have debts with lower interest rates, or those focusing on other financial goals.

For example, someone with a low-interest-rate mortgage loan may not feel the need to pay it down faster than the agreed-upon schedule. So they continue to make regular, scheduled payments that make up a manageable percentage of their monthly budget. Therefore, they are able to work on other financial goals in tandem, such as saving for retirement or starting a fund for a child’s college.

Other scenarios may call for a more aggressive strategy to pay down debt. Some reasons to consider an expedited plan:

•   Debt levels, and therefore monthly payments, feel unmanageable.

•   Carrying debts with higher interest rates, like credit cards.

•   Missed payments and added fees.

•   It could also be as simple as wanting to have zero debt.

Carrying a large debt load could negatively affect your credit score. One factor in a credit score calculation is the ratio between outstanding debt balances and available credit on revolving debt, like a credit card — the credit utilization rate.

Using no more than 30% of your available credit is recommended. So, if a person has a $5,000 credit limit on a card, that would mean using no more than $1,500 at any given time throughout the month. Using more could result in a ding on their credit score.

Carrying debt also means paying interest. While some interest may not be avoidable, it’s generally a sound financial strategy to pay as little in interest as possible.

Credit cards tend to have some of the highest interest rates on unsecured debt. The average interest rate on a credit card is nearly 17%, as of June 22, 2022. Penalty rates can reach nearly 30%. With high rates, it’s worth seriously considering paring back debt balances.

Outstanding Debt Management Strategies

The next step is to pick a debt reduction plan.

Two popular strategies for paying off debt are called the debt snowball and the debt avalanche. Both ask that you isolate one source of debt to focus on first.

Simply put, you’ll make extra payments or payments larger than the minimum monthly payment on that debt until the outstanding balance is eliminated. You’ll continue making the minimum monthly payment on all your other debts.

Debt Snowball

A debt snowball payoff plan involves working on the source of debt with the smallest balance. For example, a person with three credit cards would pick the one with the lowest outstanding balance and work on paying it down.

The idea here is that there’s a psychological boost when a card is paid off, so it makes sense to go after the smallest first. That way, when a person works up to the card with the next highest balance, they can focus singularly on it, without a bunch of annoying, smaller payments getting in the way of the ultimate goal.

It’s called a snowball because the strategy starts small, gaining momentum as it goes.

Debt Avalanche

Alternatively, the debt avalanche method starts with the debt with the highest interest rate. Because this source of debt costs the most to maintain, it is a natural place to focus.

The debt avalanche is the debt payoff strategy of choice for those who prefer to look at things from a purely mathematical standpoint. For example, if a person has one credit card with an 18% annual percentage rate and another with 12%, they’d focus on that 18% card with any extra payments, no matter the balance.

Of course, it is also possible to modify these strategies to suit personal preferences and needs. For example, if one source of debt has a prepayment penalty, maybe it drops to the bottom of the list. If there’s a particular credit card you tend to overspend with, perhaps that’s a good one to focus on.

Outstanding Debt Payoff Methods

Once you decide on a strategy, whether it’s one discussed above or something that works better for your financial situation, you’ll need to figure out where the money will come from to pay down outstanding debt.

Starting by simply listing your monthly income and expenses is a good first step. If you find that you have enough money to begin making extra payments toward your outstanding debt balances, then you might choose to start right away.

Some people choose to keep a 30-day spending diary to get a clear picture of what they spend their money on. This can be a good way to pinpoint areas you might be able to cut back on to have more money to apply to outstanding debt.

If your existing budget is already tight and won’t accommodate extra payments, you might consider looking for some other financial strategies.

Increasing Income

Sometimes the answer is just to make more money. That could mean getting a part-time job or selling things you no longer need or want. You might also think about asking for a pay raise at your regular job.

Using Personal Savings

Tapping into money you’ve saved can be another way to pay down outstanding debt. Savings account interest rates, even high-yield savings accounts, pay much less interest than you might be incurring in interest on your outstanding debts. Keeping enough money in a savings account as an emergency fund is recommended, but if you have a surplus in your personal savings, putting that money toward your debt balances is a good way to make headway on outstanding debt.

Consolidating With a Credit Card

Using a credit card to pay off debt may seem an unlikely choice, but it can make sense in some situations. If your credit score is healthy enough to qualify for a credit card with a zero- or low-interest promotional rate, you might consider transferring a higher-rate balance to a card like this.

The benefit of this strategy is having a lower interest rate during the promotional period, potentially resulting in savings on the overall debt.

There are some drawbacks to transferring a balance in this way, though. One is that promotional periods are limited, and if you don’t pay the balance in full during this period, the remaining debt will revert to the card’s regular rate. Also, it’s typical for a promotional-rate card to charge a balance transfer fee, which can range from 3% to 5%, or more, of the balance transferred. This fee will increase the amount you will have to repay.

Consolidating With a Personal Loan

Using one new loan to pay off multiple outstanding debt balances is another debt payoff method. A personal loan with a lower overall rate of interest and a straightforward repayment plan can be a good way to do this.

In addition to one fixed monthly payment, a personal loan provides another benefit — the balance cannot easily be increased, as with a credit card. It’s easy to swipe a credit card for an additional purchase, potentially undoing the progress you’ve made on your debt repayment plan.

To consolidate with a personal loan, you might want to look around at different lenders to get a sense of what interest rates they might offer for you. Typically, lenders will provide a few options, including loans of different lengths.

The Takeaway

Outstanding debt can be a heavy burden. Many people owe large amounts of debt, but don’t know how to start making a dent in their balances. A good place to start is by identifying income and expenses to see your overall financial picture. From there, you may decide to focus on paying down certain debts over others. Choosing one method to pay down your debts and finding the money to do so are the next steps.

If you decide to pursue a debt payoff strategy, an unsecured SoFi Personal Loan may be an option for you. SoFi offers unsecured, no-fee option, low fixed-rate personal loans to help guide your financial journey.

Ready to kick-start your debt payoff strategy? A personal loan from SoFi could help you consolidate your debt into one easy-to-manage monthly payment.

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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.

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

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

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One downside of leaving a traditional 9-to-5 for a life of self-employment is navigating your personal finances as a sole proprietor. From invoicing, to estimating taxes, it’s all on you — because you’re the boss now.

Qualifying for a personal loan while self-employed could also present some challenges. Self-employed individuals may have a need for a personal loan, but may find it difficult to produce traditional documentation, like W-2s or pay stubs, used to verify income. But, there may be options to fit your loan needs after all.

How to Get a Personal Loan if You’re Self-Employed

A brief personal loan explanation — a personal loan is a type of installment loan that can be used for nearly any personal expense, including home improvements, a work sabbatical, or consolidating your credit card debt. If you’re considering making a big purchase, like buying an engagement ring, a personal loan can be an alternative to using a credit card, if you don’t have the means to pay the balance off right away.

Personal loans are typically unsecured, meaning a lender won’t require collateral. Though they can also be secured, usually by the asset purchased with the loan. Unsecured loans are usually approved based on the financial standing of the borrower, and typically include their credit history and current income.

Lenders often evaluate a potential borrower’s income as a major factor in their decision-making process. Those who are self-employed may find this a tad more challenging than someone who works a traditional job with regular payments.

Self-Employed Loan Requirements

Loan requirements for self-employed individuals will be similar to the typical loan requirements as determined by the lender. In addition to evaluating factors like the applicant’s credit score, many lenders will require proof of income.

Traditional documentation used to verify income includes pay stubs and W2s. However, self-employed people may have some difficulty producing these documents, because they often aren’t W2 employees. It is possible for self-employed individuals to show proof of income, but it may require a little more legwork.

In general, lenders are looking for borrowers who have income stability and it can help if the borrower has been working in a single industry for at least two years. A short employment history could indicate that you are a borrowing risk.

Recommended: Typical Personal Loan Requirements Needed for Approval

Showing Proof of Income When Self Employed

Those who are self-employed have a couple of options for showing a lender they have sufficient and reliable income. Here are a few options that self-employed individuals could provide as documentation to prove their income.

Tax Statements. Self-employed individuals can use tax statements, like their 1099 to offer proof of income. This form should outline your wages and taxes from the previous year. Lenders often view tax documents as a reliable source of income proof because they are legal documents.

Bank Statements. Bank statements could be used if there is a regular history of deposits that illustrate consistent income.

Profit and Loss Statement. This document provides an overview of your costs, expenses, and revenue.

Court-ordered agreements. These may include things like alimony or child support.

Keep in mind that each lender will likely have their own application requirements, so be sure to read those too. Contact the individual lender if you have specific questions on the types of documentation they’ll accept.

Consider Having a Cosigner

In the event that you are still struggling to gain approval for a personal loan with your self-employed proof of income, one option is to consider adding a cosigner. A cosigner is someone who agrees to pay back the loan should you, the primary borrower, have any trouble making payments.

A cosigner can be a close friend or family member, ideally one who has a strong credit history who will strengthen your loan application.

Ready to Improve Your Financial Life?

Personal loans can be useful for those who are looking to consolidate debt, cover the cost of an emergency expense, or pay for other personal expenses like a home renovation or wedding costs. The personal loan average interest rate is lower than the average credit card interest rate.

If you’re interested in a personal loan be sure to shop around to compare the interest rates and terms available to you at various lenders. Look into any fees, especiallying prepayment penalties if you are interested in paying your personal loan off early. As you browse, consider SoFi’s Personal Loans, which have no fees required and offer competitive interest rates to qualifying borrowers.

Why It’s Difficult for the Self-Employed to Get a Personal Loan

It can be more challenging for self-employed individuals to provide proof of income to lenders, which can make it more challenging for them to get approved for a personal loan. But it’s important to note that each loan application is unique, and employment status is just one consideration.

For example, a self-employed individual who has a stellar credit history and who has been self-employed for a few years may be in a better position to apply for a personal loan than someone who has just transitioned into managing their own business.

The Income Challenge

Proving consistent and stable income is the biggest challenge for self-employed individuals. Because you are not guaranteed the same payment each pay period, lenders may request specific documentation in order to verify the fact that you have enough cash coming in to pay for the personal loan. Some lenders may request tax returns for several years in order to verify your income.

Consistency Matters

Consistency in income is another major hurdle for the self-employed. It’s not uncommon for self-employed people to experience fluctuation in their income. While some slight fluctuation may be acceptable to a lender, for the most part they are looking for consistent payments and it’s even better if there is an increasing trend over time.

Personal Loan Alternatives When Self-Employed

Personal loans aren’t the only option for self-employed individuals looking to borrow money to pay for expenses. Other options to consider a credit card, cash advance, or a home equity loan.

Credit Cards With 0% APR Promotions

Credit cards can have high-interest rates, but with a 0% APR promotion, a credit card could be a great tool to pay for an upcoming expense. Just be sure to pay off the credit card before the promotional period ends and interest starts accruing.

Recommended: Average Credit Card Interest Rates

Cash Advances

A cash advance is a short-term loan generally offered by your credit card which allows you to borrow cash against your existing line of credit. Cash advances can provide an avenue for you to get quick access to cash, but there may be additional fees and a high-interest rate for borrowing. Be sure to read all the terms and conditions outlined by your credit card company before borrowing a cash advance.

Home Equity Loans or HELOCs

If you are a homeowner, you can tap into the equity you’ve built in your home using a home equity loan or home equity line of credit (HELOC). A home equity loan is an installment loan where the borrower receives a lump sum payment and repays it in regular payments with interest.

A HELOC is a revolving line of credit that the borrower can draw from, and once it is repaid, continue drawing from during a specified period of time.

Recommended: Different Types Of Home Equity Loans

Business Loans

Small business loans can be used to pay for business expenses. Self-employed individuals may be able to qualify for loans from small business administration, banks, or even some business credit cards.

It is important to keep your personal and business expenses separate as a self-employed person. If you are using the money for a personal expense, however, avoid borrowing a business loan and vice versa.

The Takeaway

The challenge for self-employed individuals applying for a personal loan will generally be providing proof of income. Alternatives to traditional proof of income documents include tax or bank statements.

SoFi understands that a full-time job isn’t the only qualifier of financial stability. SoFi will also consider factors like your credit score, education, and whether you have a cosigner. Loan eligibility depends on a number of additional factors, including your financial history, career experience, and monthly income versus expenses.

Getting a personal loan when you’re self-employed doesn’t have to be a huge headache. Check out SoFi personal loans today.

FAQ

Can you get any loans if you’re self-employed with no proof of income?

It is possible to get a loan if you are self-employed, however with zero proof of income it may be challenging to gain approval for a loan. To improve your odds of approval, you may consider adding collateral to the loan or applying with a cosigner.

Are there any loans for self-employed people with bad credit?

While a strong credit history can help strengthen a loan application, it’s not impossible to qualify for a loan with bad credit. If you can show a consistent and stable income history, that could help improve your application. If that’s not enough, another option may be to add a cosigner.

Can self-employed freelance workers get personal loans?

Yes, self-employed freelance workers can qualify for a personal loan. Instead of providing W-2 documents to verify their income, they will need to provide alternatives such as tax documents or bank statements. Applicants who have been working in a specific industry as a freelancer for two years or more may be viewed more favorably by lenders. Those with a strong credit score and history may qualify for more competitive rates and terms.

If a self-employed freelancer is struggling to get approved for a personal loan they could consider adding a cosigner to help strengthen their application.

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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.

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

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

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 .

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The longer you live in your house, the more obvious it may become that you need more living space — perhaps for a guest bedroom when your family expands or as a home office where you can work remotely in a telecommuting society. Your first thought might be to build an addition, but the sticker shock may cause you to shelve that idea and instead consider an attic conversion.

Fortunately, an attic conversion is an idea that may be more economical than a complete home addition. Read on for a full breakdown of the cost to finish an attic.

Should You Convert Your Attic Space?

There are many benefits of converting an attic into usable space, including:

•   The space already exists in your home, making this choice both cost- and time-effective.

•   You don’t need to pour a foundation, again making it a more viable and economical option.

•   Wiring is likely already in place and can be modified to suit your needs.

An attic conversion also allows you to use the entire envelope of your home, rather than wasting potential living space.

Before you fully commit to your attic remodel, though, it’s crucial to make sure your attic has the potential to become a usable living space. Better Homes & Gardens provides a litmus test to determine whether your attic is worth remodeling .

Recommended: Renovation vs. Remodel

Tips on Converting an Attic, Plus Associated Costs

One of the first things you might do before converting your attic is to see if your roof is being supported by W-shaped trusses in your attic. If so, it’s likely that building an addition is a better choice. If your attic contains A-shaped rafters, though, that’s a plus; if there’s enough open space beneath the rafters, then you can potentially convert your attic into usable space.

Other considerations that Better Homes & Gardens recommend include to:

•   Check your local building codes to make sure your remodel will fit. As just one example, a typical requirement is that the attic space must be at least 7.5 feet high and over 50 percent of the floor area. The thickness of the material will also factor into the final headroom and ceiling height. The quickest way to add significant costs to your attic remodel is to be forced to change course mid-project because of a code violation (though this is an example of personal loan use that could come in handy).

•   Determine how you’ll get into the space. Will you need to add a staircase or expand the current one? Stairs that go straight up will need more floor space than, say, spiral staircases. Or perhaps your only option is a pull-down access point; this will limit what furniture and materials you can fit into your attic conversion and how utilitarian the new living space might be.

•   Consider whether you’ll need to add windows. If you’re creating an additional bedroom, codes may require an egress window in case of fires. But even if they aren’t required, you might consider adding windows or punching skylights that open to brighten the space with natural light.

•   Decide how much flooring needs to be reinforced, along with any electrical or plumbing issues. If you ultimately decide that your attic has what’s needed for a successful conversion, it’s time to think both practically and creatively to shape what may well become the most interesting — and potentially challenging — room in your house.

•   Prioritize what’s most important to you. Maybe it’s crucial that the attic is fully plumbed for a bathroom because you want this space to serve as a guest suite. To make that happen, perhaps you’d be willing to give up your specialty flooring idea if your budget doesn’t accommodate both or if it could make it harder to get your personal loan approved for the project.

•   Consult with a professional unless you’re already an experienced builder. Ask friends, family members, and building associations for recommendations and referrals, then request quotes from at least three contractors to understand both possibilities and associated costs. When you contact contractors, ask them for credentials. Compare bids and, tempting as it may be, don’t automatically choose the lowest one. Make sure the contractor describes what will be provided as well as the estimated time frame.

Want to know how much value your attic conversion will bring to the table? Check out SoFi’s Home Project Value Estimator.

Recommended: How to Find a Contractor for Home Renovations & Remodeling

How Much Does It Cost to Finish an Attic per Square Foot?

On average, you can expect to pay between $4,600 to $16,000 — or $30 to $60 per square foot — to refinish your attic. Most high-end attic conversions can cost as much as $200 per square foot.

Overall, costs vary depending on the overall square footage and the materials you use.

How Much Does It Cost to Finish an Attic per Task?

If you hire individual contractors for each aspect of your attic remodel, then it’s easy to see what each portion of the remodel is costing you. However, if you hire a contractor to manage the entire project, you likely won’t receive the project broken down into great detail.

Here are some estimates you might expect to pay for various components of your attic renovation:

Cost of Walls and Ceilings

New walls and ceilings can effectively transform an unfinished attic into a space that’s both comfortable and livable. Although prices vary by where you live, attic drywall can cost an average of $1,000 to $2,600 to install, with ceilings costing $120 to $25,000.

Other aspects to consider: Will you paint the walls and ceilings? Add wallpaper? Do you need trim and crown molding? All of these features will be additional costs and can quickly cause your project budget to skyrocket.

Cost of Flooring

Flooring is another important consideration, so first think about what’s located directly below the attic space. Do you need soundproofing? If a bedroom is located below the attic space, you’ll likely want some sound control. Insulation provides that to some degree, and carpeting adds even more dampening.

The cost of attic flooring will depend on the current state of the attic and what materials you choose. Replacing floor joists to beef up the strength will cost anywhere between $1,000 and $10,000, while installing subfloor will run between $500 and $800. Installing the flooring itself averages between $200 and $6,400, depending on material and square footage.

Cost of Windows and Skylights

If there currently are no windows in your attic, you may want to add an egress window, which will run you between around $2,500 and $5,300, as a safety precaution. You also might want windows or skylights to brighten the space with natural light. Expect to pay an average of $200 to $10,000 to install an attic window, and $1,000 to $2,400 to add a skylight.

Cost of Heating and Cooling

Your attic conversion might require additional heating and cooling. The price to install an attic fan is around $400 to $900, and a window air conditioner averages $298. A skillful contractor could also potentially tie in your current climate control system.

For heat, baseboard heaters run $780 on average. Electricians charge $75 to $200 per hour in labor, and installing duct plumbing might cost you between $454 and $2,051 on average.

If your attic is difficult to access during the renovation period, contractors may tack on a surcharge. To get an idea of how much your attic renovation will cost, use our Home Improvement Cost Calculator.

How Much Does It Cost to Finish an Attic Yourself?

It’s generally cheaper to go the DIY route than to hire a professional — though you will need some know-how. If you’re making minor improvements to your attic space, you may be looking at an attic remodel cost as low as $300. However, if you’re looking to make a total transformation, your costs for materials could run as high as $50,000.

Though you’ll certainly save on labor costs, make sure to take into account the time involved if you decide to do it yourself as opposed to bringing in a professional.

How Much Does It Cost to Finish an Attic by Type?

How much it costs to finish an attic will also vary depending on the type of attic space you’re creating. Here’s a look at how much an attic remodel costs by attic type.

Cost of Finishing a Walk-Up Attic

The cost of finishing a walk-up attic generally ranges anywhere from $8,100 and $26,000. Large portions of the costs are typically adding a staircase and installing flooring.

Finishing an Attic as a Storage Space

If you’re finishing an attic to serve as a storage space, your costs are generally a little lower as there isn’t as much polishing involved. Generally, the attic remodel cost for a storage space runs from $4,600 for a simpler setup to $18,900 if the space is larger and you opt for more elaborate storage systems.

Cost to Finish an Attic With a Dormer

Installing a dormer — a window that juts out vertically on a sloped roof — can add in some ceiling height and natural sunlight into an attic. However, it will set you back. On average, the cost to add in a dormer ranges anywhere from $2,500-$20,000, plus the additional costs of other attic remodeling work.

Cost to Finish an Attic Above a Garage

The cost to finish an attic above a garage can vary widely depending on what’s involved, such as the installation of heating, insulation, or ventilation. You can typically expect to pay anywhere from $4,600 up to $24,000.

What Factors Influence the Cost of Finishing an Attic?

As you may have guessed from the wide-ranging estimates above, the cost of finishing an attic can vary a lot depending on what’s involved and what materials you use. Here are some major factors that can affect how much it costs to finish an attic:

•   Square footage: How large your attic is will play a big role in the total costs involved in remodeling. The bigger an attic is, the more materials required and the more time it will take to finish it, which translates to additional labor costs.

•   Need for structural changes: You’ll also pay extra if your attic is an odd shape or difficult to access. These challenges could call for structural updates, such as the addition of height, the expansion of space, or the creation of a staircase.

•   Intended use: Your planned purpose for your attic will also influence cost. If you just want to add in some additional storage space, you’ll pay a lot less than if you plan to install a full suite complete with a bedroom, bathroom, and closet.

•   Extra features desired: Perhaps unsurprisingly, the more features you want in your newly remodeled attic, the more it will cost you. Big-ticket items include windows, electricity, plumbing, and heating and cooling.

Of course, another factor that influences your cost is whether you need to get financing for the project and, if so, what terms you’re able to secure. Keep in mind that you can always use our personal loan calculator to see how your current loan stacks up.

The Takeaway

An attic conversion can be one way to create a unique room through adding more usable space to your home. It’s also a more economical home renovation project than an addition to your house. There are a lot of technical aspects to consider, and before getting started, it’s best to check with your local codes office so you know any building or permit requirements upfront, then come up with a project wishlist before soliciting bids from at least three contractors.

Figuring out how to finance your attic conversion is the last step of the project before getting started. If you’re looking for help with some or even the whole cost of your attic conversion, a home improvement loan is one way to finance virtually any home project. These are essentially one of the types of personal loans used to pay for renovations, additions, or updates to your home or property.

SoFi offers personal loans online for home improvement with a fast approval process, so you can get started sooner than later. Because of SoFi’s low rates and flexible terms, it can be a better choice than paying for your remodel with high-interest credit cards. And because this is an unsecured loan, you aren’t using your home as collateral like you would with a home equity line of credit.

Ready to start renovating your attic? Learn more about how SoFi personal loans can help.

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

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

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

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.

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If you’re saddled with credit card debt, you’re not alone. A recent study based on Federal Reserve and Census data found that over 45% of households in America carry a credit card balance, and that their average balance is $6,270. Considering the average credit card interest rate is just under 17%, that average balance could end up costing Americans quite a bit in interest.

Not only can reducing your credit card debt allow you to stop making hefty interest payments, but because 30% of your FICO Score® is determined by your debts owed, reducing your debt could potentially help improve your credit. If you’re working on getting out of — and staying out of — credit card debt, here are some tips on being a savvy credit card user.

How to Use a Credit Card Wisely: 7 Tips

If you have a credit card, it’s crucial that you use your credit card responsibly. Here are some tips to keep in mind to ensure your credit card usage stays in check.

1. Always Try to Pay Off Your Statement Balance in Full

Again, with average interest rates around 17%, credit cards can be a very expensive way to borrow. It’s extremely important to pay off your statement balance in full after each billing cycle if you want to avoid dealing with high-interest charges.

If you’re already in the habit of paying your balance in full when it comes due, you could consider leveraging your credit card spending to earn favorable reward points, such as points toward travel or cash back rewards.

2. Cut Your Interest Rate if You Have Credit Card Debt

If you have a large balance or multiple cards, paying off your credit card debt is likely top of mind. It could help to consolidate your credit card debt with a personal loan, as consolidating your credit card balance(s) might help you pay off your debt at a lower interest rate.

When you pay off a credit card, you’re still able to spend using that card, which would increase your balance even as you’re trying to deplete it. That’s because credit card debt is revolving debt, which is the debt you can continue to grow even while paying some of it off.

However, if you consolidate your credit card debt with a personal loan, you’d be paying off your debt in monthly installments without adding to that debt and, hopefully, at a lower interest rate. A personal loan is considered installment debt, which is debt that has a set, regular payment schedule until the balance reaches $0.

3. Make Sure to Pay on Time

This one may seem like a no-brainer, but it’s still worth discussing. Paying your statement balance after the due date may mean that you’re incurring late fees or other interest charges. And because payment history is 35% of your FICO Score , paying late can also potentially hurt your credit.

4. Build an Emergency Fund to Avoid Turning to Credit Cards in a Bind

Emergencies happen, and ideally, you’d be able to turn to your savings instead of leaning on a credit card to take care of an unexpected expense. If you don’t have an emergency fund yet, it might be a good goal to prioritize once your credit card debt is under control. In general, an emergency fund makes for a much better safety net for these situations.

Recommended: Why Having Emergency Savings Should Be a Financial Priority

5. Use the Snowball Method to Help Pay Off Debt More Quickly

Haven’t heard of the snowball method? Here’s how the popular debt payoff method works:

•   Target the account with the smallest balance to pay off first. You’ll want to pay as much as possible on this target account to pay off the debt as soon as possible. Meanwhile, you’ll continue making minimum payments on all other accounts on time to avoid late fees.

•   Once the target account is paid off, add the amount that you were allocating to the old target account to the account with the next lowest balance. Make that account the new payoff target.

•   Repeat this process until all debt balances are paid off.

For many, this method works by providing incremental victories from knocking out smaller debts, which can offer momentum toward tackling larger balances.

6. Keep Your Card Open Even After You Pay Off the Balance

Having access to available credit that you don’t use can help to improve your FICO Score. This is because you’ll be using a smaller percentage of your available credit. Remember, “amounts owed” accounts for 30% of a FICO Score.

To keep your available credit as high as possible, even if you make the occasional purchase or automate a bill payment on the card, you’d probably want to pay off the balance either on or before the due date.

7. Try Sticking to Cash to Reduce Credit Card Spending

Paying in cash instead can, paradoxically, be easier to track than swiping a credit card for purchases. If you only withdraw a certain amount of cash to spend for the week, it could potentially help reduce unnecessary spending.

To try this method, you’d want to decide how much you need to spend each day and put that amount of cash in your pocket. When it’s gone, you’re done spending for the day. It may take a lot of discipline, but if it helps you successfully pay off your credit card debt, it could be worthwhile.

The Takeaway

Using your credit card responsibly is key to avoid racking up interest charges and potentially harming your credit score. You’ll want to ensure you make at least the minimum payment on time each month and, if you can, pay off your balance in full. Other tips for using credit wisely include ensuring you have an emergency fund and considering sticking to cash for more strict budgeting guide rails.

And if you do find yourself in credit card debt, consider exploring solutions like the snowball method or securing a lower interest rate through a personal loan. With a SoFi personal loan, for instance, you could get funding as soon as the same day to start paying off your high-interest debt.

Got credit card debt? Learn more about how a SoFi personal loan can help you pay that debt off at a potentially lower interest rate.

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

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

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.

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.

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A personal line of credit is a type of revolving credit line that can be used to pay for a variety of personal expenses. This is different from a personal loan, which is an installment loan — awarded in a lump sum to the borrower that must be repaid at specified intervals.

While both options allow you to borrow money there are benefits and drawbacks of each. Continue reading for more information on personal lines of credit and when this type of financing may make the most financial sense.

What Is a Personal Line of Credit?

A personal line of credit is what’s known as a revolving credit vehicle. It’s similar to a credit card in that:

•  It has a maximum credit limit.

•  A minimum payment is required every month.

•  When the debt on the credit line is repaid, money can be withdrawn again.

Although a personal line of credit doesn’t include a physical card, it’s still possible to write checks, withdraw cash at an ATM, and transfer money into another account. Generally speaking, the interest rates on a personal line of credit are lower than those on a credit card.

Personal lines of credit may be secured — requiring collateral — or unsecured — not requiring collateral. For example, a home equity line of credit is secured. This is a very popular option, so much so, that it’s often referred to by people in the know by its acronym alone — HELOC.

💡 Recommended: What Is a HELOC and How Does It Work?

Whether secured or unsecured, some lines of credit require minimum payments of interest and principal, while others only require interest payments for a period of time. This is known as the draw period.

That means that for a certain period of time you can draw money from your line of credit and most borrowers are usually required to make interest payments.

After the draw period is over, the line of credit is no longer revolving (meaning, you can’t borrow against it anymore), and you’re required to make interest and principal payments.

Where to Get a Personal Line of Credit

Not every bank or lender will offer personal lines of credits though they can be found at some banks, banks, credit unions, and other financial institutions.

How to Get a Personal Line of Credit

The process for applying for a personal line of credit is usually similar to applying for other loans or credit cards. Lenders may accept applications online, in-person, or over the phone, and specific application requirements may vary by lender.

Before formally applying, review your credit score and shop around at different lenders to compare the rates and terms you may qualify for. Many lenders will allow you to see if you prequalify, which may require a soft credit check, which won’t impact your credit score. Also be sure to evaluate any fees associated with the line of credit and review the draw period and repayment periods.

Once you’ve determined which loan you’d like to apply for, gather the required documentation (such as statements for proof of income). Your chosen lender will generally have a list of required documents. From there, you’ll fill out the application and wait for approval. At this stage, the lender will usually complete a hard credit inquiry which may impact your credit score.

When to Use a Personal Line of Credit

Personal lines of credit typically offer greater flexibility when it comes to accessing the loan and repaying it than other types of financing like a personal loan or credit card.

If you’re planning to do a home renovation, for example, you may not need a big chunk of money all at once. A line of credit allows you to access money over time (versus all at once) to pay for things in dribs and drabs as you pick out the tile for your kitchen and your contractor finally gets around to installing it. This flexibility can reduce your interest charges because you are only borrowing money you plan to use immediately.

Another benefit of a line of credit is that you can pay it off and then typically borrow from it again. This makes it a great backup to have in case you suddenly experience an expensive emergency that you don’t want to put on your credit cards.

You can also choose a line of credit with a draw period (similar to a HELOC) that allows you to only pay interest on the money borrowed for a period of time.

Drawbacks to a Personal Line of Credit

One drawback is that it can be difficult to get an unsecured line of credit with a good interest rate because they can be more difficult to qualify for than some other types of loans, such as a HELOC. This is because personal lines of credit are unsecured loans, and therefore, more risky for the lender. Without collateral, the lender needs to be sure that the borrower has the ability to pay back their loan. That’s why for some, it may be easier to qualify for a HELOC — but it means that you’re jeopardizing your home if you fail to repay it.

Also, the flexibility that comes with a line of credit may be a double-edged sword. The ability to keep borrowing for an extended period of time could lead to feeling tempted to take on more debt or take longer to pay off debt… all of which could mean more interest charges over time.

Using a Personal Loan as a Personal Line of Credit Alternative

When comparing a personal line of credit vs a personal loan, the major difference is that a personal loan is, as mentioned, an installment loan. Like a personal line of credit, personal loans can be used to pay for nearly any personal expense. Borrowers receive a lump sum payment and pay back the loan in installments. Personal loans may have fixed or variable interest rates.

A personal loan may make more sense for borrowers who have a firm idea of their budget or a fixed expense, such as for medical bills, buying an engagement ring, or consolidating debt. Additionally, depending on creditworthiness, the average interest rate on a personal loan may be lower than that of a personal line of credit. Though interest rates will vary by lender so evaluate the options available to you.

Also compare any fees or penalties associated with the personal loan. If a personal loan has a prepayment penalty, you may not be able to pay off the personal loan early.

Other Personal Line of Credit Alternatives

HELOC. As mentioned, this is a home equity line of credit. Borrowers tap into the equity in their home to borrow a line of credit. This is a secured loan where the house functions as the collateral. This can help borrowers qualify for a more competitive interest rate than with an unsecured personal line of credit, but it also means that if the borrower has issues repaying the HELOC, their home is at risk.

Credit Cards. In certain situations, a credit card may be used to help pay for emergency expenses. Be aware that credit cards generally have high interest rates — the average credit card interest rate was 14.56% in February 2022, according to recent data available from the Federal Reserve .

Secured Loans for a Specific Purpose. For example, if you are buying a car consider a car loan over a personal line of credit or personal loan.

The Takeaway

Personal lines of credit offer flexibility for borrowers because they are a revolving line of credit that functions similarly to a credit card. Borrowers can continue drawing on the line of credit for a set period of time to cover the cost of necessary expenses.

Personal loans are an alternative to consider for borrowers who are paying a fixed cost.

If you’re in the market for a personal loan — consider SoFi, which offers low fixed interest rates and have no fees required.

If you think a personal loan might be right for you, check out SoFi personal loans to see if you may qualify.

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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.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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

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

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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