SoFi

When you take out a loan, you likely have every intention of repaying it in full. But what if something should happen — say, a job loss, illness, or injury — that keeps you from fulfilling your obligation? That’s where loan protection insurance comes in.

Loan protection insurance, also known as credit insurance, is a type of insurance policy specifically designed to cover a borrower’s loan payments should they become unable to make them due to an unforeseen circumstance.

This type of coverage can provide peace of mind — and help protect your credit — in the event of the unexpected. But ​​it comes at a cost, and in some cases, it may not be necessary.

Read on for a closer look at loan insurance, including what it is, how it works, what may be excluded from coverage, and whether or not it’s worth buying.

Loan Protection Insurance Definition

Loan protection insurance is an insurance product that lenders sometimes offer borrowers with certain types of loans, including personal loans. Typically, the insurer will make the loan payments for a set period of time (or up to a predetermined amount) if the policyholder can’t keep up with the obligation because of a covered event.

For example, let’s say you take out a personal loan and opt to purchase credit insurance. If at some point during your repayment term, you lose your job, get into a car accident, or become hospitalized with a serious illness, the insurance can help ensure your debts are paid.


💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. One question can save you many dollars.

How Does Loan Protection Insurance Work on Personal Loans?

Personal loan protection insurance is specifically designed to keep a policyholder from defaulting on a personal loan in the event of a financial hardship. Should a covered event take place, the insurer agrees to step in and make payments on the loan for a set period of time, typically between 12 and 24 months.

Events that are often covered by personal loan insurance include:

•   Job loss

•   Sickness

•   Accidents

•   Death

What makes credit insurance unlike other types of insurance policies is that the payments go to the lender, not to the policyholder. Though you’re the one paying the premiums for credit insurance, the payout actually goes to your lender.

Recommended: What Happens If You Default on a Personal Loan?

What Does Loan Protection Insurance Cost?

The cost of loan protection insurance varies widely depending on the insurer, the coverage amount, the length of coverage, your age, the state you live in, and other factors. Typically, the cost is calculated as a percentage of the monthly loan payment, ranging from 1% to 5%. As a result, the larger the loan balance is, the more it costs to insure it.

If you’re considering loan protection insurance, you may want to compare the cost of the policy to other types of insurance — such as life insurance, disability insurance, or accident insurance — especially if these types of coverage are offered for free or at a subsidized rate through your employer.

One way you may be able to reduce the cost of loan protection insurance is to pay the premium in a single payment instead of rolling it into your monthly loan payments. Some credit insurers will offer a sizable discount if you’re willing to pay the full cost of the insurance up front and in full.

What Are the Benefits of Loan Protection Insurance?

Loan protection insurance isn’t necessarily the right fit for everyone, but it does offer some advantages (especially if the policy is reasonably priced). Here are some benefits to consider.

Credit Score

Should an unexpected hardship occur and you’re unable to make your loan payments, loan protection insurance would kick in and prevent you from missing payments or defaulting on the loan — and taking a hit to your credit.

Recommended: What Is Considered a Bad Credit Score?

Save Money

Maintaining a strong credit profile can pay off down the line by helping you qualify for loans with lower rates and better terms. This can help you save you money, and could make the cost of the credit insurance worthwhile. Plus, future employers and landlords may also look at and make decisions based on your credit in the future.

Peace of Mind

Having credit insurance takes some of the pressure off of loan repayment and gives you the comfort of knowing that, should something happen that makes you unable to pay your debt, you’ll be protected.


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

Risks of Having Loan Protection

One big downside to loan protection insurance is that you might end up paying for something you never use. Here are some other drawbacks to consider.

Cost

Loan protection insurance can be expensive compared to stand-alone disability and life insurance policies. It’s worth assessing what type of coverage you already have and comparing the cost of loan insurance to other types of coverage, such as supplemental disability or life insurance.

Coverage Limitations

There may be limitations on coverage that minimize how helpful the policy will actually be. For example, in some cases, a loan protection policy won’t cover a pre-existing illness or won’t kick in if you take on a part-time job or any freelance work after losing your job.

May Not Be Necessary

If your main concern is protecting your family from being liable for your debt should you become unable to pay, know that most loans that are only in your name (and don’t have a cosigner) cannot require your family to make your loan payment if you’re unable to. If you’re not worried about loan default (and potentially losing your assets to creditors), loan protection insurance may not be worth it.

Recommended: Am I Responsible for My Spouse’s Debt?

Common Reasons for Being Refused Loan Protection

Because there are different types of loan protection insurance, and policies can differ from one company to the next, it’s important to review the reasons your policy might not pay out when you make a claim. Here’s a look at some common reasons why claims can be refused.

Part-Time Employment

If you lose your job but take on part-time work to make ends meet, a credit insurance policy may not kick in, and you’ll still need to cover your loan payments.

Pre-Existing Medical Conditions

If you are unable to work because of an illness, injury, or other condition that existed before you purchased the policy, your claim could be refused. It’s important to be clear about which health conditions might not be covered under the policy before you sign up.

Short-Term Employment

If you lose your job because it was a short-term employment contract, you likely won’t qualify for a credit insurance payout, since the work was expected to end at that time.

Self-Employment

Self-employed workers might be able to make a claim if they become sick or disabled, for example, but not if they lose the work that provides their income.

>Being Able to Work Another Type of Job

Recommended: Personal Loan Modification: Is It Possible?

Is Loan Protection Insurance Required?

Loan protection insurance is optional. It’s illegal for a lender to force you to buy the policy in exchange for approving your loan. If you’re securing your personal loan with collateral (a car or some other asset), you may be required to ensure that property, but you don’t have to insure it through the personal loan lender’s policy.

If you feel you were incorrectly told by a lender that because of the purpose of a loan you wouldn’t be approved unless you purchased loan protection insurance, you can submit a complaint to your state attorney general, state insurance commissioner, or the Federal Trade Commission.

Recommended: Does Loan Purpose Matter?

The Takeaway

Loan protection insurance offers borrowers a way to continue making their loan payments and protect their credit scores in the event of an unexpected financial hardship. You can find these policies for different types of lending products, including auto loans, mortgages, personal loans, and credit cards.

However, this protection comes at a cost, and some hardships are excluded from coverage. In many cases, short-term or long-term disability insurance policies can offer better, more cost-effective protection for an unexpected loss of income. So be sure to do your research and read the fine print on all costs and exclusions before you agree to loan protection insurance.

SoFi personal loans offer competitive fixed rates and same-day funding. Checking your rate takes just a minute.

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

FAQ

Can you get protection on a personal loan?

Yes. Loan protection insurance is available for several different kinds of loans, including personal loans. Some lenders also offer their own hardship assistance programs for borrowers who run into trouble making payments due to unexpected circumstances.

What is loan protection insurance?

Loan protection insurance is a type of insurance that is designed to help protect you from defaulting on a loan due to an emergency, loss of income, or unexpected change of circumstances. If a covered event (such as a job loss, accident, or illness) takes place, the insurance would make payments on the loan for a predetermined period of time.

Why should you get personal loan protection insurance?

Personal loan protection insurance can give you the peace of mind that, should you run into financial difficulty, you won’t default on your loan. Avoiding a loan default can help you avoid a host of other negative financial consequences, as well as damage to your credit. However, these policies can be costly and typically come with a number of exclusions. You may find that other types of insurance (such as disability or accident insurance) are more cost effective.

---

Photo credit: iStock/akinbostanci

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

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

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.

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.

SOPL0324007

Read more

Consumers may not know it, but financial institutions often rely on “bundled” credit reports to make more fully informed decisions before lending an individual money.

That process is known as a tri-merge credit report (also known as a three-in-one credit report.) The merged report can give the lender a more complete picture of an applicant’s financial situation, since each credit report may contain slightly different information.

You can’t request a merged credit report on your own but you can ask a lender to share their tri-merged report with you. Read on to learn more about what tri-merged credit reports are and how they can impact your chances of getting a loan.

What Is a Tri-Merge Credit Report?

A tri-merge credit report simply combines three credit reports from the three largest credit reporting bureaus — Experian, Equifax, and Transunion — and consolidates them into one credit report for creditors and lenders. They are most commonly used in the mortgage lending sector where more information is required to properly assess larger loans.

Creditors often rely on three-in-one credit reports because they want a thorough review of an applicant’s credit history, an outcome a lender may not get with input from just one credit reporting agency.


💡 Quick Tip: Need help covering the cost of a wedding, honeymoon, or new baby? A SoFi personal loan can help you fund major life events — without the high interest rates of credit cards.

How Do Merged Credit Scores Work?

A tri-merge credit report gives those lenders what they need – a comprehensive overview of a credit applicant using information from three credit reports, instead of one or two credit reports.

By combining all three credit scoring formulas and outcomes into a single credit report, creditors can get an expanded and more complete look at a credit applicant’s financial history (including payments and credit usage), based on the information included in the tri-merge credit report.

Recommended: Common Credit Report Errors and How to Dispute Them

Why Do You Have More Than One Credit Score?

Each credit scoring company has its own formula for calculating credit scores and one model may place more importance on one factor, such as payment history, while another may not. Also, different types of loans have different scoring methods.

The most commonly used credit scoring model is the FICO® Score, a base score that has a range of 300 (lowest score) to 850 (highest score). But within the FICO models, there are industry-specific ranges.

•   FICO® Auto Score Range is 250 to 900

•   FICO® Bankcard Score Range is 250 to 900

•   FICO® Mortgage Score Range is 300 to 850

VantageScore is another credit scoring model used by all three major credit reporting bureaus.

FICO Score and VantageScore base their calculations on different aspects of a person’s financial history.

•   FICO uses factors that are in a credit report, such as payment history of credit accounts, how much debt a person has, how long credit accounts have been open, how often new credit inquiries happen and how often new credit accounts are opened, and the mix of credit account types.

•   Vantage uses the same criteria as FICO, but places different levels of importance on each. Vantage also looks at additional factors that might not appear on a person’s credit report, such as rent and utility payments. Using factors such as these makes it possible for people who don’t have much of a credit history to have a credit score and be able to access consumer credit.

Lenders use credit scores and other information in the loan approval process.

What Does a Tri-Merge Credit Report Look Like?

Tri-merge credit reports offer creditors the same look and feel as a standard consumer credit report, with a few differences.

For starters, the third-party provider creating the three-in-one credit report culls the credit reports from each of the three primary credit-reporting firms (Experian, Equifax, and TransUnion) and pulls the most pertinent information for use in the tri-merge credit report.

In its final form, the tri-merge credit report includes the following sections.

•   An upfront summary that provides information on the credit applicant in capsule form.

•   A full section on the credit applicant’s financial accounts, focusing on larger accounts like mortgages, credit cards, auto loans, and any types of personal loans.

•   Data on the applicant’s credit payments history, any open accounts, any history of late or no credit payments, any tax liens or bankruptcies, and the applicant’s credit utilization ratio (i.e., the applicant’s outstanding credit balance divided by the total amount of revolving credit the applicant has available).

A tri-merge credit report may also include a specific credit report from any of the three major credit reporting agencies, based on the specific credit analysis needs of the mortgage lender who uses the three-in-one report.

Why Do Personal Loan Lenders Look at Your Tri-Merge Credit Report?

Tri-merge credit reports are more commonly used in mortgage lending than personal loan lending. But if you’re applying for a large personal loan — some lenders offer personal loans up to $100,000 — the lender may look at a tri-merge credit report to get a comprehensive picture of your creditworthiness. The tri-merge credit report will include any current or past personal loans and your payment history on those. The lender will use that information to determine approval for the loan you’re applying for.


💡 Quick Tip: Choosing a personal loan with a fixed interest rate makes payments easy to track and gives you a target payoff date to work toward.

How Does a Tri-Merge Credit Report Affect Your Loan Application?

Different lenders approach the risk of lending money with different tolerance levels, just as they each have different credit score requirements. A loan applicant whose credit reports don’t include late payments and unmanageable debt loads will likely be approved for a loan with favorable terms and lower interest rates.

Alternatively, a loan applicant whose credit report shows a large amount of existing debt and a history of late or missed payments may be offered a high interest rate and less favorable terms.

Because lenders that use a tri-merge credit report to assess an applicant’s creditworthiness are looking at a comprehensive picture, it’s in the best interest of the applicant to clean up their credit reports from each of the three major credit bureaus before they begin applying for a loan.

Recommended: Typical Personal Loan Requirements Needed for Approval

Is a Tri-Merge Credit Report a Hard Inquiry?

Any official lender review of a tri-merge credit report will be a hard inquiry and will temporarily impact your credit score. In general, each hard credit inquiry can decrease a credit score by five points.

The severity of any credit score decline due to a hard pull largely depends on the applicant.

A consumer with a strong credit report may see less of a credit scoring decline than one with a weak credit report. Multiple credit report hard inquiries can be a reason why a consumer with a weak credit history may see their credit scores decline moderately.

Recommended: Soft vs Hard Credit Inquiry: What You Need to Know

Can I Order My Own Tri-Merge Credit Report?

Tri-merge credit reports are available to lenders, but not generally to individuals. A lender may be willing to share with you the tri-merge credit report they pulled in your application process. A credit counselor who offers first-time homebuyer programs may also be able to pull a tri-merge credit report for you in a credit review process, but there may be a fee for that service.

However, you can — and it’s a good idea to do this — request a free copy of your credit report from AnnualCreditReport.com.

You can request a free copy of your credit report once a week from each of the three major credit bureaus. Reviewing all three of your credit reports will give you much of the same information as is included in a tri-merge credit report.

The Takeaway

Tri-merge credit reports can prove highly useful to mortgage and other lenders looking for a comprehensive review of an applicant’s credit history.

By merging the credit report analysis of the three major credit reporting agencies, creditors and lenders are getting a fully-formed outlook they likely wouldn’t get by relying on a single credit reporting agency.

For consumers, the key takeaway on three-in-one credit reports is simple – take a disciplined and diligent stance on your credit, review your credit reports on a regular basis, and ensure key issues like on-time payments and credit utilization rates are in good standing.

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

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

FAQ

What is a tri-merge credit report?

A tri-merge credit report is a credit report combining information from the three major credit bureaus, Equifax, Experian, and TransUnion.

Is a tri-merge credit report a hard inquiry?

When a tri-merge credit report is pulled during the formal loan application process, it will be a hard inquiry on the applicant’s credit report.

Can I pull my own tri-merge credit report?

No. Tri-merge credit reports are available to lenders, not individuals, and they’re mainly used in the mortgage loan process. If you’re working with a credit counselor, you may be able to have a tri-merge credit report pulled during a credit review process.

---

Photo credit: iStock/Irina Ivanova

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

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

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.

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.

SOPL0324004

Read more

The median annual pay for travel agents is $46,400, according to the Bureau of Labor Statistics most recent data.

Travel is a passion many people share, but not many people are fortunate enough to make their love of travel their full-time job. If someone is skilled at finding the best travel deals and building the perfect vacation itinerary, they may find that working as a travel agent is a rewarding way to earn a living.

To better understand what it’s like to work as a travel agent and how much they earn, keep reading.

What Are Travel Agents?

Travel agents help their clients plan and book their trips. They may work for an individual client to plan their vacation or a corporate client to book their work travel. No two trips they manage are likely to be exactly the same, but they can help arrange everything from flights to hotels to excursions to dining reservations. Many travel agents can also give their clients access to deals through partner hotels and other travel vendors.

A travel agent can work independently. In-house at a large corporation, or for a major travel company. They may pursue this work full-time or as a side hustle. Given that a significant part of this career involves working with individuals to understand their travel aspirations and needs, it’s likely not a good job for antisocial people.

Travel agents can train in different ways: Some have a bachelor’s degree in an allied field or an associate’s degree in travel and tourism. There are many professional training programs and certifications available, such as ASTA, IATA, TIDS, and CLIA for different dimensions of travel planning.

As part of their work, travel agents may have the opportunity to visit various properties and destinations to make sure they would be a good fit for clients and learn about their selling points. This is often available at a reduced rate or for free and can be a major perk of working as a travel agent.

However, it’s worth noting that travel agents likely have to be available 24/7 and can deal with considerable stress, if, say, a client misses their flight or extreme weather ruins a vacation.


💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.

How Much Do Starting Travel Agents Make a Year?

If you’re wondering how much money a travel agent makes, the answer will depend a lot on how experienced the travel agent in question is. For example, entry-level travel agents can earn a lot less than more experienced agents. The lowest 10% of earners in this role make less than $29,650.

The highest 10% make more competitive pay north of $64,100. And there are those travel agents who work in the luxury sector who make considerably more.

Indeed, some could make an annual salary of $100,000 or more.

What is the Average Salary for a Travel Agent?

The Bureau of Labor Statistics reports that the latest median pay per year for travel agents is $46,400 and the median hourly pay is $22.31.

Alongside experience, location can majorly impact a travel agent’s earning potential. The following table illustrates how much a travel agent’s average salary can vary by state, arranged from highest to lowest. For example, in New York, travel agents make an average annual salary of $51,002, but in Arkansas, they earn almost $20,000 less at an average of $33,194.

What is the Average Travel Agent Salary by State for 2023

State	Annual Salary	Monthly Pay	Weekly Pay	Hourly Wage
New York	$51,002	$4,250	$980	$24.52
Pennsylvania	$46,702	$3,891	$898	$22.45
New Hampshire	$45,667	$3,805	$878	$21.96
New Jersey	$44,975	$3,747	$864	$21.62
Wyoming	$44,490	$3,707	$855	$21.39
Washington	$44,429	$3,702	$854	$21.36
Wisconsin	$44,110	$3,675	$848	$21.21
Massachusetts	$44,109	$3,675	$848	$21.21
Alaska	$43,993	$3,666	$846	$21.15
Oregon	$43,637	$3,636	$839	$20.98
Indiana	$43,568	$3,630	$837	$20.95
North Dakota	$43,557	$3,629	$837	$20.94
Hawaii	$42,711	$3,559	$821	$20.53
Arizona	$42,667	$3,555	$820	$20.51
New Mexico	$42,402	$3,533	$815	$20.39
Colorado	$42,122	$3,510	$810	$20.25
Minnesota	$42,111	$3,509	$809	$20.25
Montana	$42,024	$3,502	$808	$20.20
Nevada	$41,598	$3,466	$799	$20.00
Alabama	$41,499	$3,458	$798	$19.95
South Dakota	$41,167	$3,430	$791	$19.79
Vermont	$41,101	$3,425	$790	$19.76
Ohio	$41,077	$3,423	$789	$19.75
Rhode Island	$40,418	$3,368	$777	$19.43
Iowa	$39,934	$3,327	$767	$19.20
Delaware	$39,881	$3,323	$766	$19.17
Connecticut	$39,806	$3,317	$765	$19.14
Virginia	$39,419	$3,284	$758	$18.95
Mississippi	$39,257	$3,271	$754	$18.87
Tennessee	$39,219	$3,268	$754	$18.86
Utah	$39,017	$3,251	$750	$18.76
Illinois	$38,900	$3,241	$748	$18.70
Georgia	$38,659	$3,221	$743	$18.59
Maryland	$38,651	$3,220	$743	$18.58
California	$38,534	$3,211	$741	$18.53
Nebraska	$37,909	$3,159	$729	$18.23
Maine	$37,734	$3,144	$725	$18.14
Missouri	$37,456	$3,121	$720	$18.01
South Carolina	$37,087	$3,090	$713	$17.83
Kansas	$36,952	$3,079	$710	$17.77
Idaho	$36,789	$3,065	$707	$17.69
Louisiana	$36,765	$3,063	$707	$17.68
Oklahoma	$36,712	$3,059	$706	$17.65
Texas	$36,475	$3,039	$701	$17.54
North Carolina	$36,322	$3,026	$698	$17.46
West Virginia	$36,068	$3,005	$693	$17.34
Kentucky	$34,977	$2,914	$672	$16.82
Michigan	$34,895	$2,907	$671	$16.78
Florida	$34,212	$2,851	$657	$16.45
Arkansas	$33,194	$2,766	$638	$15.96

Source: ZipRecruiter

Travel Agent Job Considerations for Pay & Benefits

Working as a travel agent can be very flexible. While full-time positions are available in this role, some travel agents choose to work part-time or for themselves as entrepreneurs.

When working full-time for a travel advisory firm, travel agents can expect to gain access to benefits like health insurance and retirement contribution matching. If they work part-time or are self-employed, they will need to provide themselves with those benefits, which can eat into their take-home pay.


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Pros and Cons of Travel Agent Salary

The main disadvantage of a travel agent’s salary is that the median annual salary is on the lower side at just $46,400. That being said, one of the main advantages of this salary is that it can come with hefty bonuses based on travel bookings with partners that offer commissions to travel agents. Also, travel agents often get discounts and freebies as they themselves travel to check out new resorts and attractions.

Travel agents who work for themselves can also choose to set their own rates and can potentially earn more. Or those who cater to high net-worth individuals may be able to raise their income.

Recommended: Work-from-Home Jobs for Retirees

The Takeaway

A travel agent who is super organized and passionate about travel can help make their client’s lives easier and their trips more enjoyable. In exchange for their savviness, some travel agents earn good salaries doing work that they truly enjoy and have perks that involve more travel at lower or no cost for their own purposes.

SoFi helps you stay on top of your finances.

FAQ

Can you make 100k a year as a travel agent?

While most travel agents don’t earn $100,000 per year, those who choose to work for themselves and set their own rates or cater to an elite clientele can possibly make six figures. Many travel agents work on commission, so they can also stand to earn more if their clients book a lot of expensive trips.

Do people like being a travel agent?

Many people like working as a travel agent because it’s a fun way to put their love of travel to use. It tends to be a good job for those who consider themselves to be a “people person” since there’s lots of interaction with clients. Also, it’s good for people who can “roll with the punches” since travel plans often change for various reasons.

Is it hard to get hired as a travel agent?

The demand for travel agents is on par with the average of other professions. So, while it’s not seeing a surge in need, there should be availability of jobs as a travel agent.

---

Photo credit: iStock/Dimensions

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

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

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.

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

SORL0124040

Read more

It may seem as if having a bank account is a given in life, but actually, it’s not: Some people get rejected and have to work hard (really hard) to attain that privilege. There’s a situation called being blacklisted by banks, and it’s a tough one to overcome.

Granted, for many, having enough money for a deposit and valid ID gives you all you need to open a bank account.

But if you’ve had problems with a bank account before and your screening report reveals those issues, you could be denied. But all is not lost: Take a deep breath and read on. We’ll share:

•   What it means to be blacklisted

•   Why this happens

•   What you can do to earn back the ability to access the financial products and services you need

What Does It Mean to Be on the ChexSystems Blacklist?

Unless you’ve had trouble opening a bank account, it’s possible you’ve never even heard of ChexSystems. Think of ChexSystems as being akin to the credit reporting agencies that determine your all-important FICO credit score. Except instead of keeping track of how well you manage debt the way Equifax, Experian, and TransUnion do, ChexSystems records how well you manage your banking life.

Do you have a history of bouncing checks, overdrawing your account, failing to pay bank fees, suspicious activity, or have had your account closed by a financial institution? If so, it’s likely ChexSystems knows about and is keeping track of those negative activities. Approximately 80% of banks use these agencies’ screening reports when deciding whether to approve a consumer’s application to open a checking or savings account.

Along with your report, banks also may use your ChexSystems Consumer Score to assess your potential risk as a new or returning customer. A score can range from 100 to 899 — and a higher score signifies lower risk.

There’s no official point or score at which consumers are automatically “blacklisted” by ChexSystems or the banks that use its services. Each financial institution determines independently how much risk is acceptable when deciding to open a new account for a client. But if your score is in the lower range, you should be aware that your application could be refused. The reason why: You don’t appear to be someone who will use your bank accounts responsibly.

If you’re planning to open an account and you’re wondering what your current ChexSystems Consumer Score is, you can request it at the ChexSystems website. You’re able to get one free report per year.

What to Do If You Are Blacklisted

So let’s say you’ve applied for a bank account and got rejected. That can be an upsetting feeling. After all, bank accounts — especially checking accounts — are the hub of most people’s financial lives. Paychecks are deposited there, and bills and other debts are paid out of that same account. You may wonder how you will ever get a bank account after being blacklisted.

We have good news: If a financial institution denies your request to open an account, there are a few things you may be able to do to improve your standing. Here are four steps to take.

1. Request a Consumer Disclosure Report

The bank or credit union that declined to open an account for you should inform you which reporting agency (ChexSystems or another) generated the report it used when considering your application. You can then contact that agency by phone, mail, or online to request a free copy of the report. You’ll then take a look at exactly what’s on your record.

2. Report Any Discrepancies

Once you receive a copy of your file, you should be able to see which banks or credit unions provided negative information about you to the reporting agency. If the report doesn’t match up to your experiences, there may have been an error, or the problem could be connected to identity theft. Either way, it’s a good idea to check your own records for any discrepancies and prepare to address what you may uncover.

3. Dispute Any Errors Found

Consumer reporting agencies must comply with the federal Fair Credit Reporting Act. That means they are required to ensure the information they provide is as accurate as possible. What’s more, by law, they can’t include certain types of negative information that’s more than seven years old. (ChexSystems typically keeps negative information on a report for five years.)

If you feel your banking report has errors, is incomplete, or that some negative information is out of date, your next move may be to file a dispute. The Consumer Financial Protection Bureau (CFPB) provides sample letters for contacting both the financial institution that supplied the incorrect data and the agency that included it in its report. Or, you can file your dispute on the ChexSystems website.

Under the Fair Credit Reporting Act, ChexSystems must verify the negative information within 30 days or delete it from your ChexSystems report.

You also may want to get an updated credit report from one or all three of the major credit bureaus to see if there are similar problems there. You can request those reports for free at annualcreditreport.com. If you find anything amiss, you can dispute those credit report errors.

To be clear, your ChexSystems score is not the same as the FICO credit score lenders look at when you apply for a credit card or loan. And the banking reports ChexSystems provide do not include the same information as credit reports. But if there’s inaccurate information in a report about your checking account activity, there may be similar issues with your credit reports — especially if you’ve been the victim of identity theft. If you can catch discrepancies early, you may be able to head off future questions about your creditworthiness.

4. Pay Off Outstanding Debts and Fees

Of course, there is the possibility that the black marks on your report are valid. Maybe you bailed on an account that was overdrawn or had another negative situation. If information on your report was accurate, you still may be able to improve your chances of opening an account. You will probably want to show that you are trying to rectify past problems.

Check with the bank that declined your recent application for an account. A banker there may have some suggestions. It could help, for example, if you can pay off any old fees you still owe to ChexSystems’ member institutions. Once those past bad debts are taken care of, you can ask the bank or credit union that provided the negative information to update that item on your ChexSystems report.

You still may have to wait five years for the negative information to be completely removed from your report. But ultimately, it’s up to each individual bank — not ChexSystems — to decide if a customer’s application will be approved or denied. If the bank sees you’re making an effort to right old wrongs, it may reconsider your application. That’s why connecting with a banker to explain what steps you’re taking can be a move in the right direction.

How to Avoid Being Blacklisted by ChexSystems

Obviously, the best way to avoid getting a low ChexSystems Consumer Score or a negative report is to avoid the activities that could make you a riskier bank customer. If you want to be a good checking and savings account customer, avoid such things as:

•   Bouncing checks or running up too many overdraft fees

•   Having an account closed involuntarily

•   Committing ATM or debit card abuse

•   Being suspected of fraud or illegal activity

•   Opening and closing multiple accounts in a short period of time

But there are other steps you can take to further secure your finances and your financial reputation. Consider these options as well to boost your standing as a banking customer. They can help you avoid being blacklisted.

Monitor Your Financial Health

If there’s information on a ChexSystems report that you weren’t aware of, you may have been the victim of identity theft. Reviewing your accounts regularly could help you clear up problems faster. Even if you don’t have this kind of fraudulent activity on your record, it’s still a good idea to stay on top of your financial profile. Here are some key steps.

•   It’s a good idea to periodically request and scrutinize your free ChexSystems report.

•   You’ll also want to get free copies of your three major credit reports from annualcreditreport.com at least annually. Again, your goal is to make sure that everything is up-to-date and accurate and that there isn’t any fraud or identity theft occurring.

•   It’s also a good idea to regularly check your bank account and credit card statements to make sure there aren’t any transactions you aren’t aware of. Many financial institutions offer online tools and mobile apps that can make tracking your accounts easy and convenient.

•   You may want to set up a low balance alert for your checking account. That way, you’ll get a text or email when your balance reaches a certain threshold, and you’ll know to stop using the account until you make a deposit. That can help avoid overdrawing your account and bouncing checks and/or triggering fees. You also might consider setting up bank alerts for unusual activity, overdrafts, and new log-ins.

Find an Alternative to a Traditional Banking Account

If you’ve been rejected and are worried that you might be unable to open a bank account, don’t give up hope. If your ChexSystems report seems to be blocking you from getting an account, you may have other options.

•   Some banks and credit unions offer what are called “second chance” checking accounts. These typically offer fewer features and higher fees than regular bank accounts to customers who have been blocked by a ChexSystems report or score.

•   There are also some banks and credit unions that don’t use ChexSystems when making decisions on account applications. You might be able to enjoy the same benefits as other account holders, with low or no fees, if you choose to do business with one of those financial institutions. A little online research should show you which banks don’t depend upon ChexSystems.

By investing a bit of time and energy, you should be able to find an account that suits your needs even if you have been blacklisted.

The Takeaway

If a bank denied your application for a new checking or savings account, it could be that you were blacklisted due to negative information on your ChexSystems report.

You still have options, though. If the information on your report is wrong or more than seven years old, you can dispute the negative information and have your report corrected. And if it turns out the negative information is true, you can take steps to remedy the situation and possibly open an account elsewhere. The convenience of a bank account may well be within reach.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

Can I open a bank account if I’m blacklisted?

You may have a few options if you’ve been blocked from opening an account. You could try to fix your old problems, and ask the bank to reconsider. You could sign up for a “second chance” account that’s geared to people with a negative banking history. Or, you could look for a bank that doesn’t base its decisions about customer accounts on ChexSystems reports.

How long are you blacklisted from banks?

Every bank has its own policies when it comes to deciding a customer’s account eligibility. But if you have negative items on a ChexSystems report that could cause a bank to decline your account application, you can expect that information to stay on your report for up to five years.

What does it mean when your bank account is blacklisted?

If someone tells you that you have a blacklisted bank account, it generally means you have enough negative information on your ChexSystems report — or a low enough ChexSystems score — that the bank sees you as a risk. They therefore decline to offer you an account.

---

Photo credit: iStock/PeopleImages

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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.

Our account fee policy is subject to change at any time.
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.

SOBK0124036

Read more