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By Meghan Brown |
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Comments Off on SoFi and PGIM Fixed Income Announce $525 Million Securitization Agreement, Signaling Continued Demand for Personal Loans
Partners’ Largest Transaction To-Date is Second in a Series of Continued Investments by PGIM
SoFi Technologies, Inc. (NASDAQ: SOFI), a member-centric, one-stop shop for digital financial services that helps members borrow, save, spend, invest and protect their money, today announced a $525 million personal loan securitization agreement closed in Q4 2024 with funds and accounts managed by PGIM Fixed Income, one of the largest global fixed income managers – with $859 billion in assets under management (AUM), including $120 billion in public and private securitized credit AUM.
The transaction follows a $350 million investment from PGIM in May 2024. It builds on the $3.9 billion in personal loan collateral SoFi sold or securitized to-date through the end of Q3 2024, illustrating the value of the company’s leading personal loan business.
Edwin Wilches, Managing Director and co-Head of Securitized Products at PGIM Fixed Income, said, “SoFi’s personal loans represent an attractive investment opportunity for PGIM, and we’re thrilled to deepen our relationship with the company. We continue to expand our platform as an asset-based finance lender and source investments that provide compelling risk-adjusted returns for our clients with partners who put their customers first.”
“The investor demand we see for SoFi’s personal loans underscores the quality and strength of our lending business, which continues to contribute meaningfully to our durable growth,” said Anthony Noto, CEO of SoFi. “We are grateful for PGIM’s longstanding partnership as we help more of our members get their money right.”
Today’s news comes on the heels of strong demand for SoFi’s loans in the capital markets, with a range of transactions representing partners’ unique investment goals. For example, in Q4 2024, the company announced a $2 billion agreement with Fortress Investment Group to expand its loan platform business, where the company refers pre-qualified borrowers to loan origination partners and originates loans on behalf of third parties – a key example of SoFi’s diversified funding program.
For more information on SoFi, please visit www.sofi.com.
About SoFi
SoFi(NASDAQ: SOFI) is a member-centric, one-stop shop for digital financial services on a mission to help people achieve financial independence to realize their ambitions. The company’s full suite of financial products and services helps 10 million SoFi members borrow, save, spend, invest, and protect their money better by giving them fast access to the tools they need to get their money right, all in oneapp. SoFi also equips members with the resources they need to get ahead – like credentialed financial planners, exclusive experiences and events, and a thriving community – on their path to financial independence.
SoFi innovates across three business segments: Lending, Financial Services – which includes SoFi Checking and Savings, SoFi Invest, SoFi Credit Card, SoFi Protect, and SoFi Insights– and Technology Platform, which offers the only end-to-end vertically integrated financial technology stack. SoFi Bank, N.A., an affiliate of SoFi, is a nationally chartered bank, regulated by the OCC and FDIC and SoFi is a bank holding company regulated by the Federal Reserve. The company is also the naming rights partner of SoFi Stadium, home of the Los Angeles Chargers and the Los Angeles Rams. For more information, visit SoFi.comor download our iOSandAndroid apps.
By Liz Young Thomas |
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Comments Off on Liz Looks at: The First Inflation Data of 2025
Priceless
Our first inflation prints of 2025 hit the wires this week and they were generally better than expected. The Consumer Price Index (CPI), which usually gets the most attention, came in close to estimates for headline data (including all items), and below estimates for the core measure (excluding food and energy).
With investors’ renewed focus on inflation, this is an encouraging sign and one that took some nerves out of markets, at least for now. Treasury yields fell and stocks rallied on the news Wednesday.
Moreover, Wednesday’s CPI data came on the heels of Producer Price Index (PPI) data from Tuesday, which was cooler than expected. PPI measures inflation from the perspective of producers instead of consumers, and reports the change in prices received on a wholesale level. It is often looked at as a read on economic activity and sometimes as a leading indicator for CPI.
Although the chart below shows a recent steady rise in PPI, markets are more concerned with how the data looked relative to expectations, hence the supportive backdrop. It’s also worth noting that a healthy – but not hot – PPI can be an indication of supportive business activity.
Tracking the Warts on the Story
For months, we’ve been paying close attention not only to the broad inflation numbers, but also the components that are keeping it elevated such as shelter and car insurance. Shelter data actually cooled in December, which is a step in the right direction, but much of the driver of elevated shelter prices has been low housing turnover due to high mortgage rates. There is still more progress to be made on that front.
If we put the components of CPI into buckets based on how much they’re rising, we are seeing evidence that the pieces of inflation that have caused some of the biggest problems are becoming… less of a problem. Importantly, the chart below shows the percentage of components with readings above 4% month-over-month annualized, which has come down markedly since the middle of last year. That’s good news.
It’s not lost on us that the yellow line representing the components with CPI between 2-4%, which is technically above the Federal Reserve’s inflation target, has spiked recently. However, that’s being driven primarily by components slowing from an above 4% pace rather than an acceleration from those below 2%. We certainly have not reached a “problem solved” state of affairs yet, but this data does not show any compelling signs of danger and I think we can take it as a positive.
Seasons Change
As we move into 2025 data, there’s something to keep in mind about seasonality – if for no other reason than to encourage ourselves not to overreact in coming months.
Businesses often increase prices after the start of a new year, and it’s possible that some have been more aggressive in raising prices after the high inflation of recent years. However, some economists have blamed the hot inflation prints on residual seasonality. Raw data is often adjusted to account for seasonal patterns, but that process is not perfect. If consumer and business behavior has changed post-pandemic, that could mess with the seasonal adjustment process and cause CPI to look higher than it actually is.
In 2024, for example, CPI reports were hotter than expectations for January, February, March, and April. By the time April rolled around, markets were unsettled, investors had drastically repriced Fed rate cut expectations, and a bumpy spring season in the S&P 500 ensued.
The good news this year is that Fed rate cut expectations are already quite low, with markets only expecting 1-2 cuts for all of 2025. The risk is that markets again seem to be incredibly data-dependent, with big swings possible after each important macro print. Moreover, Treasury yields have been a source of concern for stocks ever since the 10-year yield surpassed 4.5%; any hotter-than-expected inflation data is likely to drive more upside in yields and pressure equity markets.
We outlined three big risks in our 2025 outlook, one of which was that inflation could reignite, causing the Fed to turn hawkish and yields to spike. As of now, inflation hasn’t reignited, but yields have spiked and markets are on edge about macro data. We should do what we can to keep a cool head as the beginning of the year unfolds.
Want more insights from Liz? The Important Part: Investing With Liz Thomas, a podcast from SoFi, takes listeners through today’s top-of-mind themes in investing and breaks them down into digestible and actionable pieces.
SoFi can’t guarantee future financial performance, and past performance is no indication of future success. This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov. Liz Young Thomas is a Registered Representative of SoFi Securities and Investment Advisor Representative of SoFi Wealth. Form ADV 2A is available at www.sofi.com/legal/adv.
• Home equity lines of credit (HELOCs) can help you pay for home improvements, consolidate debt, cover education expenses, and more.
• When comparing HELOC lenders in North Dakota, consider not only interest rates and repayments terms, but fees, credit line minimums and limits, and lender reputation.
• HELOC rates in North Dakota are influenced by the prime interest rate and other economic variables.
• Many individual factors impact the rates that HELOC lenders in North Dakota will offer you, including your home equity position, credit score, income, and loan-to-value ratio.
• To qualify for the most favorable HELOC rates, prioritize building your credit score, maintaining a steady source of income, and keeping your debt-to-income ratio low.
Introduction to HELOC Rates
If you’re wondering just what is a home equity line of credit (HELOC) in North Dakota, odds are that you’re making timely home loan payments and have been building up equity in your home. You can use this guide to see what rate and terms you might qualify for, and to understand the underlying factors that influence HELOC rates so you can choose the best offer for your financial needs.
We’ll take you step by step through the application process. And since a HELOC is just one way you can get equity out of your home, we’ll also explain alternatives to HELOCs. Ready to maximize your borrowing potential and achieve your financial objectives? Let’s start at the beginning.
What Is a HELOC?
A HELOC is a revolving line of credit with your home as collateral. The amount of your credit line will depend on your home’s value as well as your mortgage balance. Qualified borrowers may be able to borrow as much as 90% of their home equity with a HELOC. You can borrow, repay, and borrow again.
HELOCs have two phases: draw and repayment. It’s important to understand both.
The Draw Period
During a HELOC’s draw period, usually lasting 10 years, you can access funds up to your credit limit. Payments are typically interest-only, while paying down the principal is optional. If you do pay down your principal, you can borrow against the full credit line again. You can use a HELOC monthly payment calculator to help you with financial management during this phase.
The Repayment Period
A HELOC’s repayment period typically lasts 10 to 20 years. During this phase, borrowing ends and you repay the principal with interest. Rates are usually variable, which can make monthly repayment amounts somewhat unpredictable. A HELOC repayment calculator can show you what your payments would be each month depending on your interest rate.
Where Do HELOC Interest Rates Come From?
Interest rates on HELOCs are influenced by the prime rate — the rate banks charge customers deemed to be at lowest risk of default. Federal Reserve rates are just one factor lenders consider when setting their prime rates.
How Interest Rates Impact HELOC Affordability
Interest rates can have a significant impact on what a HELOC will cost you. When the time comes to repay a $60,000 HELOC with a 20-year term, a 6.00% rate would result in a monthly payment of $430, whereas a 7.00% rate would increase the payment to $465. More important, the customer with the 7.00% rate would pay $8,477 more in interest over the life of the loan. The greater the amount you borrow and the higher your interest rate, the larger these numbers grow.
HELOC Amount
Repayment Term
Interest Rate
Monthly Payment
Total Interest Paid
$100,000
20 years
8.00%
$836
$100,746
7.00%
$775
$86,072
10 years
8.00%
$1,213
$45,593
7.00%
$1,161
$39,330
$50,000
20 years
8.00%
$418
$50,373
7.00%
$388
$43,036
10 years
8.00%
$607
$22,797
7.00%
$581
$19,665
$25,000
20 years
8.00%
$209
$25,186
7.00%
$194
$21,518
10 years
8.00%
$303
$11,398
7.00%
$290
$9,833
HELOC Interest Rate Trends
Since HELOC rates are tied to prime interest rate set by lenders, understanding the history of the average prime rate can help you see where current HELOC rates in North Dakota fall. In recent years, the prime rate has ranged from a low of 3.25% in 2020 to a high of 8.50% in 2023. These fluctuations can have a direct impact on the practicality of a HELOC vs. a home equity loan, since HELOC rates are variable and home equity loan rates are usually fixed.
Historical Prime Interest Rate
Date
U.S. Rate
9/19/2024
8.00%
7/27/2023
8.50%
5/4/2023
8.25%
3/23/2023
8.00%
2/2/2023
7.75%
12/15/2022
7.50%
11/3/2022
7.00%
9/22/2022
6.25%
7/28/2022
5.50%
6/16/2022
4.75%
5/5/2022
4.00%
3/17/2022
3.50%
3/16/2020
3.25%
3/4/2020
4.25%
10/31/2019
4.75%
9/19/2019
5.00%
8/1/2019
5.25%
12/20/2018
5.5%
9/27/2018
5.25%
Source: U.S. Federal Reserve
Historical U.S. Prime Rates
Factors Influencing HELOC Rates
A bunch of factors can influence HELOC rates in North Dakota. Here are some variables that are within your control and can play a role in what you’ll be offered.
Home Equity
If you have substantial equity in your home, you’ll appear less risky to lenders, and this can lead to them offering you a lower interest rate. As a borrower, you’ll typically need a minimum of 15% equity to qualify for a HELOC.
Credit Score
Maintaining a credit score of 680 or higher is needed to secure a HELOC, and 700 is even better. A higher credit score is a bonus, too, since lenders may offer you lower interest rates.
Stable Income
Lenders scrutinize your income to evaluate your ability to repay the HELOC. Stability is important.
Loan-to-Value Ratio
Many lenders stipulate that your combined loan-to-value ratio must be 90% or less, though some will allow you to borrow 100% of your home’s value. For example, if you hope to obtain a $100,000 HELOC and your mortgage balance is $300,000, while your home appraisal puts its value at $500,000, your LTV ratio would be 80%.
Variable vs Fixed Interest Rates
HELOCs generally have variable interest rates, meaning they will fluctuate during the loan term. Although they often start lower than the current fixed rates, they can adjust up or down depending on market conditions. Plugging a number of interest rates into a HELOC calculator will give you insight into the effects these fluctuations can have on your monthly payment.
Tools & Calculators
Online calculators can show you your monthly payment amount and the overall cost of your loan. Our favorites include a HELOC interest only calculator, which can help you determine the payments you’d have to make during the draw period. Whether you’re thinking about a HELOC or a home equity loan, check out these useful tools:
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
How to Qualify for a Competitive HELOC Rate
To obtain one of the more favorable HELOC rates in North Dakota, you’ll want to do a little financial housekeeping before submitting your application. Here’s a to-do list:
Care for Your Credit Score
If you maintain regular, timely payments while also reducing credit card balances, it can help you cultivate a credit score lenders will find attractive. Take a minute to check your report, too, and request that any inaccuracies be corrected.
Assess Your Home Equity
A strong home equity position can lead to better terms and a higher credit line when applying for a HELOC. You’ll want to have at least 15% equity in your home.
Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is how much you pay each month on your debt (student loans, car loans, personal loans, etc.), divided by your gross monthly income. Home equity lenders often look for a DTI below 36%. Some allow up to 50%. Calculating a DTI ratio can help you determine your eligibility for a HELOC.
Application Process for a HELOC in North Dakota
Your application process for a home equity line of credit will involve a detailed financial review and a formal appraisal of your home, among other steps. Understanding each task can help you navigate the journey.
Step 1. Run the Numbers
Confirm that your credit score is 680 or above, and that your DTI ratio is below 36%. Estimate your home equity to understand how much you can borrow. Some lenders offer online prequalification tools to streamline this process.
Step 2. Compare Lenders
When seeking North Dakota’s best HELOC rates, also compare qualification requirements, credit line limits, fees, and draw and repayment period durations from multiple lenders.
Step 3: Gather Your Documents
When you prepare your HELOC application, gather and organize necessary documents in advance. This will typically include proof of income (such as W2 forms and at least one tax return), as well as property documents like proof of insurance. If you are self-employed, you should count on lenders asking for a profit-and-loss statement and two years’ worth of tax returns.
Step 4: Submit Your Application
You should be able to submit your HELOC application online or in person, depending on the lender. Be sure to attach all of your necessary documents.
Step 5: Get an Appraisal
A home appraisal plays a pivotal role in determining your eligibility for a HELOC. If the appraised value of your home exceeds the outstanding balance of your mortgage, you may qualify. Ask the lender to guide you through the appraisal process if needed.
Step 6: Prepare for Closing
Before accessing funds via your home equity line of credit, you’ll have to sign documents and pay any required fees. Some lenders make funds available as fast as three business days after signing.
Tax Benefits and Considerations
You can deduct the interest you pay on your HELOC if you use the funds you borrow to buy, build, or significantly improve your primary residence. Your interest deduction is limited to the first $375,000 of the HELOC principal if you are an individual taxpayer ($750,000 if you and your spouse file jointly). Consult a tax advisor to help you navigate specific tax implications and confirm your eligibility for deductions related to HELOCs.
How Much Does a HELOC Cost?
A HELOC will cost you less than a typical home loan or mortgage refinance. With a HELOC, the appraisal fee is the biggest cost, at up to $500. Other charges may include application and administrative fees, and some lenders add annual maintenance, transaction, inactivity, or early termination fees. A lender offering a HELOC with no fees, or reduced fees, may increase the interest rate to compensate. Be sure to compare offers from multiple lenders.
Alternatives to HELOCs
Other ways exist to get equity out of your home, including different types of home equity loans and cash-out refinancing. Personal loans are an option, too, if you prefer an unsecured loan. Carefully consider the advantages and disadvantages of each option to determine what’s best for you.
Home Equity Loan
Unlike a HELOC, a home equity loan provides a lump sum amount, and is paid back at a fixed interest rate. Borrowers can usually access up to 85% of their home equity through this type of loan. A home equity loan calculator can help you estimate your borrowing capacity.
Here’s a quick comparison of the two:
HELOC
Home Equity Loan
Type
Revolving line of credit
Installment loan
Interest Rate
Usually variable-rate
Usually fixed-rate
Repayment
Repay only what you borrow; you may have the option to make interest-only payments during the draw period.
If you’re debating between a cash-out refinance vs. a home equity line of credit maybe this will help: Cash-out refinancing lets you refinance your mortgage for more than what you owe, and receive the difference in cash. This option may suit you if you need a large sum of money and want just one monthly payment. Do the math to compare costs as you decide what suits your overall home loan strategy.
Personal Loan
A personal loan does not require collateral, making it a good option for those without significant home equity. A personal loan can provide a lump sum of $1,000 to $100,000, to be paid back in regular payments with interest over a 2- to 7-year term. It can be used for home improvements, debt consolidation, and other large expenses.
Credit Cards
Credit cards and HELOCs are both examples of revolving debt, in which you get access to a credit line that you tap as needed instead of receiving a chunk of money all at once. Credit cards tend to come with higher interest rates than HELOCs, though, which makes them much more expensive if you carry a large balance for months. Credit cards definitely offer flexibility for smaller purchases, but a HELOC can be more cost-effective for larger expenses like home improvements or debt consolidation.
The Takeaway
A home equity line of credit can be a valuable financial tool if you want to capitalize on your accumulated home equity. HELOCs offer competitive interest rates and flexible repayment options. A HELOC’s variable interest rate may increase unexpectedly depending on the market, making for higher monthly payment. But if you aren’t sure exactly how much you need for a big project, a HELOC is a good option to consider.
SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.
Unlock your home’s value with a home equity line of credit brokered by SoFi.
A $50,000 home equity line of credit will require a monthly payment based on several factors, including how much of the credit line you draw, the interest rate, and the repayment terms. With an 8.00% interest rate and a 10-year term, your monthly payment will be about $607. This is assuming you’ll make interest-only payments during the draw period.
Is a HELOC a good idea right now?
Determining whether a home equity line of credit is the right option for you now hinges on your individual financial circumstances, as well as the market. While a HELOC can be advantageous for home improvements, debt consolidation, and other substantial expenses, it’s important to consider the interest rate, repayment term, and potential risks involved.
What is the monthly payment on a $100,000 HELOC?
The payment a $100,000 home equity line of credit will require can easily be calculated with a HELOC monthly payment calculator. Factors like the interest rate, the duration of your repayment term, and other details will all influence the final monthly payment. But assuming you draw the full amount at a 7.00% interest rate, and choose a term of 20 years to repay, your monthly payment will be about $836.
What are the benefits of a HELOC?
HELOCs offer you flexible access to funds, a competitive rate, and potential tax advantages. Common uses of HELOCs include funding home improvement projects and educational expenses, and consolidating debt.
Do you need an appraisal for a HELOC?
Yes, an appraisal is generally required with a HELOC application, to help a lender ascertain the current market value of the property. The appraisal tells the lender how much equity you have, providing assistance at the setting of your borrowing limit.
What disqualifies you from getting a home equity loan?
A tarnished credit history, insufficient home equity, and a high debt-to-income ratio can all disqualify you from obtaining a home equity loan. Familiarize yourself with the requirements for various types of home equity loans to up your chances of meeting the criteria.
How difficult is it to get a HELOC?
How hard securing a HELOC can be is contingent on several factors, including your credit score, the home equity you have accumulated, and the stability of your income stream.
Does HELOC affect credit score?
Applying for one may temporarily cause a slight decrease in your credit score, since it will require the lender to make a hard inquiry. But making consistent, on-time payments on your HELOC should positively impact your credit score over time, too, as it demonstrates responsible borrowing behavior.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
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.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945. All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee. Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice. 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 .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
By Anneken Tappe |
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Comments Off on Finding the Retirement Strategy That’s Right for You
Saving for retirement is challenging. That’s why our three-part series this week focuses on how to get your long-term savings on track. First, we explored why habit formation is so important for long-term savings and investments. Below, we tackle why there is no one-size- fits-all solution. And later this week, we will get into how streamlining your retirement portfolio with the help of an individual retirement account (IRA) can potentially help you reach your goals.
Retirement planning is a long and personal journey. While the goal may be the same for all of us – to save enough money to sustain our life and lifestyle after retiring – our respective paths will be unique. And the great variety of investment options and retirement accounts further complicates things. There’s no one-size-fits-all solution when it comes to retirement planning.
Creating a strategy that fits your individual financial situation, long-term goals, and time horizon can help you stay on track. And that’s exactly what we’re tackling today.
Finding Your Path
A lot of your financial decisions – whether retirement-related or not – are driven by your individual circumstances, including factors such as your age, income, goals, and risk tolerance. For example, if you start saving in your 20s, you may get more bang for the money you invest through the power of compound growth (as we discussed in the first article of this series). But it may be harder to find the money to invest given that most people tend to earn less at the beginning of their career.
The first step in developing a strategy may be the trickiest: figuring out how much money you will need for retirement. A rule of thumb says you should save 10 times your annual salary. The 80% rule aims to replace 80% of your pre-retirement income by the time you leave the workforce through withdrawals from your retirement savings. Another (simpler) rule of thumb suggests saving 15% of your annual salary for retirement every year. Depending on whether you have already gotten started on saving, these rough guidelines may give you an idea how your savings to date stack up.
For most people, saving for retirement involves investing, which can provide a much higher return than a simple savings account. As such, you’ll need to consider your risk tolerance. All investments come with some risk – but some are riskier than others. Building a diversified portfolio that includes different types of investments, such as stocks, bonds, cash, and alternative investments, can help you balance your overall investment risk. And your time horizon may also play a role: Conventional wisdom suggests that younger people should invest more aggressively and gradually dial it back for more conservative investments as they approach retirement.
Tax loopholes aren’t only for the ultra-wealthy. In fact, strategically navigating your taxes is a huge part of saving for retirement. By offering tax savings on your contributions or on your eventual withdrawals, these types of accounts allow you to effectively save more. There are pros and cons to paying taxes up front or later, much of which is connected to your current and your expected tax rate. If you’re in a lower tax bracket now, saving post-tax dollars today is great. Meanwhile, if you’re in a higher tax bracket now than you expect to be in retirement, paying Uncle Sam for your eventual retirement withdrawals is a more cost efficient way to save.
If you’re a high earner in a high income tax bracket, it may be advantageous to lower your tax liability now by using an Individual Retirement Account (IRA), which are among the most popular retirement savings accounts. Contributions to a traditional IRA are tax deductible, but your withdrawals (after the age of 59½) are taxed as regular income. In contrast, with a Roth IRA, contributions are not tax deductible, but withdrawals made after age 59½ (of funds that have been held for at least five years) are tax-free. For both types of IRAs, the 2024 contribution limit was $7,000, or $8,000 over the age of 50. These limits will remain the same in 2025.
The other major type of retirement savings account is the 401(k), which is offered by an employer. With this type of savings plan, you don’t have to pay taxes on the money you deposit; and in a way, you’re shielding a portion of your income from being taxed. Withdrawals in retirement are taxed as ordinary income. But the biggest potential advantage comes if your employer offers a match: This is essentially free money to boost your savings and financial planners often recommend maximizing your 401(k) match possibilities before contributing to other retirement plans like IRAs. Last year, the 401(k) contribution limit was $23,000.
You can have both a 401(k) and an IRA that you contribute to every year. You can also use your IRA to consolidate old 401(k) from previous jobs into one account. (SoFi offers you a 1% match for any rollovers and contributions to a SoFi IRA.) We’ll discuss this in detail in the third part of our series. By combining the two types of accounts for your retirement planning you can take advantage of their benefits at the same time, potentially giving you more control over your finances. Investing through both a 401(k) and an IRA also allows you to take advantage of compounding growth with two different sums of money, potentially boosting your retirement nest egg even further.
Your Flexibility and Control
An IRA allows you to build a balanced portfolio, including stocks, bonds, mutual funds, and even real estate. This flexibility enables you to build a diversified portfolio that aligns closely with your financial goals and risk tolerance. This level of control can be particularly beneficial if you want to take a more active role in managing your retirement savings. If you’re looking to set up an account for yourself, check out the SoFi IRA and get started.
Employer-sponsored plans like 401(k)s also give you some choice in determining your investments, but they’re often much more limited. For example, you may only be able to set your risk tolerance rather than pick and choose the exact asset classes or sectors you put your money into. Other plans may allow you to choose between specific portfolios. Either way, your investing choice is likely more limited with a 401(k).
The bottom line is this: The best time to start saving and investing was yesterday (or 15 years ago). But the next best time is today. There are advantages and drawbacks to both 401(k)s and IRAs. But by combining them to save for your future, you can get the best of both worlds, maximizing both your immediate benefits (such as tax deductions and contribution matches) and long-term growth potential for a comfortable retirement.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
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According to the FICO credit scoring model, a 614 credit score is considered “fair.” If you have this score, lenders may see you as a subprime borrower, though you should still be able to get approved for certain types of loans and credit cards.
Find out what a 614 credit score means for borrowers and the types of lending products they can access.
Key Points
• A 614 credit score is categorized as “fair” in the FICO® scoring model.
• The average American credit score is 717, significantly higher than 614.
• Borrowers with a 614 score can qualify for some credit products, often with less favorable terms.
• Potential drawbacks include higher interest rates and down payments, and limited access to top credit offers.
• Strategies to improve a 614 score include timely payments, low credit utilization, and regular credit report checks.
What Does a 614 Credit Score Mean?
A credit score is a three-digit number that’s calculated using information in your credit reports, such as your history of on-time payments, length of credit history, and how much available credit you’re using. Lenders use this number to determine how likely a borrower is to default on a loan. The higher your score, the more likely a lender is to approve you for personal loans or lines of credit.
There are several types of credit scores, but the one most widely used is the FICO Score. FICO scores range from 300 to 850 and are organized into the following tiers:
• Poor: 300-579
• Fair: 580-669
• Good: 670-739
• Very good: 740-799
• Excellent: 800-850
As you can see, 614 falls within the “fair” category, which is one notch below “good.” It’s also well below the average American’s credit score of 717.
What Else Can You Get with a 614 Credit Score?
Here’s a look at how a 614 FICO score can affect your chances of getting different types of credit:
Can I Get a Credit Card with a 614 Credit Score?
While you probably won’t qualify for the best credit card offers with a 614 credit score, you may be approved for a traditional credit card or store credit card.
If you don’t qualify for a card — or can’t get one with the perks you want — then you may want to explore applying for a secured credit card. It works in the same way as an unsecured credit card except you could be required to put down a deposit equal to your credit limit.
Can I Get an Auto Loan with a 614 Credit Score?
Yes, it is possible to get an auto loan with a fair credit score, but you may be charged a higher interest rate or have to put down a higher down payment than prospective borrowers with better credit scores. Note that a 614 credit score car loan may not be offered by all lenders. Also, interest rates can vary by lender, so shop around for the best car loan terms.
While you may not qualify for certain loans or programs, it is possible to get a mortgage with a 614 FICO score. An FHA loan, for example, has a minimum credit score of 500 with a 10% down payment.
If you’re able to build your credit score a bit and strengthen your finances, a conventional mortgage may be within reach. Fannie Mae and Freddie Mac require a minimum credit score of 620 for a fixed-rate mortgage. You’ll also need a down payment of at least 3% and have a low debt-to-income ratio.
Your lender may also have further restrictions or qualifications, possibly including additional fees, a higher down payment requirement, and/or higher interest rates.
Can I Get a Personal Loan with a 614 Credit Score?
It is possible to get a personal loan or credit card consolidation loan with a credit score of 614, but as with other forms of lending, you’re likely to be charged a higher-than-average interest rate. You may also face less-attractive loan terms, including a shorter loan term or additional fees.
Use a personal loan calculator to see how different interest rates, loan amounts, and term lengths affect your possible monthly payment.
The Takeaway
Is 614 a good credit score? According to a widely used credit scoring model, it’s considered “fair,” or one notch below “good.” While the score could unlock certain lending products including credit cards, mortgages, and other types of loans, you may be charged a higher interest rate and have less-desirable terms than borrowers with better credit scores. If you can work on improving your credit score before applying to borrow money, you may find yourself in a better overall financial situation.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
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Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
