The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Personal loan interest rates can range from 6 to 36 percent and are based on various factors. Your interest rate may depend on your credit score, the lender type and other factors based on your financial situation.
Recent data shows Americans have over $241 billion in personal loan debt. Whether you have personal loan debt or are considering taking out a personal loan, this may not always be bad debt. When used responsibly, personal loans can help you get better interest rates by consolidating other debts or help when you need additional funds. When taking out a loan, it’s helpful to know the average personal loan interest rates so you can get the best deal possible.
The interest rate is a fee based on the percentage of the loan amount, so ideally, you want the lowest interest rate possible. We’re going to discuss the average interest rates based on various factors, like your credit score and lender types, to help you find a loan that has the best rates.
Average personal loan interest rates by credit score
One of the best ways to get the lowest interest rates for personal loans is by having a high credit score. There are ways to get a loan with bad credit, but these loans often have some of the highest interest rates. High interest rates mean you may pay hundreds or thousands more in interest fees when you take out a loan. Below is a chart showing the difference between interest rates when taking out a loan based on your credit score:
Credit score
Average loan interest rate
300 – 629
28.50% – 32.00%
630 – 689
17.80% – 19.90%
690 – 719
13.50% – 15.50%
720 – 850
10.73% – 12.50%
Source: Bankrate
Average personal loan interest rates by lender type
You have a variety of options when taking out a personal loan. You can go into traditional brick-and-mortar financial institutions like banks or credit unions and find personal loans online. Some of these lenders may even offer bad credit loans, but remember, these typically come with higher interest rates.
In the following sections, we show interest rates from some of the most popular lenders from each category. As you’ll see, each lender has a range of interest rates, which depends on your credit score, income and other financial information.
Average personal loan rates by bank
Personal loan interest rates from banks can range from 6.99 percent to 24.99 percent. Currently, Santander Bank offers the lowest interest rate range.
Average personal loan rates by credit union
Credit unions are another way to get personal loans, and they’re similar to banks except they’re member cooperatives and not-for-profit. Each of the credit unions listed below has lower interest rates on the higher end of the range, with none being over 20 percent.
Average personal loan rates by online lender
Many people turn to online lenders because not only are they convenient, but they’re also more likely to lend to those with bad credit or those who need a personal loan after a bankruptcy. Depending on your credit score and credit history, some of these personal loans have the highest interest rates.
5 factors that affect your personal loan interest rate
If you’re in the market for a personal loan, it’s helpful to know what lenders are looking for. This helps you get approved for the loan and the best interest rate possible. If you have poor credit, using a cosigner may help with approval, but if you want to get a personal loan without a cosigner, here’s what lenders are looking at:
Credit score and report: Your credit score and report show your credit history and how likely you are to pay back your loan. A low credit score can lead to higher interest rates.
Income: Lenders use your income to determine the loan amount and whether you can pay the amount back.
Debt-to-income ratio: Your debt-to-income ratio is a calculation of how much debt you currently have compared to your income. Ideally, it should be low.
Employment status: Employment shows a steady flow of income. If you’re self-employed or an independent contractor, it may make getting a loandifficult.
Length of loan: Shorter loan terms often come with higher interest rates.
What is a good personal loan interest rate?
What’s considered a “good” personal loan interest rate will depend on the person and their situation. Typically, a good interest rate is anything below the average rate for your credit score. Ideally, you want to improve your credit to get even better interest rates on personal loans.
How your credit score affects your personal loan interest rate
Your credit score and credit history play a big part in getting a good personal loan interest rate. As mentioned earlier, a high interest rate can cost you thousands in additional interest fees. If you have a bad credit score, you may have errors on your credit report that are hurting your credit. Lexington Law Firm offers an in-depth credit assessment that shows you where your credit stands before you apply for a loan. Get your free credit assessment today.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Nature Lewis
Associate Attorney
Before joining Lexington Law as an Associate Attorney, Nature Lewis managed a successful practice representing tenants in Maricopa County.
Through her representation of tenants, Nature gained experience in Federal law, Family law, Probate, Consumer protection and Civil law. She received numerous accolades for her dedication to Tenant Protection in Arizona, including, John P. Frank Advocate for Justice Award in 2016, Top 50 Pro Bono Attorney of 2015, New Tenant Attorney of the Year in 2015 and Maricopa County Attorney of the Month in March 2015. Nature continued her dedication to pro bono work while volunteering at Community Legal Services’ Volunteer Lawyer’s Program and assisting victims of Domestic Violence at the local shelter. Nature is passionate about providing free knowledge to the underserved community and continues to hold free seminars about tenant rights and plans to incorporate consumer rights in her free seminars. Nature is a wife and mother of 5 children. She and her husband have been married for 24 years and enjoy traveling internationally, watching movies and promoting their indie published comic books!
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
There are several possible reasons why your credit score won’t go up, such as the lender hasn’t reported to the credit bureaus yet, you have fallen behind on payments, you have high credit utilization or you have a short credit history.
A good credit score can help you get approved for loans, secure low interest rates, and receive the best terms. However, improving your credit can be tricky, especially if you feel stuck at a certain number.
If you frequently check your credit score and don’t see the number change, you may wonder, “Why won’t my credit score go up?” In this post, we’re going to dive into 10 potential reasons why your credit score is stagnant and what to do about it. Read on to learn more.
Table of contents:
1. Your credit score hasn’t been updated yet
Lenders typically report to the three credit bureaus every 30 to 45 days. Therefore, it can take up to a month for your credit score to reflect new changes. If you recently paid off an account and haven’t seen a change in your score yet, there’s no need to worry.
What to do about it: If you don’t see the update reflected in your credit report after a month or two, consider contacting your lender.
2. You’ve fallen behind on payments
Payment history is a fundamental factor that affects your credit—accounting for 35 percent of your FICO® score. If a payment is over 30 days past due, your lender will report it to the credit bureaus. Even one late payment can hurt your credit significantly. Late payments also stay on your credit report for up to seven years, although their influence on your credit report declines over time.
What to do about it: Get in the habit of making consistent on-time payments.
3. You have high credit utilization
Your credit utilization, or the amount of money you owe compared to your credit limit, is another factor that influences your credit. For example, if your credit limit is $12,000 and you owe $3,000, your credit utilization rate is 40 percent.
While using your available credit isn’t necessarily bad, a high credit utilization rate can signal to lenders that you’re reliant on credit and, therefore, are a high-risk borrower.
What to do about it: Aim to keep your credit utilization under 30 percent by reducing your spending or increasing your credit limit.
4. You have a short credit history
Your length of credit history, or the amount of time your accounts have been established, accounts for 15 percent of your FICO score. A long credit history is helpful to your credit because it provides lenders with enough data to accurately determine your credit risk. Remember that while a long credit history is beneficial, FICO assures that it’s “not required for a good credit score.”
What to do about it: Be patient and keep old credit accounts open.
5. You have negative items on your credit report
Delinquent accounts, bankruptcies, charge-offs, and collection accounts are all major negative items. If you have any of these on your credit report, they may be preventing you from improving your credit.
Although negative information will eventually fall off your credit report, the amount of time that takes depends on the type of negative item. Most negative information stays on your credit report for about seven years.
What to do about it: While not guaranteed, you can try sending a pay for delete letter or request a goodwill deletion from your creditor to get the negative items removed.
6. Your credit mix isn’t diverse
Credit mix refers to the variety of credit accounts you hold. Examples of credit accounts include credit cards, mortgages, auto loans, credit cards, installment loans, and so on. Credit mix determines 10 percent of your credit score.
What to do about it: While you don’t necessarily need one of each type of credit, consider opening new accounts to diversify your credit mix.
7. You have multiple new hard inquiries
When you submit a new credit application, the creditor will perform a hard inquiry on your credit file, which can temporarily lower your score. While the impact of a hard inquiry is only around 5 points, multiple credit inquiries can add up and cause a significant drop in your credit.
If you frequently apply for new credit, the compounding hard inquiries may be preventing you from improving your score.
What to do about it: Wait at least six months between each new credit application to limit the effect of hard inquiries on your credit.
8. Your credit score is already high
Those with very good or excellent credit scores may struggle to advance their credit standing. The better your credit score, the harder it becomes to raise it because there is less room for improvement. Once your score is in the 700s or 800s, increasing it can be challenging.
What to do about it: Keep up with your good credit habits, but be aware that progress may slow as your score increases.
9. You have errors on your credit report
Errors on your credit report can damage your credit. Review your credit report at least once a year to check for inaccurate information. According to the Consumer Financial Protection Bureau, common errors include:
Identification errors
Misreported account status
Data management errors
Inaccurate balances
What to do about it: If you find an error on your credit report, file a dispute with the credit bureaus to get it corrected.
10. You’ve been a victim of identity theft or fraud
Identity theft can wreak havoc on your credit score. Scammers can open new accounts in your name, purchase items with your credit card and more. That’s why it’s important to keep an eye out for the following warning signs of identity theft:
Charges for purchases you didn’t make
Calls from debt collectors regarding accounts you didn’t open
Accounts on your credit report that you didn’t open
Loan applications getting rejected
Mail stops being delivered to, or is missing from, your mailbox
What to do about it: If you suspect you’ve been a victim of identity theft, make sure to set up fraud alerts and freeze your credit. Ready to move the needle on your credit score? At Lexington Law Firm, we’ll determine what inaccurate negative items might be hurting your credit and address them with the credit bureaus. Among our services, we offer an Identity Theft Focus Track, created specifically for individuals financially recovering from identity theft. Get started today.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Paola Bergauer
Associate Attorney
Paola Bergauer was born in San Jose, California then moved with her family to Hawaii and later Arizona.
In 2012 she earned a Bachelor’s degree in both Psychology and Political Science. In 2014 she graduated from Arizona Summit Law School earning her Juris Doctor. During law school, she had the opportunity to participate in externships where she was able to assist in the representation of clients who were pleading asylum in front of Immigration Court. Paola was also a senior staff editor in her law school’s Law Review. Prior to joining Lexington Law, Paola has worked in Immigration, Criminal Defense, and Personal Injury. Paola is licensed to practice in Arizona and is an Associate Attorney in the Phoenix office.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
After you’ve been notified of a data breach, you should contact your bank and the three major credit bureaus as soon as possible.
When a data breach occurs, you should monitor all of your accounts for suspicious activity. Creating alerts for your banking accounts can help you react to suspicious transactions. A similar strategy is advised for your credit report; in certain cases, companies will have to provide credit monitoring services to their customers for up to 12 months.
Data breaches can lead to negative situations, such as identity theft and credit card fraud. Below, we’ll discuss what to do after a data breach occurs and explore options for reliable credit monitoring services.
Key takeaways:
A data breach occurs when cybercriminals illegally gain access to sensitive information.
In certain cases, companies will be ordered to provide credit monitoring services to their customers for up to 12 months.
The Equifax® data breach of 2017 compromised 148 million Americans and 15 million British citizens.
Table of contents:
What is a data breach?
A data breach occurs when cybercriminals and bad actors illegally access sensitive data. A data breach can happen to specific individuals and large organizations—such as the 2017 Equifax data breach, which impacted nearly 150 million Americans and 15 million British citizens.
If an organization is held accountable for a data breach by a court of law, compensation may be issued to victims. For example, the Equifax breach settlement was finalized in January 2022 and resulted in free credit monitoring services and up to $425 million of support to impacted individuals.
How do you check if your personal information was exposed?
The Data Breach Notification Act offers guidelines and regulations in the event of a data breach. Section 2 of this act states that businesses and federal agencies must tell affected individuals that their data has been leaked “without unreasonable delay.”
These specific guidelines are relevant after a data breach occurs. Here are several actionable steps if you want to take proactive measures to combat a data breach:
Intrusion detection system (IDS): This technology can monitor a network and determine if suspicious or malicious activity is underway.
Data leak checker websites: Websites like Have I Been Pwnd will help you check if one of your emails was part of a data breach.
Review your emails: If your spam and junk email boxes have an unusual amount of spam, your email could’ve been compromised.
What should you do after a data breach?
After you’ve received a notice that your data was compromised, it’s natural to feel overwhelmed or upset by this violation of your privacy. Nevertheless, taking action and making adjustments is the best way to minimize or prevent the worst outcomes.
Change your passwords
If you were part of a data breach, there’s a high likelihood that cybercriminals might possess your current login information. Changing your passwords can prevent bad actors from signing into your accounts.
Ideally, it’s best to use a complex password comprising upper and lowercase letters, special characters and numbers. The less this new password resembles your old one, the better. Furthermore, changing your password every few months is an excellent preventive measure.
Activate two-factor authentication (2FA)
Two-factor authentication (2FA) is an additional login step where users have to finish signing in on a trusted device, usually a smartphone. 2FA reduces the likelihood of a bad actor illegally accessing one of your accounts as the additional login measure (your phone) is on your person.
Look into credit monitoring services
For those wondering what credit monitoring is, the term refers to any service that watches your credit reports and alerts you about suspicious activity that doesn’t match your usual financial habits.
Credit monitoring services look for everything from fluctuations in your credit score to new accounts that have been opened in your name. Lex OnTrack is a monitoring service that tracks your credit history and helps protect your identity from fraud.
Freeze your credit with the three credit bureaus
Learning how to freeze your credit can help you stop cybercriminals from taking unauthorized actions with your credit. To fully freeze your credit, you’ll at least want to contact Equifax®, Experian® and TransUnion®—the three major credit bureaus.
Contact your bank
Speaking with your bank after you’ve been notified of a data breach is an effective way to protect your finances. You’ll have an opportunity to notify your financial institution of this unfortunate event, and you’ll also be able to review recent account activity.
If recent purchases were made on your account that don’t align with your habits, they could be tied to unlawful activity.
What states have data breach laws?
Every state in America has cybersecurity laws that protect civilians, organizations and federal agencies in the event of a data breach.The Data Breach Notification Act generally applies to all 50 states alongside territories and districts.
At the time of writing, California, Colorado, Connecticut, Utah and Virginia have unique data privacy laws that differ somewhat from their contemporaries. For instance, the California Consumer Privacy Act (CCPA) gives Californians the right to demand all information that a company and its third-party partners have on them.
3 reasons data breaches happen
Data breaches are incredibly alarming, and it’s tempting to search for an easy explanation as to why they happen. Though only a small number of them are successful, cyberattacks are quite common.
A study by the Clack School found that some computers may be attacked, on average, approximately 2,200 times each day. Some factors that raise the odds of a cyberattack succeeding are outlined below.
1. Malware attacks
Malware (or malicious software) can compromise security if someone downloads it onto their device. For example, a key logger is a type of malware that records every keystroke a user inputs. Such software could help cybercriminals steal admin credentials from an organization, then log in and access sensitive data.
2. Internal data leak
“What is a data leak?” is a fair question, as this term sounds similar to a data breach. However, a data leak occurs when an internal source releases private information to the general public. If someone working at an organization gives out confidential login details, a cybercriminal could capitalize on that and initiate a data breach.
3. Outdated software
Software updates bolster a network’s security and make it harder for hackers to slip past defenses. Repeated cyberattacks that are launched against systems with outdated software are more likely to be successful.
Monitor your credit with Lexington Law Firm
The sheer number of cyberattacks that occur each day can be alarming, but there are many ways to protect yourself from digital disturbances. A credit monitoring service is an excellent tool that works in the background and catches seemingly minute details.
Explore Lexington Law’s services, which include credit monitoring as well as assistance with challenging errors on credit reports, if any are found.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Moriah Beaver
Associate Attorney
Moriah is an attorney practicing in consumer advocacy at Lexington Law.
Before joining Lexington, she represented plaintiffs in personal injury litigation, dealing with claims arising from car accidents, slip and falls, and dog bites. Moriah studied English at Brigham Young University for her undergraduate degree and went on to graduate from Brigham Young University’s J. Reuben Clark Law School. She is from Hau’ula, Hawaii, but has been a resident of Utah for over 10 years now.
A judgment is an order issued by a judge or jury to settle a lawsuit. This decision details the rights, responsibilities, and obligations of each party. For example, if you fail to pay a debt, the lender can take you to court. In this case, the judge may order you to pay the other party as part of the court’s final judgment.
The order can be issued in one of two forms:
A monetary judgment: A judgment that orders one party to pay the other party a specific amount of money.
A nonmonetary judgment: A judgment that involves a nonmonetary type of resolution, such as the exchange of property or services. For example, a contractor may be ordered to complete a service for a client.
There are several classifications for judgments, including:
In personam: This is the most common civil judgment classification. It occurs when one party is liable to another.
In rem: Rather than involving personal liability, in rem judgments hold liability over a specific item, such as property.
Quasi in rem: Quasi in rem judgments consider the legal rights of individuals and not necessarily all parties involved.
Ultimately, if you don’t pay a debt, the lender or bill collector can file a lawsuit against you to recoup the money. The judge or jury determines if and how much money you owe. These terms are laid out in the final judgment.
What Is a Judgment on Property?
Your property includes both physical items and money. That means judgment creditors can seek debt payment from more than your wages and bank accounts. They may also take back a car you financed or other personal property. Another option is placing a lien on some of your property, such as your home.
What Property Can Be Taken to Settle a Judgment?
Creditors must follow the law when applying a judgment to take, or seize, your property. Some things are exempt—which means they can’t touch those items or properties. Some examples include the home you live in, the furnishings inside it, and your clothes. State laws identify these items and set limits based on their value.
Non-exempt property can be taken to help meet a judgment debt. Your creditor can take or leverage these possessions in the following ways:
Wage attachments. This is known as wage garnishment. When your employer receives the proper legal notice, they must withhold a percentage of your wages. These payments are sent to the judgment creditor until your debt is paid. The Consumer Credit Protection Act caps these types of garnishments. The limit is 25% of your disposable weekly wages or the amount you earn that’s above 30 times the minimum wage. The lessor of these two amounts applies. Some states set the cap even lower.
Nonwage garnishment. If you’re retired, unemployed, or self-employed, your bank account may be garnished instead. Here, too, there are exemptions. Veterans payments, social security, and disability benefits are not eligible for nonwage garnishment. Some states add even more restrictions to the garnishment of bank funds.
Property liens. If you own real estate, your judgment creditor may file a legal claim against it. These liens notify lenders of the creditor’s rights to your property. That way, if you sell your real property, the debt must be paid out of the proceeds. In many states, liens are placed automatically when a judgment is entered.
Property levies. Judgments may also allow some of your non-exempt personal property to be taken through a levy. Law enforcement may seize things like valuable collections or jewelry to be sold at auction. Sales proceeds are applied to your debt.
What Are the Types of Judgments?
Judgments come in many forms. Below is a look at the five types of judgments.
Satisfied judgment: A satisfied judgment means the debt is settled. This doesn’t necessarily mean you have paid the debt in full. It could mean there’s a new payment arrangement and you’re making regular payments.
Unsatisfied Judgment: An unsatisfied judgment means the debt is not settled yet. You’re expected to follow the court order and make payments on the outstanding debt. Until you make your final payment or come to another agreement with the other party, it will remain an unsatisfied judgment.
Vacated Judgment: If you don’t agree with the court’s initial judgment, you have the right to appeal that decision. If the judge decides to dismiss the case, the initial order becomes a vacated judgment.
Summary Judgment: If both parties agree to the basic facts of the case, either party may request to skip the trial and go straight to a summary judgment. The judge issues this final judgment without going through the process of holding a trial.
Renewed Judgment: Some states allow creditors to seek a new judgment for specific reasons. If this happens, the judge may issue a renewed judgment. This judgment may void the initial judgment or serve as an additional order.
Three Ways of Getting a Judgment
There are several ways a civil judgment can be determined.
1. Judgment After Trial
As the name suggests, a judgment after trial is a decision that occurs only after a trial. Once the judge or jury hears all the evidence and makes a final decision, the judge issues a formal judgment in the case.
2. Consent Judgment
A consent judgment occurs when both parties negotiate a final settlement. The judge must approve this final agreement, which is done by issuing a formal consent judgment.
3. Default Judgment
A default judgment occurs when the defendant fails to respond to a summons and complaint. In this case, the judge issues a default judgment in favor of the plaintiff without hearing any evidence from the defendant.
Can Judgments Affect Your Credit?
Judgments can’t directly impact your credit because the details of these orders aren’t part of your credit report. However, it’s likely that issues leading up to the final judgment could affect your credit. For example, your payment history can remain on your credit report for up to seven years. If you have any missing or late payments that led to the judgment, this history can impact your credit score.
A judgment could also have a positive effect on your credit. For example, once the debt is paid, the account balance should change to zero on your credit report. This could help lower the amount of debt you owe, which could impact your credit utilization rate.
Once the judge issues a judgment, you can use Credit.com’s Free Credit Score service to see if it had any effect on your score. As you work to rebuild your credit, you can enroll in Credit.com’s ExtraCredit® program to monitor your credit score over time.
What Is a Judgment on a Credit Report?
Judgments aren’t reported on your credit report and don’t directly impact your credit score. However, judgments are public records, so lenders could still have access to this information. This could affect your ability to secure credit in the future.
What Happens After a Judgment Is Entered Against You?
Once the judge enters a judgment, both parties must abide by the order. For example, you must pay the amount of money ordered by the judge, and the creditor must mark the account paid in full once payment is made. If you can’t pay the amount all at once, you may be able to set up a payment arrangement. You’re legally obligated to make these payments.
What Happens After a Judgment Is Entered Against You?
The court enters a judgment against you if your creditor wins their claim or you fail to show up to court. You should receive a notice of the judgment entry in the mail. The judgment creditor can then use that court judgment to try to collect money from you. Common methods include wage garnishment, property attachments, and property liens.
State laws determine how much money and what types of property a judgment creditor can collect from you. These laws vary. So, you need to look to your own state for the rules that apply. A consumer law attorney can help you understand your state’s laws on judgment collections.
What Is the Difference Between a Civil Judgment and a Criminal Judgment?
There’s a major difference between civil court and criminal court.
A civil court typically involves disputes between two parties. For instance, it could involve a case between two individuals, two organizations, or one organization and one individual. These cases often pertain to a breach of contract, an unsettled debt or a lack of services.
Unless both parties agree to the facts of the case, the judge gives each party the opportunity to present evidence. For example, if a debt collector takes you to civil court for an unpaid bill, you can provide evidence of any payments you made. After hearing the evidence, the judge issues a final judgment, known as a civil judgment.
On the other hand, criminal court involves someone accused of breaking the law. The federal, state, or local government charges the accused party. If, after holding a trial, the defendant is found guilty or the defendant pleads guilty prior to the trial, the judge issues a criminal judgment. A sentence is issued later, which could include jail time or some other form of punishment.
What Can You Do to Avoid a Judgment?
Heading off a lawsuit is the best way to avoid a judgment. To do so, don’t ignore calls and correspondence from your creditor. Reach out to learn if they’ll accept suitable payment arrangements. Educate yourself on smart ways to pay debt collectors, and consider using the services of a debt management agency.
What if the loan company or debt collector has already started the lawsuit? Don’t skip court. Show up and fight. You may win if the statute of limitations has expired.
If you haven’t made a payment on an old debt for many years, you may have a successful legal defense. Most states set the time frame between four to six years. Collectors often still file suit because they win by default if you don’t show up. So, it’s important that you go to court with proof of your last date of payment.
If you successfully defeat or avoid a judgment, don’t stop there. Take some sensible steps to help you get out of and stay out of debt. Adopting these smart financial habits can also help prevent future judgment actions.
Additional FAQs about Judgments
How Long Can the Judgment Creditor Pursue Payment?
The answer depends on where you live, since state laws differ. Some states limit collection efforts to five to seven years. Others allow creditors to pursue repayment for more than 20 years. With the right to renew a judgment over and over in many states, it may last indefinitely.
Judgment renewals may be repeated as often as desired or limited to two or three times. This is another state-specific issue. Judgments can also lapse or become dormant. The creditor must then act within a specific time frame to revive it.
What Happens When You Can’t Pay a Judgment Filed Against You?
If you own a limited amount of property, it may all be exempt from judgment collection efforts. Also, you may not work or only work part-time. With the CCPA cap, that may mean you don’t earn enough for garnishment.
This inability to pay your debt is called being judgment proof, collection proof, or execution proof. While these circumstances exist, the judgment creditor has no legal way to collect on the debt. It’s not a permanent solution. The creditor may revisit collection efforts periodically for many years.
For a more permanent solution, you may want to consider filing bankruptcy. This process can discharge or eliminate most civil judgments for unpaid debt. Exceptions apply for things like child support, spousal support, student loans, and some property liens. Speak with a bankruptcy lawyer to learn whether this will help your situation.
Can You Settle a Judgment?
If you can afford to pay a decent lump sum, you may be able to negotiate a settlement. The judgment creditor may be willing to settle if they fear you will otherwise file bankruptcy. Get the terms and settlement amount you agree upon in writing. Be sure the creditor agrees to file a satisfaction of judgment with the court after they receive your pay off.
Can a Judgment Be Challenged or Reversed?
Challenging and overturning a judgment is difficult but not always impossible. This is the case if there were errors. Perhaps you weren’t notified of the suit or it was never your debt to begin with. Consult with an attorney to find out whether you have grounds to challenge the decision.
If you want to challenge a judgment, act fast. If you received prior notice of the case, you may have up to six months to reopen it. If you weren’t notified, you likely have up to two years to appeal. By reopening the case, you have the opportunity to fight the claim anew.
Do Credit Reports Still Include Judgments?
For many years, credit reports included judgment information. But that changed in 2017. The National Consumer Assistance Plan is responsible for creating more accurate credit data requirements. These changes resulted in the removal of civil debt judgments from credit reports.
Judgments are still a matter of public record. But the NCAP now requires that there be identifying information on these records for more accuracy. That data includes a social security number or date of birth along with the consumer’s name and address.
Public records cannot include this type of identifying information. It would violate privacy laws. This is the reason these judgments are no longer reported on credit files.
How Do You Find Out if You Have Any Judgments Against You?
You should receive a summons when you’re being sued. So, you can expect a default judgment will follow if you don’t show up in court. You can also expect a notification when a judgment is entered against you.
Mistakes happen, though. You may have missed the notice or moved to a new address. If that happens, you may not learn of the judgment until collection actions start.
What if You Find a Judgment on Your Credit Report?
Take action if you learn that judgments are still being reported by Equifax, Experian, or Trans Union. The NCAP eliminated this practice, so if there’s a judgment on your report, this is definitely something that you should dispute. Credit repair services, like Lexington Law Firm*, can help you challenge the errors on your behalf with the credit bureaus and request that they correct your report.
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Disclosure: Credit.com and CreditRepair.com are both owned by the same company, Progrexion Holdings Inc. John C Heath, Attorney at Law, PC, d/b/a Lexington Law Firm is an independent law firm that uses Progrexion as a provider of business and administrative services.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Some credit facts you need to know are your credit score is based on five key factors, FICO credit scores range from 300 to 850, checking your own credit won’t hurt your score, and twelve more facts outlined below.
With all of the misleading and incorrect information about credit floating around, it’s no wonder some of us feel lost when it comes to our credit reports and credit scores. Fortunately, we’re here to help set everything straight with these simple and clear explanations.
We’ve taken the time to compile the most important credit facts you need to know to understand your credit and everything that impacts it. Just as importantly, we’re setting the record straight when it comes to credit myths that have been lingering for too long. Read on to learn everything you’ve always wanted to know about credit.
1. Your credit score is based on five key factors
Most lenders make their decisions using FICO credit scores, which are based on five key factors. That means that when you apply for a new credit card or loan, these are the primary influences on whether you’ll end up getting approved. Here are the five factors, in order of importance: payment history, credit utilization, length of credit history, credit mix and new credit inquiries.
35% – Payment history. Your ability to consistently make payments has the biggest impact on your score. Having late and missed payments is detrimental to your credit score, while a streak of on-time payments has a positive effect.
30% – Credit utilization. Your utilization measures how much of your available credit you’re using across all of your cards. By using one-third or less of your total credit limit, you could help improve your credit.
15% – Length of credit history. In general, having a longer credit history is helpful, though it depends on how responsibly you’ve used credit over time. Using credit well over time signals to lenders that you can be trusted to manage your finances.
10% – New credit. Applying for new credit leads to hard inquiries, which can negatively impact your credit score. Spacing out your new credit applications—and only applying for credit when you need it—helps your score.
10% – Credit mix. Having a variety of different types of credit—like credit cards, an auto loan or a mortgage—can influence your score as well. A diverse credit portfolio demonstrates your ability to successfully manage different types of credit.
With the knowledge of exactly how your score gets calculated, you can make smarter decisions with credit.
Bottom line: Credit scores aren’t as mysterious as they first appear, and you have control over all of the factors that determine your score.
2. Credit reports are different than credit scores
Although they are related, a credit report and a credit score are different. Also, it’s a bit misleading to talk about a single credit report or a single credit score, because the reality is that you have several different credit reports, and your credit score can be calculated in many different ways.
A credit report is a collection of information about your credit behaviors, like the accounts you have and when you make payments. Three main bureaus—Experian, Equifax and TransUnion—each publish a separate credit report about you.
A credit score uses the information in your credit report to create a numerical representation of your creditworthiness. In other words, all of the information in your report is simplified into a single number that gives lenders an idea of how likely you are to repay a debt.
Surprisingly, your credit report does not include a credit score. Instead, lenders who access your report use formulas to determine a score when you apply for credit. The most common scoring models are FICO and VantageScore, but lenders can make modifications to the calculations to give more weight to areas that are more important to them.
Bottom line: You’ll want to be familiar with both your credit reports and your credit scores, as they each play a role in helping you obtain new credit.
3. Negative credit items will eventually come off your credit report
Negative items on your credit report can cause damage to your credit score. Negative items include late payments, collection accounts, foreclosures and repossessions.
Although these items can lead to significant drops in your credit score, their effect is not permanent. Over time, negative items have a smaller and smaller impact on your score, as long as your credit behaviors improve so that more recent items are more favorable.
Additionally, most negative items should remain on your report for seven years at the most due to the regulations set by the Fair Credit Reporting Act. A bankruptcy, on the other hand, can last up to 10 years in some cases.
Bottom line: Negative items can cause a decrease in your credit score, but they aren’t permanent. Start building new credit behaviors and your score can recover over time.
4. FICO credit scores range from 300 to 850
One of the most common credit scoring models is produced by the Fair Isaac Corporation, also known as FICO. While you may hear “FICO score” and “credit score” used interchangeably, there are in fact several different scoring models, so you could have a different credit score depending on which lender or financial institution you’re working with. The score you’re assigned by FICO will usually always be in a range from 300 to 850.
Accessing your FICO score gives you the chance to have a high-level overview of your credit health. Scores that are considered good, very good or exceptional often make it much easier to get new credit cards or loans when you need them. On the other hand, scores that are fair or poor can make getting new credit more difficult.
Here’s an overview of the FICO scoring ranges:
800 – 850: Exceptional
740 – 799: Very Good
670 – 739: Good
580 – 669: Fair
300 – 579: Poor
Remember, though: credit scores are not fixed and permanent. Your score responds to factors like payments, utilization and credit history, so positive decisions now will benefit your score in the long term.
Bottom line: The FICO scoring ranges lay out broad categories to give you a sense of how you’re doing with credit—and can also help you set a goal for where you want to be.
5. The majority of lenders use FICO scores when making decisions
While there are multiple credit scoring models, the majority of lenders check FICO scores when making decisions. That means that when you apply for new credit—whether it’s a credit card, a loan or a mortgage—the score that’s more likely to matter is your FICO score.
That’s important to know, because many free credit monitoring services will show you score estimates or your VantageScore. Some credit card companies provide a FICO score, however, and you can also request to see the credit score that lenders used to make their decision during the application process.
Fortunately, credit scoring models tend to reference the same data and weight factors fairly similarly. That means if you make on-time payments, keep your utilization low, avoid opening up too many new accounts and have a consistent credit history with a variety of accounts, you’ll probably be in good shape regardless.
Bottom line: Knowing your FICO score can help you have an idea of how lenders will view your application for new credit.
6. You have many different types of credit scores
Credit scores vary based on the credit bureau reporting them and the credit scoring model used. The major credit bureaus all have slightly different information regarding your credit history. This means that these three, along with other credit reporting agencies, report several FICO credit scores to lenders to account for different information they’ve collected.
There are also different scores specific to particular industries. For example, auto lenders review different risk factors than mortgage lenders, so the scores each lender receives might differ. Although it can get confusing, the most important things to remember are the five core factors that affect your credit score.
Bottom line: Although many people reference their credit score in the singular, the truth is that there are many different types of credit scores that take into account different factors.
7. Checking your own credit won’t hurt your score
Many people believe that checking their credit score or credit report hurts their credit, but fortunately, this isn’t true. Getting a copy of your credit report or checking your score doesn’t affect your credit score. These actions are called “soft” inquiries into your credit, and while they are noted on your credit report, they shouldn’t have any effect on your score.
Hard inquiries, on the other hand, are noted when lenders look at your credit during an application process—and these can temporarily reduce your score. This is used to discourage you from applying for new credit too frequently. However, the effect is typically small, and after a couple of years the notation of a hard inquiry will leave your report.
Bottom line: You can check your own credit report and credit score without any negative effect—and we actually encourage you to do so to stay on top of your credit health.
8. You can check your credit score and credit reports for free
There are three main ways to check your credit for free. You’ll likely want to take a look at both your credit reports and your credit scores. Here’s how to get a hold of both of those:
You’re entitled to a free credit report once each year by visiting AnnualCreditReport.com, a government-sponsored website that gives you access to your reports from TransUnion, Experian and Equifax.
You may be able to check your credit score free by contacting your bank or credit card company. Additionally, many free services—like Mint—enable you to monitor your score for free. Just make sure to note which kind of credit score you’re seeing, because there are many different scoring methods.
The information you find in your credit report lays out the factors that determine your credit score. By scanning your report closely, you’ll likely find out the best strategy for improving your score—for instance, by improving your payment history or lowering your utilization.
Bottom line: Information about your credit is freely available, so take advantage of those resources to stay on top of your credit report and score.
9. Your credit score can cost you money
Ultimately, the purpose of credit scores is to help lenders determine whether they should offer you new credit, like a loan or a credit card. A lower score indicates that you may be at greater risk for default—which means the lender has to worry that you won’t pay back your debts.
To offset this risk, lenders often deny credit applications for those with lower scores, or they extend credit with high interest rates. These interest rates can cost you a lot of money over time, so working to improve your credit score can have a measurable effect on your financial life.
Consider, for example, a $25,000 auto loan. With a fair credit score, you may secure an interest rate of 5.3 percent—so you’ll pay a total of $3,513 in interest over five years. With an excellent credit score, your rate could drop to 3.1 percent, and you’ll save nearly $1,500 in interest charges over that same five-year period.
Bottom line: A good credit score can have a positive impact on your finances, and a bad score can cost you money in interest charges.
10. Canceling old credit cards can lower your score
If you have a credit card that you’re no longer using, you may be tempted to close the account entirely. Before doing that, though, consider how it could impact your credit score.
Recall that two credit factors are utilization and length of credit history. Closing an old account could affect one or both of those factors when it comes to calculating your score.
Your credit utilization could drop after closing an account because your credit limit will likely be lower. Since utilization represents all of your balances divided by your total credit limit, your utilization will go up if your credit limit goes down (and if your balances stay the same).
Your length of credit history could be lowered if you close an older account that is raising the average age of your credit.
Some people worry that having a zero balance on their credit card can negatively impact their score. This is just a credit myth. A zero balance means you aren’t using the card to make any purchases. Keeping the credit card open while not using it actually works to your benefit. You’re able to contribute to the length of your credit history, while not risking the chance of debt and late payments.
You may need to use the card every now and then to avoid having it closed. Additionally, if the card has an annual fee, you may need to close the card or ask to have the card downgraded to a version that does not have a fee. Still, if there’s a way to keep the card open, it’s often good to do so even if you don’t plan to regularly use it.
Bottom line: An old credit card can benefit your credit score even if you aren’t using it anymore.
11. You can still get a loan with bad credit
It’s true that getting a loan can be more difficult with bad credit, but it’s not impossible. There are bad credit loans specifically for people with lower credit scores. Note, however, that these loans often come with higher interest rates—or they require some sort of collateral that the lender can use to secure the loan. That means if you don’t pay your loan back, the lender will be able to seize the property you put up as collateral.
If you don’t need a loan immediately, you could consider trying to rebuild your credit before applying. There are credit builder loans, which are specifically designed to help you build up a strong payment history and improve your credit in the process. Unlike a traditional loan, you pay for a credit builder loan each month and then receive the sum after your final payment. Since these loans represent no risk to lenders, they’re often willing to extend them to people with poor credit history looking to raise their score.
Bottom line: You can get a loan even with bad credit—but sometimes it’s wise to find ways to raise your score before applying.
12. Credit scores aren’t the only deciding factor for lending decisions
While credit scores are important in lending decisions, lenders may take other factors into account when deciding whether to offer you new credit. For example, your income and employment can play a significant role in your approval odds. Additionally, some loans (like auto loans and mortgages) are secured by collateral that the lender can seize if you default. These loans may be considered less risky for the lender in certain cases because the asset can help offset any losses from nonpayment.
In many cases, your debt-to-income ratio is also an important factor in whether you’re approved for a loan or credit card. Lenders consider your current monthly debt payments (from all sources) as well as your monthly income to determine whether you may be overextended financially.
Two different people may pay $1,500 each month for student loans, a car payment and a mortgage. That said, if one individual makes $3,500 each month and the other makes $8,000 each month, their situations will be considered very differently by a potential lender.
Bottom line: Keeping your credit score high can help you secure credit when you need it, but you’ll want to stay on top of all aspects of your financial health.
13. Your credit report can help you spot fraud
Regularly checking your credit report can help you notice fraud or identity theft. If someone is using your information to open accounts, they will show up on your credit report.
If you notice an account that you did not open, you’ll want to start taking steps to protect your identity from any further damage. You may also want to freeze or lock your credit, which prevents anyone from using your information to open up more accounts.
Bottom line: Reviewing your credit report provides you an opportunity to notice when something is amiss.
14. Joint accounts affect your credit scores, but you do not have joint scores
If you have a joint account with someone else, that account will be reflected on both of your credit reports. For example, a loan that was opened by you and your spouse will show up for both of you—and will affect both of your credit scores. That said, your credit history, credit report and credit score remain separate. No one—including married couples—has a joint credit report or joint credit score.
In addition to joint accounts, you may also have authorized users on your credit card, or be an authorized user yourself. Authorized users have access to account funds, but they are not liable for debts. That means that if you make someone an authorized user on your credit card, they can rack up charges, but you’ll be on the hook if they don’t pay.
Because joint account owners and authorized users can influence credit scores in significant ways, we advise you to be careful about who you open accounts with or provide authorization to.
Bottom line: Even though joint account owners and authorized users can influence someone else’s credit, there are no shared credit reports or joint credit scores.
15. Many credit reports contain inaccurate credit information
The Federal Trade Commission found that one in five people has an error on at least one of their credit reports, and these inaccuracies can greatly impact your credit. (Also see this 2015 follow-up study from the FTC for more information regarding credit report errors.) This is why you should frequently check your credit report and dispute any inaccurate information. For example, since payment history accounts for 30 percent of your credit score, one wrong late payment can significantly hurt your score.
It’s important to get your credit facts straight so you understand exactly how different things impact your score. One of the first things you should learn is how to read your credit report so you can quickly spot discrepancies and ensure that the information reported is fair and accurate.
After scrutinizing your credit report, you can look into other ways to fix your credit, like paying late or past-due accounts, so you can help your credit with your newfound knowledge. You can also take advantage of Lexington Law Firm’s credit repair services to get extra help and additional legal knowledge to assist you.
Bottom line: Your credit report could have inaccurate information that’s hurting your score unfairly. Fortunately, there is a credit dispute process that can help you clean up your report and ensure all of the information on it is correct.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Nature Lewis
Associate Attorney
Before joining Lexington Law as an Associate Attorney, Nature Lewis managed a successful practice representing tenants in Maricopa County.
Through her representation of tenants, Nature gained experience in Federal law, Family law, Probate, Consumer protection and Civil law. She received numerous accolades for her dedication to Tenant Protection in Arizona, including, John P. Frank Advocate for Justice Award in 2016, Top 50 Pro Bono Attorney of 2015, New Tenant Attorney of the Year in 2015 and Maricopa County Attorney of the Month in March 2015. Nature continued her dedication to pro bono work while volunteering at Community Legal Services’ Volunteer Lawyer’s Program and assisting victims of Domestic Violence at the local shelter. Nature is passionate about providing free knowledge to the underserved community and continues to hold free seminars about tenant rights and plans to incorporate consumer rights in her free seminars. Nature is a wife and mother of 5 children. She and her husband have been married for 24 years and enjoy traveling internationally, watching movies and promoting their indie published comic books!
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Becoming an authorized user on an open credit account, paying down student loans and securing credit builder loans can help young adults build credit.
Learning how to build credit at 18 can pay dividends throughout your life and help you explain financial concepts to others. Length of credit history is one of many factors that impact your overall credit score, so building credit early on can make it easier to secure credit cards and loans in the future.
Here, you can learn how to build credit at 18 and better understand which factors influence your credit health. You can also discover how Lexington Law Firm can help you improve your financial literacy.
Key takeaways:
You don’t have a credit score until you take actions that are reported to credit bureaus.
Length of credit history makes up 15 percent of your FICO® credit score.
Paying down student loans will positively affect your credit over time.
Table of contents:
1. Learn what credit score you start with
Starting credit scores vary from person to person and are largely based on each individual’s financial habits. When you first secure a loan, a credit card or a line of credit, your credit habits during the following six months will determine your starting score. Afterward, your credit score can increase or decrease based on several factors.
Who provides credit scores?
Credit reporting bureaus keep track of your credit history and provide reports based on your financial habits. Equifax®, Experian® and TransUnion® are the three main credit bureaus you can request a credit report from. Your credit score will be based on the information found in your credit report.
The law requires each bureau to provide at least one free report each year. Checking one of your credit reports every few months throughout the year can help you track your credit habits and progress.
2. Become an authorized user on a credit card
Just like other adults, young adults can become authorized users on another person’s credit card with the cardholder’s permission. With this method, an individual without any credit history can make purchases with a credit card and gradually build credit.
The caveat to this method is that all activity with a credit card will affect everyone connected to it. If a young adult gains access to one of their parents’ credit cards, the child’s activity will increase or decrease their parent’s credit score as well as their own.
3. Apply for a student loan
As previously mentioned, length of credit history can positively impact your credit score. For many young adults, a student loan will be their first credit account until they can acquire a credit card.
Paying off your loan might temporarily cause your score to dip, as your oldest account will be closed. However, regularly making timely payments will benefit your overall credit score far more than this dip will hurt it.
4. Secure a credit builder loan
Credit builder loans are helpful options for individuals with no credit history and people looking to repair their credit. These loans often have flexible requirements for applicants, though they typically have higher-than-average interest rates and brief repayment terms.
Community banks, credit unions and online lenders offer various credit builder loans. Large commercial banks don’t usually offer these loans, as their small payout amounts (normally $300 – $1,000) aren’t helpful to their everyday operations.
5. Frequently review your credit report
Challenging an error on your credit report and getting it removed can be an effective way to improve your credit. To discover these issues, it helps to routinely check your credit reports throughout the year.
Equifax, Experian and TransUnion all accept challenges by phone or online, and Lexington Law Firm can also help you challenge any errors on your report. Explore our services and see what features our tiered plans provide.
6. Space out your credit card applications
Every time you apply for credit, a hard inquiry occurs. This means that a third party (i.e., the bank offering the credit card you applied for) asked to review your credit report. Hard inquiries can appear on your report for years, but they’ll generally only hurt your credit for 12 months.
Issues can arise if you apply for too many credit cards or other lines of credit in a short period. Those dings against your credit can mount and damage your credit. On the other hand, spacing out your applications can help keep your credit healthy and stable.
7. Manage your credit utilization ratio
Your credit utilization measures your current account balances against your total credit limit. The higher your utilization is, the more negatively it will affect your credit. Ideally, it’s best to keep your utilization below 30 percent, or even 10 percent if possible.
Here’s an example to help visualize credit utilization. If you have a total credit limit of $5,000 and you’re currently using $500 of your available credit, your credit utilization will be 10 percent.
8. Use a credit monitoring service
Credit monitoring simply refers to reviewing credit reports and making decisions based on that information, whether you see inaccurate information that needs to be fixed, or accurate information that shows you where you can improve your credit usage. People can do this process themselves or seek out a credit monitoring service for help. Institutions like banks, credit unions and the three credit bureaus all provide distinct credit monitoring services.
Learn to manage credit with Lexington Law Firm
Young adults looking to build and manage their credit have many resources at their disposal. Still, professional advice from individuals with years of experience can make a big difference. Lexington Law Firm can provide a free credit assessment to help you get a sense of where your credit is starting and where you may want to go from here.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Brittany Sifontes
Attorney
Prior to joining Lexington, Brittany practiced a mix of criminal law and family law.
Brittany began her legal career at the Maricopa County Public Defender’s Office, and then moved into private practice. Brittany represented clients with charges ranging from drug sales, to sexual related offenses, to homicides. Brittany appeared in several hundred criminal court hearings, including felony and misdemeanor trials, evidentiary hearings, and pretrial hearings. In addition to criminal cases, Brittany also represented persons and families in a variety of family court matters including dissolution of marriage, legal separation, child support, paternity, parenting time, legal decision-making (formerly “custody”), spousal maintenance, modifications and enforcement of existing orders, relocation, and orders of protection. As a result, Brittany has extensive courtroom experience. Brittany attended the University of Colorado at Boulder for her undergraduate degree and attended Arizona Summit Law School for her law degree. At Arizona Summit Law school, Brittany graduated Summa Cum Laude and ranked 11th in her graduating class.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
The average student loan debt is $37,557.60 per borrower, though the exact amount varies significantly from person to person.
Conversations around student loan debt forgiveness have called to attention a staggering statistic: in the middle of 2023, Americans held a collective $1.63 trillion in federal student loans spread amongst more than 43 million borrowers.
The average student loan debt is $37,557.60 per borrower, though the exact amount varies significantly from person to person depending on age, gender and education level, among other characteristics.
The following chart captures the staggering rise of average student loan debt since 2007 by displaying the average debt, total debt and total number of borrowers and how they have changed over time.
Average student loan debt over time
Year
Average debt
Total debt
Borrowers
2007
$18,233.22
$516 billion
28.3 million
2008
$19,297.66
$577 billion
29.9 million
2009
$20,467.29
$657 billion
32.1 million
2010
$21,865.89
$750 billion
34.3 million
2011
$23,232.88
$848 billion
36.5 million
2012
$24,751.96
$948 billion
38.3 million
2013
$26,262.63
$1.04 trillion
39.6 million
2014
$27,764.13
$1.13 trillion
40.7 million
2015
$29,086.54
$1.21 trillion
41.6 million
2016
$30,732.86
$1.30 trillion
42.3 million
2017
$32,159.62
$1.37 trillion
42.6 million
2018
$33,566.43
$1.44 trillion
42.9 million
2019
$35,198.14
$1.51 trillion
42.9 million
2020
$36,596.74
$1.57 trillion
42.9 million
2021
$37,096.77
$1.61 trillion
43.4 million
2022
$37,471.26
$1.63 trillion
43.5 million
2023
$37,557.60
$1.63 trillion
43.4 million
Source: U.S. Department of Education
After accounting for inflation, the average student loan debt has increased by more than 50 percent since 2007. According to the Pew Research Center, the median purchasing power of Americans has hardly risen in the past four decades, so it stands to reason that student loan debt is an ever-increasing source of financial burden.
Student loan debt has ballooned over the past 15 years. At the beginning of 2007, just 28 million borrowers held around $500 billion in student loan debt—or an average of $18,233 per borrower. In 2023, the number of borrowers increased to about 43 million, who collectively hold more than $1.6 trillion in debt, which amounts to an average of $37,557.60 per person.
Although average student loan debt is more than $37,000, this figure is somewhat skewed since some students have extraordinarily large sums of debt that raise the overall average. The greatest number of borrowers owe just $10,000 to $20,000 in student loans, but more than 3 million are over $100,000 in debt from federal student loans.
Using the most recent available data from the U.S. Department of Education, we’ve compiled detailed statistics about the average student loan debt for Americans. Read on to see more, or use the links below to jump to a specific section.
Average student loan debt:
Average student loan debt by state
While student loan debt is a national concern, the effects are felt differently in various states across the country. Many states have average student loan debt that hovers around the $37,645 national average, but there are several notable outliers. North Dakota, for instance, has the lowest average student loan debt at $30,000, while Maryland has the highest average student loan debt at $43,115.
Though they are not technically states, the District of Columbia has a very high average student loan debt of $54,347, and the U.S. territory of Puerto Rico has a relatively low average student loan debt of $29,577.
Here’s a list of U.S. states along with their average student loan debt, total student loan debt and total borrowers using data as of June 30, 2023.
Average student loan debt by state
State
Average debt
Total debt
Borrowers
Alabama
$37,265.17
$24.2 billion
649,400
Alaska
$34,493.45
$2.4 billion
68,700
Arizona
$35,543.01
$32.5 billion
917,300
Arkansas
$33,508.38
$13.4 billion
399,900
California
$37,343.36
$149 billion
3.99 million
Colorado
$36,939.31
$29.4 billion
795,900
Connecticut
$36,055.35
$18.5 billion
513,100
Delaware
$38,173.65
$5.1 billion
133,600
District of Columbia
$54,347.83
$6.5 billion
119,600
Florida
$39,037.04
$105.4 billion
2.7 million
Georgia
$41,529.41
$70.6 billion
1.7 million
Hawaii
$37,995.15
$4.7 billion
123,700
Idaho
$33,139.27
$7.4 billion
223,300
Illinois
$39,437.50
$63.1 billion
1.6 million
Indiana
$33,105.92
$30.3 billion
918,300
Iowa
$30,758.71
$13.5 billion
438,900
Kansas
$33,127.89
$12.9 billion
389,400
Kentucky
$33,110.42
$20.3 billion
613,100
Louisiana
$34,777.39
$23.2 billion
667,100
Maine
$33,854.42
$6.5 billion
192,000
Maryland
$43,115.60
$36.7 billion
851,200
Massachusetts
$34,922.69
$32.3 billion
924,900
Michigan
$36,928.57
$51.7 billion
1.4 million
Minnesota
$33,953.31
$27.2 billion
801,100
Mississippi
$36,904.50
$16.5 billion
447,100
Missouri
$35,536.60
$30 billion
844,200
Montana
$33,690.66
$4.4 billion
130,600
Nebraska
$32,449.54
$8.2 billion
252,700
Nevada
$33,996.68
$12.3 billion
361,800
New Hampshire
$34,341.36
$6.7 billion
195,100
New Jersey
$35,416.67
$44.9 billion
1.2 million
New Mexico
$34,022.39
$7.9 billion
232,200
New York
$37,960.00
$94.9 billion
2.5 million
North Carolina
$36,857.14
$51.6 billion
1.4 million
North Dakota
$30,000.00
$2.7 billion
90,000
Ohio
$35,000.00
$63 billion
1.8 million
Oklahoma
$31,874.88
$16.1 billion
505,100
Oregon
$37,415.59
$20.5 billion
547,900
Pennsylvania
$35,000.00
$66.5 billion
1.9 million
Puerto Rico
$29,577.05
$10 billion
338,100
Rhode Island
$32,885.91
$4.9 billion
149,000
South Carolina
$38,360.14
$29.1 billion
758,600
South Dakota
$31,746.03
$3.8 billion
119,700
Tennessee
$36,557.93
$32.5 billion
889,000
Texas
$33,447.37
$127.1 billion
3.8 million
Utah
$33,125.00
$10.6 billion
320,000
Vermont
$38,071.07
$3 billion
78,800
Virginia
$39,818.18
$43.8 billion
1.1 million
Washington
$36,176.03
$29.1 billion
804,400
West Virginia
$32,159.93
$7.4 billion
230,100
Wisconsin
$32,231.85
$23.8 billion
738,400
Wyoming
$30,357.14
$1.7 billion
56,000
Source: U.S. Department of Education
Total student loan debt for each state correlates strongly with population, so California ($149 billion), Texas ($127.1 billion) and New York ($94.9 billion) have the largest amount of debt among all states. The smallest amount of debt belongs to Wyoming, which holds just $1.7 billion among 56,000 borrowers—though that is nearly 10 percent of the state’s population with some sort of student loan debt.
Average student loan debt by age
Student loan debt varies significantly by age, with those ages 50 to 61 holding the highest average debt at $45,584.62. On the other hand, the greatest number of borrowers are ages 25 to 34 (14.9 million total borrowers), and the greatest amount of debt is held by those ages 35 to 49 ($613 billion total debt). Those 62 or older represent less than 6 percent of total borrowers who hold just $92 billion—less than any other age group.
The following chart shows the average student loan debt, total student loan debt and number of borrowers for each major age group.
Average student loan debt by age
Age
Average debt
Total debt
Borrowers
24 and younger
$14,383.35
$97.8 billion
6.8 million
25 to 34
$32,801.32
$495.3 billion
15.1 million
35 to 49
$43,000.00
$632.1 billion
14.7 million
50 to 61
$45,584.62
$296.3 billion
6.5 million
62 and older
$42,518.52
$114.8 billion
2.7 million
Source: U.S. Department of Education
The average debt for each age group is skewed slightly upward by a small number of people who hold a significant amount of student loan debt—in some cases $200,000 or more. Across borrowers ages 25 to 61, it is most common to have between $20,000 and $40,000 of student loan debt, whereas those under 25 generally have between $10,000 and $20,000. Most borrowers above age 62 have less than $5,000 in debt.
Across all age groups, a total of 11.7 million borrowers owe more than $40,000 in student loan debt—meaning around 25 percent of total borrowers have more debt than average.
Average student loan debt by race and gender
Student loan debt is not distributed equally among races and genders, as borrowing patterns tend to vary substantially. While Asian students tend to borrow the least amount of money to fund their education, Black students tend to borrow the most. In general, a smaller percentage of white students (67 percent) and Asian students (43 percent) took out loans for their education than Hispanic students (70 percent) and Black students (86 percent).
Here is a full look at how students of different races and genders funded their education using student loans.
Average student loan amount borrowed by race and gender
Race or ethnicity
Gender
Average borrowed
White
Male
$29,862
Female
$31,346
Black or African American
Male
$35,665
Female
$37,558
Hispanic or Latino
Male
$27,452
Female
$27,029
Asian
Male
$25,507
Female
$25,252
Source: American Association of University Women
Many women take loans out for four-year for-profit universities, which tend to charge higher tuition, leading to larger student loan burdens after graduation. The American Association of University Women found that women hold nearly two-thirds of student loan debt, and many women manage debt payments while also managing housing, food or childcare costs on an average post-graduation salary of about $35,000.
Among Black women, 57 percent of college graduates report difficulty repaying student loans despite earning a bachelor’s degree or higher. A 2022 study by The Education Trust also found that 12 years after enrolling in college, Black women find themselves owing 13 percent more than the amount they initially borrowed, whereas White men have managed to reduce their debt by 44 percent in the same time frame.
Average student loan debt by repayment status
The average student loan debt varies according to repayment status, as student loans are treated differently for students in school, throughout the post-graduation grace period, amid repayment or during deferment, forbearance or default. For students in school and during the post-graduation grace period, no payments are required—though interest may continue to accrue for unsubsidized loans. Deferment and forbearance are similar, though no interest accrues with deferment as it typically does with forbearance.
The following chart shows the average student loan debt for those with different repayment statuses. Keep in mind that the below chart is based on data from Q3 2023. Prior to that, in March 2020, many major shifts occurred in loan statuses due to the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The following chart shows the average student loan debt for those with different repayment statuses.
Average student loan debt by repayment status
Status
Average debt
Total debt
Borrowers
In school
$17,903.85
$93.1 billion
5.2 million
Grace
$23,923.08
$31.1 billion
1.3 million
Repayment
$33,000.00
$9.9 billion
300,000
Deferment
$36,571.43
$102.4 billion
2.8 million
Forbearance
$40,260.07
$1,099.1 trillion
27.3 million
Default
$21,844.44
$98.3 billion
4.5 million
Source: U.S. Department of Education
While temporary government action has offered reprieve to millions of student loan borrowers, a looming financial crisis still threatens as high-interest loans prevent many people from accumulating wealth, purchasing homes or starting families.
Total student loan debt has tripled over the past 15 years—and in that time, it has passed both auto loans and credit card debt for the greatest share of non-housing debt in the United States, according to data from the Federal Reserve Bank.
With student loan debt on the rise, many people were struggling to make payments before the CARES Act. Now that payments have restarted as of October 2023, you’ll want to make sure you’re making payments on time. Student loan debt and payments can have an impact on your credit, so getting a handle on that debt is crucial.
If you need help with cleaning up your credit report or getting your credit back on track, our services at Lexington Law Firm could help. The combination of debt from student loans, credit cards, mortgages and auto loans can be overwhelming and make it hard to maintain good credit, but professional support can provide the boost you need to overcome these temporary obstacles.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Alexis Peacock
Supervising Attorney
Alexis Peacock was born in Santa Cruz, California and raised in Scottsdale, Arizona.
In 2013, she earned her Bachelor of Science in Criminal Justice and Criminology, graduating cum laude from Arizona State University. Ms. Peacock received her Juris Doctor from Arizona Summit Law School and graduated in 2016. Prior to joining Lexington Law Firm, Ms. Peacock worked in Criminal Defense as both a paralegal and practicing attorney. Ms. Peacock represented clients in criminal matters varying from minor traffic infractions to serious felony cases. Alexis is licensed to practice law in Arizona. She is located in the Phoenix office.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
VantageScore® and FICO® use somewhat different factors to determine credit scores. They also have separate requirements for credit history and distinct credit score ranges.
VantageScore® and FICO® are both accurate credit scoring models with unique nuances. For example, FICO treats credit mix and age of credit as two separate categories, while VantageScore lumps them into one category (mix and age of credit).
Lenders can use your FICO score and VantageScore when deciding to approve or decline your loan applications. Learning how both models work can help you have a positive impact on your credit. We’ll compare and contrast FICO and VantageScore to help answer questions like “Why are my credit scores different?”
Key takeaways
VantageScore and FICO are both accurate scoring models that use different factors to calculate your credit score.
FICO was established in 1981, while VantageScore was founded in 2006.
Payment history impacts VantageScores and FICO scores the most
Table of contents:
What is a FICO score?
Your FICO credit score is a credit scoring model created by the Fair Isaac Corporation (FICO) that is based on information in your credit reports with the three major credit bureaus—Equifax®, Experian® and TransUnion®. FICO score 8 is the most popular version of this model, and other versions can specifically weigh your habits with auto loans and credit cards.
What is a VantageScore?
Your VantageScore is also based on information in your credit reports with the three major credit bureaus, and it was created by those same credit bureaus as an alternative to the FICO scoring model. VantageScore 3.0 is the most commonly used version of this tool, which debuted in 2013. VantageScore 4.0 incorporates machine learning to analyze a person’s credit habits over time.
Why are my FICO score and VantageScore different?
There are multiple reasons why your FICO score and VantageScore may differ, and it comes down to the way each model calculates scores. Here are several ways that these popular scoring models differ from each other.
Creation and history
The Fair Isaac Corporation was founded in 1956 (then called Fair, Isaac and Company), and they created the FICO score model in 1981. The corporation’s long-standing history is one of the reasons why so many lenders use its scoring models.
VantageScore Solutions, LLC, created the VantageScore model to gauge your creditworthiness using a different formula than FICO. This model was created in 2006, and many lenders have adopted it since.
Minimum scoring criteria
FICO requires at least six months of credit activity to generate a credit score. Moreover, your credit report must display a tradeline (which refers to an item such as a credit card or line of credit) with at least six months of activity.
VantageScore simply asks that clients have at least one tradeline item on their credit reports. There’s also no minimum monthly requirement for that item.
Credit score values
When comparing your VantageScore vs. FICO score, knowing which factors affect each model is important.
FICO Score 8 consists of the following five factors:
Payment history (35 percent): Gauges how often you make payments on time.
Accounts owed (30 percent): Weighs how much of your available balance you’ve used.
Credit age (15 percent): Measures the average age of your open credit accounts.
Credit mix (10 percent): Indicates how diverse your open credit accounts are.
New credit (10 percent): Looks at any new credit accounts you’ve applied for.
VantageScore 3.0, on the other hand, looks at these six metrics:
Payment history (40 percent): Weighs your on-time payments and your missed payments.
Depth and age of credit (21 percent): Measures your credit mix and the average age of your credit.
Credit utilization (20 percent): Is the same as FICO’s “accounts owed” category.
Total balances (11 percent): Looks at your outstanding balances across all accounts.
Recent credit (5 percent): Examines your behavior with new credit.
Available credit (3 percent): Refers to how much credit you currently have available.
Based on these factors, it’s easy to see why your FICO score and VantageScore can differ. Credit mix is scrutinized by VantageScore far more than FICO, which is why it can help to responsibly manage different credit accounts. FICO, on the other hand, weighs new credit activity more heavily—so pace yourself when applying for new credit.
Is your FICO score or VantageScore more important?
Your FICO score and VantageScore are both important because they can help you get a sense of your current credit habits. However, auto loan lenders, commercial banks and landlords favor FICO. This means that your application for a new rental property will likely be approved or declined based on the strength of your FICO credit score.
There’s a lot of overlap between FICO and VantageScore, so most credit-building tips apply to both models. For example, payment history is the most important factor for both FICO and VantageScore, so making timely payments will positively impact both scores.
Several other ways to increase your credit scores include:
Frequently check your credit report to dispute errors and review your habits.
Limit the number of credit cards or loans you apply for all at once.
Learn how Lexington Law Firm’s focus tracks can help you rebuild your credit after major life events.
Monitor your credit with Lexington Law Firm
Responsible credit habits will build your credit no matter which model is being taken into account. Lexington Law Firm can help you better understand your current credit habits, help you manage account inquiries and address errors on your credit reports.
Learn more about our services and see if they will suit your needs.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Sarah Raja
Associate Attorney
Sarah Raja was born and raised in Phoenix, Arizona.
In 2010 she earned a bachelor’s degree in Psychology from Arizona State University. Sarah then clerked at personal injury firm while she studied for the Law School Admissions Test. In 2016, Sarah graduated from Arizona Summit Law School with a Juris Doctor degree. While in law school Sarah had a passion for mediation and participated in the school’s mediation clinic and mediated cases for the Phoenix Justice Courts. Prior to joining Lexington Law Firm, Sarah practiced in the areas of real property law, HOA law, family law, and disability law in the State of Arizona. In 2020, Sarah opened her own mediation firm with her business partner, where they specialize in assisting couples through divorce in a communicative and civilized manner. In her spare time, Sarah enjoys spending time with family and friends, practicing yoga, and traveling.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
If you’re planning to buy a house in the near future, you may be paying extra attention to your credit. While good credit can help you qualify for the best terms and interest rates, bad credit can stand in the way of your dream home.
If your credit could use a little TLC, continue reading to learn more about credit repair for first-time home buyers and discover helpful tips to improve your credit.
Table of contents:
1. Pay your bills on time
2. Look for errors on your credit report
3. Dispute any inaccuracies
4. Lower your credit utilization
5. Consider consolidating your debt
6. Leave old credit accounts open
7. Avoid opening new credit accounts
8. Get help from a credit repair company
1. Pay your bills on time
Since payment history is the number one factor that affects your credit score, the first step in repairing your credit is getting current with your bills. Late payments, especially those over 30 days past due, can cause your credit to take a significant hit. Not to mention late payments can stay on your credit report for seven years and continue to negatively impact your credit, although the effect lessens over time.
If you’ve missed payments in the past, it’s important to get back on track with making your payments on time. Consider creating a budget, making a list of all your bills, noting their due dates and setting reminders so you don’t forget to pay them. Set up automated payments wherever possible.
Pro tip: Build an emergency fund so you’re still able to pay your bills even if you get hit with an unexpected expense.
2. Look for errors on your credit report
Errors on your credit report could negatively impact your ability to secure a mortgage. In fact, a recent study by Consumer Reports found that 34 percent of participants had at least one error on their credit report.
According to the Consumer Financial Protection Bureau, common errors to look for include:
Identity errors: These include inaccuracies regarding your personal information. For instance, your name, address or phone number may be incorrect or misspelled. Make sure to look for accounts that don’t belong to you and could be the result of identity theft.
Reporting errors: These are errors regarding the state of your accounts. For example, accounts you previously closed that are inaccurately reported as open.
Data errors: These could be duplicate accounts or incorrect information that had previously been corrected.
Balance errors: These include wrong balances or credit limits.
While not all errors affect your credit score, incorrect payment dates or account statuses can have a significant adverse effect, so it’s important to review your credit report before buying a house.
Pro tip: You can get a copy of your credit report from each of the three credit bureaus for free at AnnualCreditReport.com.
3. Dispute any inaccuracies
If you identify any errors on your credit report, you will want to get the inaccurate information removed if you can. File a dispute with the credit bureau via their website, mail or phone.
Regardless of the method you choose, make sure to clearly state what items you’re challenging and why the information is wrong. Consider including a copy of your credit report and highlighting or circling the errors.
Once you file a dispute, the credit bureau has 90 days to complete an investigation into your claim. If the bureau confirms that the error is inaccurate, they will remove it from your credit report. You should see the correction reflected in your score within a few weeks.
Pro tip: Use the Federal Trade Commission’s sample letter as a guide when writing your letter.
4. Lower your credit utilization
Credit utilization is another factor that influences your credit. Your credit utilization ratio is the amount of credit you’re using in relation to the amount of credit available to you.
Keeping your credit utilization low shows mortgage lenders that you aren’t too reliant on credit. Meanwhile, a high credit utilization ratio could indicate that you may struggle to pay your mortgage.
Here are a few strategies to lower your credit utilization ratio:
Pay off large purchases immediately: If you make a large purchase on your credit card, consider paying it off the same day if possible.
Make multiple payments each month: Get in the habit of paying your balance multiple times each month so the credit bureaus are more likely to see a lower number when your credit card issuer reports your statement balance.
Request a credit limit increase: Contact your credit card issuer to see if you qualify for a credit limit increase. Keep in mind that this may result in a hard inquiry, which could temporarily lower your score.
Lower your spending: Consider switching to cash or a debit card to decrease the amount of money you charge to your credit card each month.
Pro tip: Generally, experts recommend keeping your credit utilization below 30 percent. For example, if you only have one credit card and the limit is $10,000, you should aim to spend less than $3,000 each month.
5. Consider consolidating your debt
If you struggle to keep track of your different credit accounts and their due dates, consider consolidating your debt into a single monthly payment. This strategy can help you pay off debt quicker and avoid late payments. However, in order for debt consolidation to make sense, you should aim to get a lower interest rate.
There are a few different ways to consolidate your debt, including:
Zero-percent APR balance transfer credit card: Transfer your credit card debt to a new card, specifically during the 0 percent APR introductory period. Aim to pay down your debt before the introductory period ends—typically between 12 and 21 months.
Debt consolidation loan: Get a debt consolidation loan from a bank, credit union or online lender. Compare options to find the lowest interest rate.
Home equity loan: A home equity loan involves using the equity in your home as collateral to borrow money. While home equity loans typically have lower interest rates, you could end up losing your home if you fail to make payments.
401(k) loan: If you have a retirement account, you can borrow money from your savings. Keep in mind that taking out a 401(k) loan can hurt your retirement savings since you cannot continue to invest until you pay back the loan.
Pro tip: Weigh the benefits and drawbacks to find the best debt consolidation option for your financial situation.
6. Leave old credit accounts open
You may consider closing old credit accounts that you don’t use anymore, but that can actually hurt your credit. FICO® takes into account your length of credit history when calculating your score.
A long credit history signals to mortgage lenders that you have experience using credit and provides a more thorough track record of your credit history.
You should leave old credit accounts open unless you have another reason for closing them, such as an annual fee.
Pro tip: If your oldest account charges an annual fee, consider calling the credit card issuer to see if you can get it waived.
7. Avoid opening new credit accounts
Opening too many credit accounts in a short time frame can be a red flag to lenders. They may come to the conclusion that you’re financially unstable and are relying on credit to get by. As a result, they may consider you more likely to fall behind on payments.
Additionally, too many hard inquiries can hurt your credit. While a single hard inquiry typically only lowers your score a small amount, multiple hard inquiries may cause a noticeable drop in your score.
Pro tip: Try to wait six months between credit card applications.
8. Get help from a credit repair company
If you need help repairing your credit in preparation for buying a house, consider looking into credit repair services. A credit repair company can closely examine your credit report and help you identify negative items that might be wrongfully hurting your credit. The company will then challenge the inaccuracies on your behalf so they might no longer impact you.
Pro tip: Research each company and read reviews to avoid running into credit repair scams.
Why is credit important when buying a home?
Credit is important when buying a home if you plan to take out a mortgage. A good credit score will boost your likelihood of qualifying for a mortgage with a lower interest rate and better terms. This can end up saving you thousands of dollars over the course of your mortgage.
What does your credit score need to be to buy a house for the first time?
The credit score needed to buy a house varies depending on the type of loan you want. For most conventional mortgages, borrowers need a credit score of 620 or higher to qualify. Meanwhile, an FHA loan requires a minimum credit score of 500. Generally, the higher your credit score, the more favorable interest rates and terms you’ll be approved for.
Need help repairing your credit before buying a home? Lexington Law Firm could help you identify and address inaccurate negative items that may be damaging your score. Sign up for a free credit assessment to establish your starting point and see what services may be right for you.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Brittany Sifontes
Attorney
Prior to joining Lexington, Brittany practiced a mix of criminal law and family law.
Brittany began her legal career at the Maricopa County Public Defender’s Office, and then moved into private practice. Brittany represented clients with charges ranging from drug sales, to sexual related offenses, to homicides. Brittany appeared in several hundred criminal court hearings, including felony and misdemeanor trials, evidentiary hearings, and pretrial hearings. In addition to criminal cases, Brittany also represented persons and families in a variety of family court matters including dissolution of marriage, legal separation, child support, paternity, parenting time, legal decision-making (formerly “custody”), spousal maintenance, modifications and enforcement of existing orders, relocation, and orders of protection. As a result, Brittany has extensive courtroom experience. Brittany attended the University of Colorado at Boulder for her undergraduate degree and attended Arizona Summit Law School for her law degree. At Arizona Summit Law school, Brittany graduated Summa Cum Laude and ranked 11th in her graduating class.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
A person’s credit score can impact their finances positively and negatively. Entities from commercial banks to auto loan lenders uses credit scores to determine if they’re willing to trust an applicant. FICOⓇ and VantageScoreⓇ, the two most popular scoring models, assign credit scores from 300 to 850—and higher scores typically pave the way for more lucrative deals.
Whether you have no credit history whatsoever or you’re looking to improve your current credit standing, everyone has the power to work on their credit. There is no set timeline for how long it can take to improve your credit, as everyone’s individual circumstances are different. Keep that in mind as we share 15 of the best ways to work to build credit fast in 2024.
Key takeaways
Making timely payments can help you more quickly build credit since payment history makes up 35 percent of your FICO credit score.
Becoming an authorized user on another credit card can help improve your score over time.
Removing errors on your credit report can help your score most accurately reflect your credit history.
Table of contents:
1. Apply for credit builder loans
Any kind of loan you secure can help you build credit if you make payments on time and in full. However, credit builder loans specifically exist to help borrowers improve their credit. If approved, applicants will pay into a secured account that they can only access at the end of their term.
Pro tip: A lender will normally approve low- or no-credit borrowers for a credit builder loan, but anyone can apply regardless of their standing.
2. Build credit with rent payments
Building credit with rent payments can be especially effective for individuals with no credit history. Your timely rent payments won’t raise your score automatically, as landlords don’t typically report rent payments to the credit bureaus. Instead, you’ll need to find a rent reporting service that can add your payments to your credit report.
Pro tip: You can enroll in rent reporting services with any of the three major credit bureaus: EquifaxⓇ, ExperianⓇ and TransUnionⓇ.
3. Maintain your oldest accounts
A person’s credit age, or length of credit history, makes up 15 percent of your FICOscore. This means that closing an old account can lower your score by reducing your overall credit age. If you have an old credit card, even if you don’t regularly use it, it’s usually best to keep that account open.
Pro tip: You can call your credit card issuer and request that the annual fee be waived on an old card.
4. Apply for a retail credit card
Stores and online vendors that offer retail credit cards can help you quickly build credit if you’re a frequent shopper, with one important caveat: you must use the card responsibly. These cards may come with unique bonuses like cashback rewards or discounts. Just be careful not to overspend so you’re able to pay your balance off in full every month.
Pro tip: Retail cards can benefit frequent shoppers who also have the funds to pay off their debts quickly.
5. Challenge errors on your credit report
Credit reports are intended to reflect your spending habits, but no system is perfect. Sometimes, a payment you’ve made doesn’t get reported on time or you notice inaccuracies elsewhere on your report, like an account you never opened. Lexington Law Firm can check your credit report for errors or discrepancies and challenge them on your behalf.
Pro tip: You can request one free credit report annually from each of the three credit bureaus.
6. Apply for a secured credit card
Secured credit cards traditionally have lower interest rates and higher credit limits than unsecured cards. The caveat is that borrowers will have to put down collateral to be eligible, but responsibly using secured cards can significantly improve your credit.
Pro tip: For secured credit cards, collateral comes in the form of the cash deposit you make when you first open the account.
7. Use a credit monitoring service
Credit monitoring services can help borrowers get a better sense of what’s happening on their credit profile. Many services can also dispute errors and take action if they detect fraudulent activity. Lexington Law Firm offers credit monitoring services and other features like ID Theft Insurance and help with challenging errors on credit reports.
Pro tip: Lexington Law Firm also provides free credit assessments to help you understand which services might benefit you the most.
8. Make timely payments
Payment history accounts for roughly 35 percent of your FICO credit score and about 40 percent of your VantageScore. Consistently making payments on time will display your financial reliability and responsibility to lenders and credit bureaus.
Pro tip: Using autopay can reduce instances of forgetting to make payments on time.
9. Increase your credit limit
Your credit utilization ratio weighs your current account balances against your total credit limit. Increasing your credit limit can give you more breathing room when borrowing funds. Borrowing $500 with a $1,000 limit would give you a 50 percent utilization rate. Borrowing $500 with a $2,000 limit would give you a 25 percent utilization rate.
Pro tip: It’s best to keep your credit utilization ratio below 30 percent if you can.
10. Become an authorized user on another account
Becoming an authorized user on another account lets you borrow funds on a credit card that you may not have access to otherwise. Positive action on that account can affect everyone who’s linked to it—and the same goes for negative habits. You can become an authorized user on another account even if you have no or bad credit history, provided you have the primary account holder’s permission.
Pro tip: It’s best to only become an authorized user on an account where the cardholder already has good or better credit.
11. Acquire a student credit card
Student credit cards typically have less stringent requirements than their grown-up alternatives. Responsibly using these cards can help new borrowers prove their creditworthiness.
Pro tip: Student card requirements normally include enrollment at qualifying institutions, proof of income or a cosigner and no bad credit history.
12. Use a rapid rescoring service
It takes varying amounts of time for changes to be added to your credit report. Rapid rescoring for a mortgage can help your credit by quickly updating your credit report with new information. For a fee, a mortgage lender can pay credit reporting companies to expedite the reporting process for someone who’s looking to take out a home loan.
Pro tip: It can generally take roughly 30 to 45 days for a change to appear on your credit report.
13. Meet with a financial advisor
While it’s becoming increasingly easy to access financial information, not everyone has the years of experience needed to add context to that information. Financial advisors can offer tailored strategies to help clients reach specific goals and improve their credit standing.
Pro tip: You can find a financial advisor to meet with online if you don’t want to meet with one in person.
14. Download credit-building apps
Credit-building apps can help borrowers improve their scores in various ways. Some apps can provide custom recommendations based on the data you provide them. Others can offer incentives and in-app rewards to help promote better financial habits.
Pro tip: Many commercial banks offer free apps with credit-building features.
15. Use a credit builder card
Much like a credit builder loan, this option helps low- and no-credit borrowers increase their standing. Credit builder cards function just like normal cards, but they usually come with more stringent limits like higher interest rates and lower overall limits.
Pro tip: Credit builder cards often have more lenient eligibility requirements than other commercial bank cards.
Improve your credit knowledge with Lexington Law Firm
We’ve outlined some of the best ways to build credit fast in this guide, but there’s still plenty of additional information that could help you increase your financial literacy. Learning how to read a credit report and knowing which factors affect your credit score are vital long-term skills. Lexington Law Firm’s team of professionals can help you gain a better understanding of your credit profile. Get your free credit assessment today.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Nature Lewis
Associate Attorney
Before joining Lexington Law as an Associate Attorney, Nature Lewis managed a successful practice representing tenants in Maricopa County.
Through her representation of tenants, Nature gained experience in Federal law, Family law, Probate, Consumer protection and Civil law. She received numerous accolades for her dedication to Tenant Protection in Arizona, including, John P. Frank Advocate for Justice Award in 2016, Top 50 Pro Bono Attorney of 2015, New Tenant Attorney of the Year in 2015 and Maricopa County Attorney of the Month in March 2015. Nature continued her dedication to pro bono work while volunteering at Community Legal Services’ Volunteer Lawyer’s Program and assisting victims of Domestic Violence at the local shelter. Nature is passionate about providing free knowledge to the underserved community and continues to hold free seminars about tenant rights and plans to incorporate consumer rights in her free seminars. Nature is a wife and mother of 5 children. She and her husband have been married for 24 years and enjoy traveling internationally, watching movies and promoting their indie published comic books!