What Credit Score Do You Need to Buy a Car in 2021?

What Credit Score Do You Need to Buy a Car in 2022?

Because a credit score is an important indicator for determining a consumer’s creditworthiness when buying a car, those with excellent credit histories tend to have an easier time borrowing money on favorable terms compared to those with lower credit scores. However, industry data shows that high-risk borrowers remain viable candidates for auto loans. In other words, there is no universally defined credit score needed to buy a car.

Read on to learn how your credit score can affect buying a car, plus some tips for purchasing a car with a lower credit score.

What FICO® Score Do Car Dealers Use?

There are a few different scoring models that car dealers may use for determining a customer’s credit score. They may use the FICO Auto Score 10 , an industry-specific model featuring a score range from 250 to 900. The auto industry also may use VantageScore 3.0 or the newer VantageScore 4.0 model, which has a score range from 300 to 850.

No matter which scoring model is used, a bad credit score falls on the lower end of the range and a good credit score sits on the higher end of the range.

Recommended: What is The Difference Between Transunion and Equifax

What Is the Minimum Credit Score To Buy A Car?

There may not necessarily be a minimum credit score required to buy a car. Consumers with deep subprime credit scores from 300 to 500 have obtained financing for new and used vehicles in the second quarter of 2021, according to the credit bureau Experian’s State of the Automotive Finance Market report for that period. Although the percentage of borrowers in this category is very low, this indicates that even those with the lowest credit scores still may have access to auto financing.

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Average APR by Credit Score Ranges

Consumers from all credit score categories have obtained auto loans in 2021, but car buyers with excellent credit histories tended to secure the lowest annual percentage rate (APR) financing, according to Experian’s Q2 report. When assessing what is a good credit score to buy a car, Experian’s data confirms that consumers in the super prime and prime categories obtain the lowest interest rates on average for financing.

Quarterly financing data on new vehicle purchases in the second quarter of 2021 shows the following average APRs by credit score ranges:

•  Deep subprime (300-500): 14.59%

•  Subprime (501-600): 11.03%

•  Near prime (601-660): 6.61%

•  Prime (661-780): 3.48%

•  Super prime (781-850): 2.34%

How to Buy a Car With a Lower Credit Score

Obtaining a loan to purchase a new or used vehicle when you don’t have great credit can be cumbersome, but it’s not impossible. Here are some ways a consumer with poor credit may be able to obtain auto financing:

Make a Large Down Payment

Offering a large down payment on a vehicle purchase may allow car buyers to obtain more reasonable rates and better terms for financing, resulting in more affordable monthly loan payments. By putting more money down at the time of purchase, lenders also may view the loan as less risky, thus increasing your odds of approval.

Get Cosigner Assistance

Buying a car with the assistance of a cosigner is another way to potentially bolster your chance of securing favorable financing. A cosigner agrees to share the responsibility of repaying the loan, effectively promising the lender that if you don’t make the payments they will. If the cosigner is creditworthy, it puts the buyer in a much better position to obtain financing than going it solo.

Consider a Less Expensive Car

Especially if you are buying a car with bad credit, it is important to know how much you can realistically afford to spend — and then stick to that budget, even if the dealer tries to upsell you. Additionally, finding a less costly car will reduce the amount you need to borrow, and it may be easier to get approved for a smaller loan amount than a larger one.

Benefits of Good Credit When Buying a Car

The benefit of a good credit score when buying a vehicle is that you may secure lower interest rates compared to consumers with poor credit. Unless a consumer buys a vehicle outright with cash or receives 0% APR financing, the consumer will eventually face monthly principal and interest payments until they’ve paid off the loan balance in full. Auto financing terms may vary in length, with some maturing at 60 months, 72 months or 84 months.

Car loans with a high APR may cause consumers to pay a long-term premium above and beyond the actual sales price of the vehicle.

Discover real-time vehicle values with Auto Tracker.¹

Now you can instantly monitor vehicle prices in this unprecedented market—to help you make smart money moves.


How to Monitor and Keep Track of Credit Scores

There are a number of ways you can check your credit score, including through your credit company or another financial institution where you have an account, as well as through a credit service or credit scoring website. Contrary to what you may expect, your credit report does not include your credit score, though it does provide valuable information about your credit history and debts, which is why it can still be helpful to read over your credit report before making a major purchase like a car.

Credit scores can fluctuate over time depending upon financial circumstances, and credit score updates occur at least every 45 days. That’s why it’s important to take a look at where your score stands right before you begin the process of car shopping.

Also keep in mind that it’s common for credit inquiries to occur when you’re shopping around to see what auto loan terms you qualify for. While soft inquiries don’t affect your credit score, hard inquiries, such as those that happen when you’re comparing rates for an auto loan, can ding your score. However, most major credit scores will count multiple car loan inquiries made within a certain period of time — typically 14 days — as one inquiry.

What’s Expected in 2022?

Based on the trends outlined in Experian’s Q2 report for 2021, prime borrowers with good credit in 2022 may continue shifting away from used vehicles in favor of new vehicles. Experian’s research also shows that subprime financing remains at near-record lows, with just a fraction of car loans in 2021 going to consumers in the deep subprime risk category. These trends could continue into 2022.

The Takeaway

While it is possible to buy a vehicle with bad credit in 2022, consumers in the subprime or deep subprime risk categories may want to explore ways of improving their credit scores to help secure financing with more favorable terms. As far as what credit score you need to buy a car, any score is potentially sufficient for obtaining financing.

If you want to check your credit or work to improve your score before buying a car, SoFi Relay is a money tracker app that allows you to easily monitor and keep track of your credit score.

Stay on top of your credit score with weekly updates.

Photo credit: iStock/tolgart


SoFi’s Insights tool offers users the ability to connect both in-house 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. 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 provided to you is a Vantage Score® based on TransUnion™ (the “Processing Agent”) data.
¹SoFi’s Insights tool offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc’s service. Vehicle Identification Number is confirmed by LexisNexis and car values are provided by J.D. Power. Auto Tracker is provided on an “as-is, as-available” basis with all faults and defects, with no warranty, express or implied. The values shown on this page are a rough estimate based on your car’s year, make, and model, but don’t take into account things such as your mileage, accident history, or car condition.
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
.

SoFi’s Insights tool offers users the ability to connect both in-house 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. 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 provided to you is a Vantage Score® based on TransUnion™ (the “Processing Agent”) data.
*Terms and conditions apply. (Must click on the link to be eligible.) 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 into SoFi accounts such as cash in SoFi Checking and Savings or loan balances, Stock Bits, fractional shares and cryptocurrency 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.
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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8 Reasons Why Good Credit Is So Important

8 Reasons Why Good Credit Is So Important

Credit matters when looking to buy a house, car or any other pricey asset. Unless a consumer is flush with cash, the path to home and vehicle ownership may go through a mortgage or a loan. Good credit can provide you with terms and privileges not available to a person with poor credit, including lower interest rates and increased borrowing capacity.

We delve into what constitutes a good credit score and the reasons why it is important to have a good credit score.

Recommended: What Credit Score is Needed to Buy a Car

What’s Considered Good Credit?

Consumers with standard credit scores of 661 or greater are considered to have good credit, because they rank as prime or super prime in terms of their risk assessment. A bad credit score falls on the lower end of the range and a good credit score falls on the higher end of the range.

Many credit scoring models, including the standard FICO® Scores and VantageScore 4.0, measure an individual’s credit risk on a three-digit scale ranging from 300 to 850. The highest risk group are consumers with deep subprime credit scores from 300 to 500, and the lowest risk group are consumers with super prime credit scores from 781 to 850, according to Experian’s State of the Automotive Finance Market report for the second quarter of 2021.

Consumers may build and attain good credit by paying their bills on time, maintaining a mix of accounts and keeping their revolving balances under 30% of credit limits.

Recommended: What is The Difference Between Transunion and Equifax

Check your score with SoFi Relay

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


8 Benefits of Good Credit

Here are the eight core benefits of good credit, which highlight why it is important to have a good credit score:

Benefit #1: Easier Access to Credit

Good credit may provide you with easier access to additional credit. When a consumer applies for a credit card or personal loan, lenders may analyze the consumer’s credit report and credit score to make an informed decision on whether to approve or deny the application. A person with good credit is considered low-risk and therefore has an easier time getting approved for a personal loan compared to high-risk borrowers.

Benefit #2: Lower Interest Rates

Consumers with good credit may qualify for lower interest rates when borrowing money. For example, available financing data for new vehicle purchases in the second quarter of 2021 show consumers in the deep subprime category of bad credit have obtained auto loans with 14.59% interest on average. Meanwhile, consumers in the super prime category of excellent credit secured 2.34% interest rates on average, according to Experian’s quarterly report. That amounts to an over 12 percentage point difference in interest rates.

Benefit #3: Lower Car Insurance Premiums

Many auto insurance companies use credit-based insurance scores to help categorize consumers by risk and determine what premiums they may pay. Under this practice, higher-risk consumers may pay higher auto insurance premiums than lower-risk consumers. In some states, having good credit or improving your credit score may lead to lower auto insurance premiums over time.

Benefit #4: Increased Borrowing Capacity

Consumers with good credit may obtain larger credit limits than those with poor credit. This could translate to greater spending power on a credit card and the ability to make larger purchases on credit. Having good credit also puts you in a better position to apply for and obtain new credit.

A bolstered borrowing capacity is not limited to credit cards either — credit unions and banks may offer personal loans to consumers with good credit. Such loans can help you consolidate debt, finance large purchases or obtain fast cash to weather an unforeseen emergency. Personal loans also may command lower interest rates than credit cards.

Recommended: Does Net Worth Include Home Equity

Benefit #5: Easier to Buy a Home or Car

Good credit can help you buy a house with a good mortgage rate or a car with low financing. Borrowing money to own a home or vehicle may come at a price that includes principal and interest. Consumers with good credit may qualify for 0% annual percentage rate loans for a car, where no APR means no interest or finance charges. Establishing good credit may also improve your likelihood of obtaining a low-APR mortgage, which translates to lower debt repayment obligations.

Automotive consumers had an average credit score of 732 for new vehicle purchases and 665 for used vehicle purchases in the second quarter of 2021, according to Experian’s quarterly report for that period of April through June. This shows the average automotive consumer boasted good credit within the prime category of low risk.

Recommended: Should I Sell My House Now or Wait

Benefit #6: More Apartment Lease Options

Signing a lease to an apartment may require good credit. Landlords who conduct credit checks might deny lease applications if a prospective tenant has bad credit. Or, those with poor credit may have to provide a higher security deposit for rental housing compared with a prospective tenant who boasts good credit. Tenants with good credit also may have more leverage to negotiate for lower rent.

Benefit #7: Helps Satisfy Employment Background Checks

Jobseekers can benefit from good credit, as some employers may consider a person’s credit score when making hiring decisions. A U.S. Department of Housing and Urban Development report released in October 2019 says that a low credit score or credit invisibility is a burden that “can thusly limit housing choice and employment opportunity,” whereas “a good credit score is part of the pathway to self-sufficiency and economic opportunity.” The term “credit invisible” refers to consumers who lack a credit score or credit history.

Benefit #8: Ability to Obtain Security Clearances

Law enforcement officers with good credit could gain privileged access to classified national security information and FBI facilities. Any state or local law enforcement officer seeking a security clearance has to first satisfy a comprehensive background check that includes a review of credit history. The FBI shares secret or top secret information with local law enforcement officers who have obtained security clearances.

Poor credit history would not necessarily disqualify an officer from obtaining a security clearance, but significant credit history issues “may prevent a clearance from being approved,” according to information posted on the FBI’s website .

The Takeaway

Good credit is important for anyone who wishes to borrow money to help finance key purchases. Many consumers rely upon mortgages and loans to buy houses and cars, while many cash-strapped individuals turn to credit cards to buy essential goods and services ranging from food and electricity to water and rent for housing.

The eight benefits of good credit highlighted above showcase why it is critical to pay your bills on time and practice good budgeting. SoFi Relay is a money tracker app that allows you to monitor and keep track of your credit score, among other perks that could assist with financial planning and managing your net worth.

Check out the features SoFi Relay offers to help bolster your financial success.

Photo credit: iStock/AndreyPopov


SoFi’s Insights tool offers users the ability to connect both in-house 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. 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 provided to you is a Vantage Score® based on TransUnion™ (the “Processing Agent”) data.
*Terms and conditions apply. (Must click on the link to be eligible.) 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 into SoFi accounts such as cash in SoFi Checking and Savings or loan balances, Stock Bits, fractional shares and cryptocurrency 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.
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.
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Important Factors That Affect Property Value

7 Important Factors That Affect Property Value

There are a number of factors that affect house prices, from the age, condition, location and size of your home, to broader factors like the economy and current interest rates. If you’re thinking about putting your house on the market, it’s important to know what determines property value so you can ensure you get the most out of what’s likely your largest asset.

Read on to learn more about the main factors that make property value increase and how you can figure out how much your home is worth.

Recommended: Does Net Worth Include Home Equity

Factors that Affect Home and Real Estate Value

Factor #1: Location

There’s a reason everyone will tell you that real estate is about location, location, location — it’s true. When it comes to factors that affect property value, location is one of the biggest determinants.

Keep in mind that while your home’s location works for you, others will have their own criteria. For example, how good are the schools in the area? Is shopping and entertainment accessible? What are property taxes like in the neighborhood? Is it a long commute to downtown or wherever many jobs may be?

Factor #2: Size

Size often isn’t the be-all-and-end-all, but it’s nearly so when it comes to what determines property value. Square footage plays a big role when it comes to house prices. For example, if the median price per square foot in the U.S. is $123, you’ll be getting more for a house that’s 4,000 square feet than one that’s 2,000 square feet.

It also matters how much of the space in your house is actually usable. Spaces like unfinished garages and basements as well as attics typically won’t boost your home’s value even if they do tack a lot onto the total square footage. What will matter in terms of square footage are areas like bedrooms and bathrooms.

Recommended: Should I Sell My House Now or Wait

Factor #3: Real Estate Comparables

You’re supposed to love thy neighbor, but you might give them the side-eye if their home is not well-maintained and becomes a drag on the desirability of your street as well as on home prices. When it comes to home values, your neighbors are critical. If their homes are being highly sought by buyers, you’ll likely benefit from the popularity of the area.

The word to know here is comps, or comparable homes in your area that have sold in the last 12 months. These are part of what realtors and home appraisers rely on when estimating how much your home is worth.

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


Recommended: What is The Difference Between Transunion and Equifax

Factor #4: Age

While it may be frowned upon to ask someone their age, it’s an essential detail when it comes to home buying. If you’re dealing with a home that has a few decades in the rear-view mirror, you’ll have to do some math. How soon might the roof and other major systems need to be replaced or upgraded? That can affect the price someone is willing to pay, as they might want to pay less if they’re anticipating needing to shell out money for those repairs.

A house that is less than 10 years old — and even better if it’s less than five — can command more money because the buyer has a certain amount of confidence that repair bills shouldn’t be on the immediate horizon. They expect they’ll have time to sock away cash for when that day eventually arrives.

Factor #5: Condition

If your home isn’t in tiptop shape, don’t expect to bring in the big bucks. In fact, if you have the luxury of time, it might behoove you to make any necessary repairs and do any upgrades and updates before you put your house on the market so you can maximize the chances it will get set at a higher price. Consider the cost of home improvements an investment.

At the same time, you don’t want to get too carried away here, as it is possible that you won’t be able to recoup all that you spent. Do just enough so that you might be able to squeak out some profit when you sell. While it varies by region of the country and other factors, a 2021 survey by Remodeling Magazine found that projects that can pay off include a garage door replacement, manufactured stone veneer and a minor kitchen remodel. Some of the less profitable projects included an upscale bathroom addition and an upscale master suite addition.

Factor #6: The Economy

You could have crossed all your t’s and dotted all your i’s — your home is attractive inside and out and you’re in a great location. Trouble is, if the economy is less than stellar, you could be stuck until it swings back into positive territory. If people are uncertain and feeling insecure due to the economy, they may decide to delay major life changes, such as buying a home. Or, if they do move forward, they may be looking for bargains, which is a downer for you.

Your local economy and market figure also into the equation. It’s about supply and demand. If there is a shortage of available housing in your area and tons of potential buyers on the hunt, you could capitalize big time on a hot market — think bidding wars and selling your home faster than you could have imagined.

Factor #7: Interest Rates

When interest rates are at the historic lows, as they have been in recent times, it’s an incentive to buy. This is because doing so can be dramatically less expensive. On the flipside, when interest rates tick upward, fewer people may be able to home shop because it’s more costly. If demand slows, the price you can command may dip as well.

How to Check What Your Home Is Worth

Get an appraiser: One way to check how much your home is worth is to get an appraiser, someone who is licensed or certified by the state, to conduct a home appraisal. The appraiser will review your home from top to bottom and compare it to other homes in the area and beyond to determine its fair market value.

Make a list of comparables: You could also go dig up property comparables on your own. For example, you can call real estate agents with homes in escrow to learn the sales prices. There are also several websites that could give you valuable insight on your home’s value, including Zillow, Trulia, Redfin, Realtor.com and Eppraisal, among others.

Use an HPI calculator: Another option is to use a house price index (HPI) calculator , which uses data from mortgage transactions over time to estimate a home’s value. The calculator makes projections based on the purchase price of the home and the changing value of other homes nearby. This tool is ideal for seeing how much a house has appreciated over time and any estimated future changes in mortgage rates.

The Takeaway

Knowing what factors impact your home’s value is like knowing how much money you have in the bank. Determine where you may have weaknesses so you can make the necessary adjustments to get the maximum value for your home when you go to sell.

If you need to save up to make some necessary repairs and upgrades before you put your home on the market, a money tracker tool like SoFi Relay can help you finesse your budget accordingly.

See how SoFi Relay can help you get the most out of your finances.

Photo credit: iStock/terng99


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.
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.
SoFi’s Insights tool offers users the ability to connect both in-house 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. 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 provided to you is a Vantage Score® based on TransUnion™ (the “Processing Agent”) data.
*Terms and conditions apply. (Must click on the link to be eligible.) 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 into SoFi accounts such as cash in SoFi Checking and Savings or loan balances, Stock Bits, fractional shares and cryptocurrency 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
.

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.
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What Factors Affect Your Credit Score?

What Factors Affect Your Credit Score?

Your credit score is one of the most influential components when it comes to being approved for loans and credit cards, and it is determined by a number of different factors. This includes your history of on-time payments and how much debt you owe as well as what types of credit you have and how long your credit history is.

Knowing what affects your credit score is the first step to ensuring your score stays high so you can qualify for financing opportunities when they arise. We’ll address all your questions about what affects your credit score, as well as how to keep track of it.

Recommended: What Credit Score is Needed to Buy a Car

Why a Good Credit Score Is Important

In a nutshell, having a good credit score provides opportunities for you financially and can help you spend less overall on financing. If you want to buy a car, a good credit score can help you find a car loan at a low rate. Similarly, having good credit is key to opening a credit card.

Having a bad credit score — generally anything under 500 on the scale of poor to exceptional credit — can limit your financial opportunities. If you have bad credit, you may not qualify for loans that you apply for, or if you do, you may have higher interest rates. You also may not get approved for a credit card, unless it’s a secured card, which requires a deposit and has a low credit limit. A bad credit score could even hamper your job search, particularly if the job involves handling money.

The bottom line is that having bad credit hinders your ability to grow financially, so it’s important to do what you can to maintain a good credit score.

Learn more: 8 Reasons Why Good Credit Is So Important

Check your score with SoFi Relay

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


Recommended: What is The Difference Between Transunion and Equifax

5 Factors That Influence Your Credit Score

The first step toward building your credit score is understanding what factors help to determine it. In general, these are the five credit score factors that shape your score:

Factor #1: Credit Utilization

When it comes to what affects your credit score, one of the most important factors is how much credit you have available versus how much debt you currently have. Called your credit utilization, you can calculate this number by dividing your outstanding debts by your total credit available.

Let’s say you have three credit cards with a total credit limit of $30,000. You owe $3,000 in total. So your credit utilization would be:

   3,000/30,000=0.10

Your credit utilization of 10% (you’re using 10% of your total available credit) is great, as lenders generally want to see a utilization rate below 30% to approve a loan application.

Factor #2: Payment History

You might not feel like an occasional late payment on a credit card is a big deal, but it can impact your credit score negatively. In fact, payment history accounts for 35% of your FICO score (the scoring system for the credit bureau Experian).

The easiest way to raise your credit score? Pay your bills on time. Many loans and credit cards will allow you to set up autopay, which is a foolproof way to make sure you never miss a payment.

Factor #3: Credit History Length

You’re not born with a credit history; it has to be built over time. Many college students start the journey by opening their first credit card account. This is a great place to start, though remember that good habits like paying on time and keeping your credit utilization rate down will help build good credit.

And lest you think if you want a new credit card you need to close an old one, you don’t. The longer you have relationships with credit companies, the better your credit.

Factor #4: Types of Credit

While this factor isn’t nearly as important as the others, the types of credit you have can impact your credit score. Having a nice mix of credit — such as credit cards, a home mortgage, and an auto loan — can contribute positively to your credit scores, though it isn’t required.

Recommended: Should I Sell My House Now or Wait

Factor #5: Recent Applications

Whenever you apply for credit, whether that’s a car loan or a credit card, there is what’s called a “hard inquiry” on your credit report. If you make several applications within a few days or weeks of one another, it may be seen as derogatory on your report, and your credit score might dip a bit.

Consider your credit needs carefully and try to look for lenders that let you see if you prequalify, since that is considered a “soft inquiry” and won’t impact your credit the same way.

Remember, There Are 3 Main Credit Scores to Consider

While the factors above are what generally affect your credit score, you actually have three different credit scores, each of which may be calculated slightly differently. These three credit scores come from the following three personal credit bureaus that track your financial activity:

•   TransUnion

•   Experian

•   Equifax

Each bureau has its own credit scoring system that it uses to determine your score. Some loans and credit card companies report to one or two bureaus — or even all three — so it’s important to know that your activity may show up slightly differently depending on the reporting agency.

How to Track Your Credit Score

Now that you understand what affects your credit score, it’s your responsibility to stay on top of your score so you know when it changes. Each credit scoring bureau updates scores on a different schedule, but you can expect updates roughly every 30 to 45 days.

There are several places you can check your credit score. Some banks and credit card issuers offer the service free to customers. Additionally, you are entitled to one free credit report a year from
AnnualCreditReport.com
, which provides your credit reports and scores from each of the three credit bureaus.

Tracking your score is important even if you don’t plan to take out a loan or open a credit card any time soon. Make sure to regularly review your report to ensure there are no discrepancies, such as a late payment you know you didn’t make, or an open account you closed. If you see anything that is incorrect, contact the credit bureau immediately to get it resolved.

Recommended: Does Net Worth Include Home Equity

The Takeaway

Once you understand what affects your credit score, you have the power to improve your score by taking steps such as reducing your credit utilization and paying your bills on time. As you build your credit, you will qualify for better loan offers and interest rates on credit cards, which can empower you to purchase what you need without high expense.

Take control of your finances with SoFi Relay’s money tracker app, which allows you to track your spending, set goals, and monitor your credit, all in one place.

See how SoFi’s Relay can help you easily keep track of your credit score and what affects it.

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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
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SoFi’s Insights tool offers users the ability to connect both in-house 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. 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 provided to you is a Vantage Score® based on TransUnion™ (the “Processing Agent”) data.
*Terms and conditions apply. (Must click on the link to be eligible.) 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 into SoFi accounts such as cash in SoFi Checking and Savings or loan balances, Stock Bits, fractional shares and cryptocurrency 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.
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Ways to Save on Gearing Up for Cold Fall Weather

31 Ways to Save on Staying Warm & Having Fun This Fall

With the cold weather approaching, it’s time to look for ways to stay warm & entertained without breaking your budget. Consider: How are you going to keep your heating costs down this year?

The average American spends about $115.49 per month on energy, and nearly half of that goes towards heating and cooling. But heating isn’t your only concern — winterizing your home, your car, and your wardrobe costs money.

Here are some fall energy-saving tips and ideas for low-cost fall fun to help you enjoy colder weather without overspending.

Fall & Winter Savings Tips

Ready for sweater weather? Consider these 31 tips for saving money this fall while staying cozy and enjoying the season.

1. Seal Your Home

Before the cold weather hits, use caulk to seal any openings around your house that could allow cold air in. If too much cold air is getting in, then you’ll need to crank up the thermostat, which may cost you unnecessarily. Install weather stripping and seals around your doors, windows, mail chute, and air conditioner, too.

Recommended: 25 Fall Home Projects to Tackle This Year

2. Have Your Heaters Checked

Get in touch with your landlord, repairman, and/or heating company to check that your furnace and fireplace are properly functioning. They may check to see that the pilot is still on and clear any buildup and dust that may have accumulated in the warmer months, potentially saving you a costly (and inconvenient) service call mid-season.

3. Clean Up Your Yard

Branches, debris, or overgrown trees on your property can damage your home or car. Clean up any unsecured items or dead trees and branches while it’s still warm enough to enjoy the outdoors. Call a professional gardener for advice if you need to.

4. Winterize Your Gutters

Gutters filled with leaves and other debris can clog and form ice dams in the winter. Water can get into the roof and foundation of your home. Spend some time clearing your gutters before the cold weather comes to avoid costly repairs.

Recommended: What are the Most Common Home Repair Costs?

5. Set Your Thermostat to 68 Degrees (or Lower)

Make a goal and tell everyone in your home that you want to keep the thermostat at 68 degrees or lower throughout the fall and into the winter. This can help you keep utility bills under control.

6. Open Curtains During the Day

Take advantage of sunlight to heat your home and provide bright natural lighting throughout the day. You may be able to turn your thermostat down during the day when the curtains are open for additional energy savings.

7. Close Curtains at Night

When the sun starts to set, close those curtains to trap that heat inside your home and insulate your windows.

8. Invest in Thermal Curtains

Those cute sheer panels you have up in the summer just aren’t going to cut it in the cold fall months and beyond. Instead, switch them out for thermal curtains, which will add more insulation and keep your home warmer. Ideally, your thermal curtains will have thick padding and multiple layers of fabric to stop air from circulating from your window and into your home.

9. Set Your Ceiling Fan to Spin Clockwise

Warm air rises. When your ceiling fan spins clockwise, it pushes down the warm air from ceiling level to your level — to keep you cozy all season long.

10. Turn Your Thermostat Down at Key Times

Whenever you don’t need much heat, like when you’re sleeping or out at work, you can find some extra fall savings by turning your thermostat down 10 to 15 degrees. Less heating should mean lower heating bills.

11. Install a Smart Thermostat

When you’re looking into how to save on utilities, technology is your friend. If you often forget to turn your thermostat down, you might want to invest in a smart thermostat such as the Google Nest. The Nest allows you to control your thermostat from anywhere via smartphone app, and offers intelligent programming such as Eco mode, which can sense when you are not home and automatically adjust the temperature to save energy.

12. Wear Warm Clothes at Home

Break out your favorite cozy sweater and flannel pants for wearing around the house, because they could help you save big on your electric bill. For every degree you lower your thermostat in cold weather, you could save 1% on your monthly heating bill. It’s called sweater weather for a reason, after all!

13. Pile on the Blankets

Along with layering up, another one of the best savings tips for cold fall weather is to purchase warmer blankets. Typically, down, cotton fleece, wool, and cashmere blankets are the warmest. They are great insulators and perfect for using on your bed or on the couch.

14. Check Your Car Battery

It takes much more energy to properly power your battery in the colder months. Along with making sure your car battery is functioning properly, ask a mechanic to check and see if it’s at or above 600 CCA. This should improve your car’s performance in cold weather.

15. Look Into Your Car’s Cooling System

While you’re at the mechanic and winterizing your car, have your cooling system checked, too. It’s a good idea to make sure you have a ratio of between 50/50 and 70/30 of antifreeze to water to protect against freezing and potential corrosion.

Recommended: 31 Ways to Save Money on Car Maintenance

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16. Consider Buying Winter Tires

Getting winter tires is crucial if you live somewhere that experiences winter weather early on, like in October. When temperatures drop to freezing levels, the rubber compounds in the non-winter tires will harden, and this will reduce the tire’s ability to grip the road. This could be very dangerous and not only lead to accidents and injuries but considerable costs as well.

17. Head to the Thrift Store

While buying new cold-weather clothes may be convenient, you could save big by purchasing these items secondhand. Even if you don’t find any clothes that fit, you may be able to stock up on scarves, mittens, blankets, and more.

18. Shop at the Right Times

If you’re purchasing new fall clothes in September, you likely aren’t going to get the best deal. Instead, break out those fall clothes from last year and then wait until late January or early February to restock on cold-weather apparel. The end of the season is when you’re going to snag the best deals.

19. Sign Up for Store Promotions

If you sign up for store emails with your favorite retailers, you can access coupons and other deals throughout the season and save on your cold-weather clothing and accessory purchases.

20. Sign Up for Rewards Programs

Enrolling in retailers’ rewards programs could also lead to big fall savings. For instance, with Macy’s Star Rewards, you can get 1% back in rewards, a birthday surprise, and other perks and offers. If you use your Macy’s card to make purchases, you could save even more. Platinum members get 5% back on purchases as well as free shipping and more. Look into your favorite stores’ rewards programs to see what you could receive for being a loyal shopper.

21. Look at Shipping Costs

When it comes to shopping for cold-weather gear online, make sure you calculate shipping costs into your budget. If you need to buy something from a specific store, determine whether the shipping costs are worth it or if there is an option to get it shipped free to the store.

Recommended: 9 Tips for Finding the Best Deals Online

22. Create a Fall Budget

Having a budget year-round is ideal, but creating one for the fall can keep you at the top of your fall savings game. Use a budget planner app (like SoFi Relay) to track your spending, meet your fall savings goals, see all of your accounts on the go, and monitor your credit score.

Recommended: Budgeting for Basic Living Expenses

23. Make Your Fall Lattes at Home

While you may love the Pumpkin Spice Latte from Starbucks — who doesn’t? — that treat could end up costing you more than $5 a pop. Instead, buy ground coffee that comes in fall flavors and the instant version of the PSL, which is only $5.99 for a pack of five at Target. Add some whipped cream, and the homemade version will taste just as good.

24. Eat More Plant-Based Foods

Save money on food in the fall by switching to at least a partially plant-based diet based on the fruits and vegetables that are in season. Foods that are in season in the fall include apples, pumpkins, bananas, carrots, spinach, kale, lemons, cabbage, raspberries, bell peppers, beets, and broccoli.

25. Make Chili

Chili is a cost-effective food that can be plant-based or meat-based and keep you satisfied for days on end. At the beginning of the week, make a big batch that you can eat on its own, with bread, or inside of tacos. This comfort food will keep you warm, cozy, and satiated all season long.

26. Clip Those Coupons

Another way to save is by looking in your weekly store circulars and clipping coupons for all the foods you’re going to purchase. You probably get these for free in the mail or as an insert in your weekly newspaper.

27. Go Online for Coupons

You can also save money on food by searching for coupons online prior to heading out to the store. Aside from your grocery store’s coupon offerings, you can find entire websites filled with manufacturer’s coupons simply by searching “grocery coupons.”

28. Find Free Events in Your Area

While going to your local county fair or pumpkin patch is enjoyable, it could involve a pricey admission fee. Instead, look for free events to go to in your area. Check your local newspaper’s event calendar or log onto Yelp for some ideas.

29. Sit Around the Fire

If you have a fire pit, you can invite some friends over for some low-cost or free fall fun. Break out the marshmallows and hot apple cider to get into the spirit of the season!

30. Jump Into a Pile of Leaves

Piles of leaves provide lots of entertainment, especially for kids. Once you’re finished raking your yard, set aside a pile you or your kids can jump into for some good old-fashioned free fall fun.

31. Switch to a Streaming Subscription

While a cable package can cost more than $200 per month, streaming services like Netflix cost less than $20 per month. Since you’re going to be spending a lot of time indoors, maximize your fall savings by opting for a streaming subscription instead of paying big bucks for cable packages.

The Takeaway

With a little common sense and some focused spending on things like preventative maintenance and smart technology, you could cruise into this fall and winter prepared to stay cozy and save money.

Optimize your fall savings even more by signing up for an online bank account from SoFi Checking and Savings. You won’t pay any minimum balance, overdraft, or monthly fees. Additionally, you can access 55,000+ fee-free ATMs within the Allpoint Network when you need to take out cash.

Ready to save in a way that’s convenient for you? See how SoFi Checking and Savings can help.

Photo credit: iStock/StefaNikolic


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SoFi’s Insights tool offers users the ability to connect both in-house 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. 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 provided to you is a Vantage Score® based on TransUnion™ (the “Processing Agent”) data.
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