That’ll see new opportunities and challenges for brokers and LOs looking ahead. “When rates come down, people will refinance for sure, and they’ll be more confident to go out there and buy a house,” Nguyen said. “I always advise my agents that they need to become a better loan officer because competition is going to … [Read more…]
Are you looking for the best side hustles for moms? Being a mom is a full-time job, but that doesn’t mean you can’t make extra money on the side if you need to. Balancing work and family life can be tough, but finding a side hustle that fits your schedule can make it easier. Whether…
Are you looking for the best side hustles for moms?
Being a mom is a full-time job, but that doesn’t mean you can’t make extra money on the side if you need to. Balancing work and family life can be tough, but finding a side hustle that fits your schedule can make it easier.
Whether you need to make money to pay the bills, if you’re looking to save for a vacation, or if you simply want to save more money, there are many side hustles that may fit what you’re looking for.
I am a mom and I have done many of the side jobs listed below. Some can be part-time, others full-time, so there is probably something on the list below that can work for you.
Below are the best side hustles for moms.
Blogging is a great way for moms to make money from home. It is what I personally do so that I can work from home and spend more time with my daughter.
For me, blogging lets me travel whenever I want, work on my own schedule, make good money, write about topics I enjoy, and I really love having a blogging business.
I started Making Sense of Cents in 2011, and since then, I’ve made over $5,000,000 from my blog. When I began, I had no idea it would turn out to be one of the best jobs for stay-at-home moms. Now, I am extremely grateful for this – and it all started as a side hustle!
One way to earn money with a blog (and this is my favorite way) is through affiliate marketing. This means you recommend products and get paid when someone buys through your link. It’s like earning a commission for sharing products you use and enjoy.
Another way to make money is by placing ads on your blog. As your blog gets more visitors, you can earn money from the ads.
Writing sponsored posts is another option. Companies pay you to write about their products or services (it’s a good idea to choose products that you believe in and that fit your blog’s theme).
Blogging takes time and effort, but it can be very rewarding. You get to be creative, connect with others, and make money doing something you love.
You can learn more about how to begin in my free How To Start a Blog Course here.
Selling printables on Etsy can be a great side hustle for moms. You can make extra money by creating and selling digital items like planners, calendars, and worksheets.
All you need is a computer and some design software, and you can work on it at your own pace and from the comfort of your home.
You don’t have to spend any money to start selling printables either.
This is a great way to make money from home because you only need to create one digital file for each product, and you can sell it as many times as you want. You don’t have to print or ship anything. Instead, you create the digital file, and the customer downloads it and handles the rest after buying it from you.
You can learn more at How I Make Money Selling Printables On Etsy.
Do you want to make money selling printables online? This free training will give you great ideas on what you can sell, how to get started, the costs, and how to make sales.
Proofreading is a great way to make some extra money from home. If you have an eye for detail, you can get paid to spot errors in text.
You don’t need a special degree to start proofreading. Many online companies hire beginners and this means you can get started without lots of experience. Plus, you can build up your skills and portfolio as you go.
The pay can vary. Some proofreaders earn $1,000 a month, while others make six-figure incomes. It depends on how much you work and your experience level. You can do this full-time or just as a part-time gig.
I know several proofreaders (who are moms) who started proofreading as a side hustle, and now it’s their full-time job. So, you can spend as little or as much time as you want growing this job.
You can learn more at 20 Best Online Proofreading Jobs For Beginners (Earn $40,000+ A Year).
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This free training teaches you how to start a proofreading side hustle (and how to earn $1,000+ per month!), even if you are brand new and don’t have any previous proofreading experience.
Bookkeeping is a great side hustle for moms. It’s flexible and can be done from home.
Bookkeepers keep track of financial records for businesses. This includes recording transactions and balancing accounts.
Before you pass this by because you think you’re not qualified, you might be surprised to know that you don’t need to be an accountant or have any experience. Becoming a virtual bookkeeper is something you can learn from home.
You can learn more at How To Find Online Bookkeeping Jobs.
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This free training will show you how to start a profitable bookkeeping side-hustle in the next 30 days—even if you have no prior experience!
Print-on-demand is a great side hustle for moms.
You can create your own designs and sell them on items like T-shirts, coffee mugs, and tote bags. Websites like Etsy make it easy to set up your own shop.
There’s no need to buy supplies or handle shipping. The print-on-demand company (like Printify) takes care of that for you. This means you can focus on being creative and taking care of your family.
Many moms find this side hustle to be simple and rewarding. You can work on it during nap times or after the kids go to bed. If you love designing, this can be a perfect fit for you.
You can learn more at How I Make $1,500 Monthly With My Print-On-Demand Business.
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This freebie will teach you about print-on-demand as well as give you a list of 17 hot-selling products you can sell via print on demand.
Starting a dog treat bakery can be a fun and profitable side hustle. You can begin this business right from your kitchen so it’s perfect for moms looking to make some extra money.
This side job can be very flexible. You can choose to keep it small and earn $500 to $1,000 a month. Or, if you have more time, you can scale it up and make even more.
You can learn more at How I Earned Up to $4,000 Per Month Baking Dog Treats (With Zero Baking Experience!).
Plus, you can sign up for this free training workshop that teaches you the small business plan for starting your own pet bakery.
If you’re a mom looking to make some extra money from home, taking online surveys could be a side hustle.
Companies pay for your opinions on their products or services, which helps them improve and stay competitive. This side hustle is flexible, allowing you to fit it around your busy schedule, whether during nap times or after the kids go to bed.
No, you will not get rich taking surveys (this is not a lucrative side hustle, but it is very flexible!), but you may be able to earn around $50 to $100 per month by answering several surveys each week.
Surveys are almost always done online, and you’ll usually be answering multiple-choice questions or typing in quick answers about your daily life, like where you last shopped. To get started, you can sign up for several survey sites.
Some popular survey sites include:
While some surveys pay just a few cents, others can pay up to $20 or more, depending on how detailed and complex they are. This makes it a convenient way for moms to earn a little extra income in their spare time.
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Swagbucks is a site where you can earn points for surveys, shopping online, watching videos, using coupons, and more. You can use your points for gift cards and cash.
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Once you complete five surveys, you’ve earned $5, which you can cash out using the payout options offered by the site (such as PayPal cash and free Amazon gift cards).
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Prime Opinion is a survey website that helps people to earn extra money by sharing their opinions at home. It’s a simple survey site to use: you share your thoughts, and they pay you for them.
A virtual assistant (VA) can do many tasks from home and this is a popular side hustle idea for moms. They may manage emails, set up appointments, create social media posts, handle customer service, and more. Many small businesses need help with these jobs.
Becoming a VA doesn’t require a lot of training. You just need good organizational skills and a reliable internet connection.
A big advantage of being a VA is flexibility. You can set your own hours and work when it’s best for you, so this makes it a perfect side hustle for busy moms.
You can learn more at Best Ways To Find Virtual Assistant Jobs.
Being a social media manager is a great side hustle for moms.
Many businesses need help with their social media accounts because they don’t have the time to keep up with posting and replying to messages, or they simply don’t have the expertise.
Tasks might include creating posts, scheduling them, and interacting with followers. Social media managers might also run ads and analyze their performance.
It’s a flexible job you can do from home, making it perfect for busy moms.
Affiliate marketing is a great way for moms to make extra money.
With this side hustle, you promote products or services online. When someone buys through your link, you earn a commission.
You can get started by choosing products you like and trust. This makes it easier to talk about them. People will feel your enthusiasm and trust your recommendations.
Many moms start with their own blogs. You can write about things you know and enjoy. Topics like parenting, cooking, or fashion are good choices. You can add affiliate links in your blog posts where they fit naturally.
Social media is another place to use affiliate marketing. Sharing links on Instagram, Facebook, or Pinterest can reach a lot of people.
Affiliate marketing is flexible. You can do it at your own pace and schedule, so this is perfect if you have kids and need to work around their needs.
For me, I love affiliate marketing and I think it’s one of the best ways to make money online. I especially like how I can do work up front and make money years down the line from older blog posts. So, it is kind of like a form of semi-passive income.
If you want to learn more about affiliate marketing, I recommend signing up for Affiliate Marketing Tips For Bloggers – Free eBook.
Online tutoring is a great side hustle for moms. You can teach different subjects from your own home and this flexible job allows you to set your own hours.
If you love math, science, or another subject, there are students looking for help. You don’t need to be a certified teacher, but having a good grasp of the subject is important.
Online tutoring also pays well. Average rates can range from $10 to $30 per hour, depending on the subject and your experience.
If you love animals, pet sitting and dog walking could be the perfect side hustle for you.
Pet sitting is when you look after a pet while the owner is away. This could mean feeding, playing with, and sometimes even staying overnight with the pet.
Dog walking is a bit different. You take dogs for walks, making sure they get exercise and fresh air.
Both of these jobs are flexible. You can take on as many or as few clients as you want. This makes it easy to balance with other responsibilities.
My husband’s mother is a dog walker and pet sitter on Rover (the popular dog walking app), and it always seems like she loves this side hustle. She really likes dogs, so it looks like fun to me.
You can learn more at 7 Best Dog Walking Apps To Make Extra Money.
Selling handmade crafts is a fun and creative way to make money as a mom. You can use your skills to create unique items that people love.
There are many types of crafts you can sell. Items like handmade jewelry, painted mason jars, or knit blankets can be very popular. If you’re good at sewing, you can make and sell upcycled clothing or custom pieces.
Selling classes or workshops is another option. If you’re skilled at a particular craft (like knitting), teaching others can be a rewarding side hustle.
You can learn more at 16 Best Things To Sell On Etsy To Make Money.
Transcribing is a great side hustle for moms working from home. This is where you transcribe audio files into text for clients.
To start, you only need a computer and good listening skills. Some companies hire beginners, so you don’t need experience.
The pay can vary. Some jobs pay per audio minute, while others pay per audio hour. Usually, though, you can make around $10 to $20 per hour.
Platforms like Rev, Scribie, and CrowdSurfWork are good places to begin.
Transcribing can be done at any time of day, making it flexible for moms. This makes it easy to fit around your family’s schedule.
You can learn more at 18 Best Online Transcription Jobs For Beginners To Make $2,000 Monthly.
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In this free training, you will learn what transcription is, why it’s a highly in-demand skill, who hires transcriptionists, how to become a transcriptionist, and more.
Photography can be a great side hustle for moms, and I personally know a few photographers who have very successful photography careers and are also mothers!
This is something you can learn, such as by shadowing another photographer or by taking classes in person or online. As you get better, you can sell your services to others. Portrait photography is a popular choice, such as with taking photos of families, kids, or even pets.
Event photography is another option. Birthdays, weddings, and parties usually need a photographer.
You can also sell your photos online. Websites like Shutterstock or Etsy allow you to earn money from your images. This way, you can work from home and on your own time.
You can learn more at 18 Ways To Get Paid To Take Pictures.
Cleaning homes can be a good side hustle if you enjoy tidying up. Many people need help keeping their houses clean but don’t have the time to do it themselves.
You can set your own hours, making it easy to fit into your daily schedule. You can start by selling your cleaning services to friends and family. Once you get some experience, you can expand your client base.
You don’t need much to start. Basic cleaning supplies and a positive attitude can go a long way. You can also charge by the hour or by the job, whichever works best for you and your clients.
I know several mothers who clean homes in their free time, and they like how they can find homes to clean that fit into their schedule (so, it can be flexible!).
Renting out baby equipment can be a great way for moms to make extra cash. Many mothers likely already have a bunch of different baby items at home, so they can make money with them when they are not being used.
Platforms like BabyQuip help connect you with families who need baby gear when they travel. You can rent out items such as strollers, cribs, car seats, and even toys.
You earn money based on how often your items are rented. The more popular the equipment and the busier the travel season, the more you could earn.
Some top providers make over $10,000 a month by renting out baby gear (at this level, they are definitely buying things with the sole purpose of renting them out, though, and not just renting out things they have just laying around their homes).
As a mom, becoming a book author can be a great side hustle. You get to share your stories or knowledge while working from home.
You can write about anything that interests you. Whether it’s a children’s book, a novel, or a guide on something you know a lot about, there’s a place for your work. You could even write romance novels!
Income from book sales can vary. New authors might see $0 to $500 a month, while experienced authors can make between $1,000 and $10,000 per month.
Writing a book does take time and effort. You might need to write during nap times, after the kids go to bed, or when they are in school.
Becoming a real estate agent can be a great side gig for moms. You get to help people buy, sell, or rent properties. You can set your own hours, which is perfect for balancing work and family time. Plus, the more properties you sell, the more money you can make.
You can start part-time and grow your business as you gain experience. Real estate agents usually earn commissions, so your income can vary. It’s possible to earn a lot if you work hard and build good relationships with your clients.
Being a travel agent from home is a great side hustle for moms. You help people plan their trips, find the best deals, and book their vacations.
It’s ideal for moms who love to travel and know how to find great deals. If you have experience planning trips, this can be a rewarding way to earn money.
Freelance writing is a great side hustle for moms, and I think it’s one of the most realistic jobs for stay-at-home moms. It lets you work from home on your own schedule, so if you love to write, this could be a perfect fit.
You can write many things like blog posts, articles, or website content. The pay can start from around $50 per article but can go up to over $1,000. As you gain more experience, you might earn even more.
One big advantage of becoming a freelance writer is the flexibility. You can work when your kids are napping or busy with activities. This makes freelance writing great for busy moms.
You don’t need a lot to start either, which is nice. A computer and internet connection are enough.
I have been a freelance writer for years, and I think it’s a great way to make money as a mom.
You can learn more at 14 Places To Find Freelance Writing Jobs – (Start With No Experience!).
As you may have noticed above, there are a lot of different side hustles for moms.
But, how can you fit them into your already busy schedule?
I get it. Being a mom is hard work, and you may feel scattered already.
Managing time can be tough for moms who have a lot to handle. Here are some simple tips to help you stay organized and use your time wisely.
I recommend that you start by creating a weekly schedule. Write down everything you need to do, like work, family time, and personal tasks. You may want to use a planner or a digital app to keep it all organized.
Then, allocate specific times for your side hustle. It could be during your child’s nap time or after they’ve gone to bed. Consistency helps in sticking to your plan.
Don’t forget to schedule some “me time.” Whether it’s reading a book or going for a walk, taking breaks can help you recharge.
Review your schedule at the end of each week. Adjust what didn’t work and keep improving. This way, you’ll find a rhythm that suits you best.
Balancing work and family is important. I recommend that you set clear boundaries between work time and family time. Let your family know when you’ll be working on your side hustle so they can respect that time.
You may want to find activities for your children that don’t need constant supervision. This can give you pockets of time to focus on your tasks.
Another way is to prioritize tasks based on importance. Use to-do lists to keep track of what needs to get done. Tasks with tight deadlines should come first. For me, I have a constant to-do list on my phone, and I find that helps me remember everything as well as prioritize everything that I have going on.
To balance work and family, you will want to remember to have family activities. Movie nights or game days can strengthen family bonds and make up for the time you are working. Quality time with family is just as important as work.
Time management is about finding balance and being flexible. What works for one mom might not work for another, so keep adjusting until you find what works best for you.
Below are answers to common questions about side hustles for moms.
There are many ways for moms to make money on the side, such as starting a blog, selling handmade crafts, selling printables on Etsy, proofreading, bookkeeping, freelance writing, tutoring, dog walking, photography, and more.
There are many ways for moms to earn money from home. They could start a bookkeeping business, sell online courses, start a blog, transcribe, or even work with print-on-demand services to sell custom-designed items.
Some creative side jobs for moms include blogging, making and selling printables, baking (and selling) dog treats, graphic design, voice-over work, and starting a YouTube channel.
Working moms can find time for side jobs by finding small pockets of time during the day, like when the kids are napping or after they go to bed. Using a planner can help organize your time and set achievable goals to keep on track.
Taking online surveys or becoming a virtual assistant are great options for moms with no prior experience. These jobs are easy to start and require little to no training.
To make $2,000 a month, a mom could sell multiple services like bookkeeping, proofreading, or selling a range of products such as printables and crafts. Combining several side hustles can help you reach this goal. Or, you could focus on a single side job and spend more time on it.
A mom can definitely become financially independent. This is possible by diversifying their income streams. They can sell products online, sell freelance services (like writing or bookkeeping), or even invest some time into building a successful blog or YouTube channel.
I hope you enjoyed this article on the best side hustles for moms.
Finding the right side hustle can make a big difference for moms who want to earn extra money while still focusing on their families.
Many of the side hustles for moms above have a lot of flexibility, the chance to work from home, and the opportunity to do what you love.
Whether you start a blog, sell handmade crafts, or become a virtual assistant, there’s a side hustle that can fit into your busy life.
What do you think are the best side hustles for moms?
Recommended reading:
Source: makingsenseofcents.com
If you’re thinking about purchasing a property, you’ve likely sifted through available home loan options to determine what’s best.
There are lots of loan types of choose from, including conventional loans (those not backed by the government) and government-backed loans, such as FHA, USDA, and VA loans.
While each have their pros and cons, there is one hidden danger to taking out an FHA loan, especially if you’re buying a home as opposed to refinancing an existing loan.
In competitive markets where there are multiple bidders vying for the same property, the financing you choose matters.
Sellers want assurances that you can actually close your loan, and that could make or break your offer.
Over the past decade, home buying has been very competitive. It’s been a seller’s market for as long as I can remember.
In fact, even when the housing market bottomed in 2012-2013, it was still difficult to find a property.
While short sales and foreclosures were prevalent then, inventory was still relatively scarce and many savvy buyers entered the fray quickly to scoop up bargains.
Over the years, it has only gotten worse, thanks in part to underbuilding since the mortgage crisis, and also due to record low mortgage rates.
That combination of limited inventory and low mortgage rates propelled home buyer demand to new heights.
And the fact that millions were entering the prime home buying age (of 34 years old) didn’t help either.
Long story short, you’ll often face other bidders when making an offer on a home. And one of the things sellers look at when evaluating offers is financing.
How will you be able to afford the property. Will you pay with cash? Probably not, but know that cash is king and will make your offer stand out above the rest.
A close second might be putting 20% down on the home purchase because it shows you’ve got a lot of skin in the game and assets in the bank.
It also provides wiggle-room should the appraisal come in low, allowing you to retool the loan amount as necessary.
Further down the pecking order are FHA loans, which allow borrowers to come in with just a 3.5% down payment and FICO score as low as 580.
While that’s great for borrowers in need of flexible underwriting guidelines, sellers might not be as keen. After all, they need the loan to fund to sell the property!
That brings me to a new report from the Consumer Federation of America (CFA), which “highlights the stigmatization of FHA loans,” especially in competitive housing markets.
The graph above shows how FHA lending was popular when banks were risk-averse post-crisis, but fell off once conditions improved, possibly because such buyers were outbid by those using conventional financing.
In addition, they found that FHA lending is less common in more affluent communities or those that are predominantly white.
This means minority individuals may be relegated to less desirable neighborhoods, where seller’s agents are more familiar and willing to work with borrowers who need FHA loans to qualify.
The result is the unintended effect of “perpetuating socio-economic and racial segregation” in the housing market.
There are a couple main issues that drive this negative perception of FHA loans, per the CFA.
One is that the FHA includes a mandatory inspection as part of the appraisal process to establish minimum property requirements.
While it’s not necessarily an intensive inspection, it does require the property being financed by an FHA loan be “safe, sound, and secure.”
So things like access to clean drinking water and working appliances, and no hazards like lead-based paint or overhead power lines.
Some of these items might wind up being a nuisance for the seller, who must now either repair/resolve the issue or work out an arrangement with the buyer. The CFA notes that sellers aren’t “financially liable to make all repairs.”
But nonetheless, it can present an unnecessary roadblock and put a deal in jeopardy, especially if the buyer is already lacking funds.
That brings us to the second issue, which is that real estate agents have a “perceived stigma about FHA mortgages and their buyers.”
Some look at it like a loan program for less qualified applicants, or a government program (which it is) riddled with bureaucracy or inefficiencies.
In turn, it becomes a sort of self-fulfilling prophecy where such applicants might be avoided and then only bid on homes in less desirable areas.
These areas then see a high concentration of FHA loans as a result, and such loans become further stigmatized because agents in the “good areas” don’t deal with them.
If they are to make their way into a desirable neighborhood and/or home, they might find that they need to “overbid” to get their offer accepted.
The CFA came up with four policy recommendations to level the playing field for FHA loans, which they argue have helped millions purchase a home.
They believe more states and cities should pass “source of income” or “source of financing” anti-
discrimination statutes, which make it illegal to refuse to rent/sell/lease based on income used.
Originally intended to protect renters using things like subsidized Section 8 vouchers, it could apply to home buyers using government-insured mortgages.
For example, preventing anti-FHA language in an MLS listing or real estate advertisement.
The next step is to “simplify FHA inspection criteria” to reduce potential hurdles for home buyers.
Another measure would be for real estate agent trade groups to dispel myths related to FHA loans and educate them on how to better work with FHA buyers.
Lastly, they argue that Congress/HUD should increase funding for Fair Housing Centers to investigate FHA home buying trends.
And if necessary, bring cases against offending real estate agents, lenders, brokers, etc. that perpetuate “financing discrimination.”
While I’m not opposed to their findings or their solutions, the bottom line is sellers will still gravitate towards the most creditworthy buyers.
Their agents will likely reinforce this as well when looking at multiple offers. As noted, the cash buyer will always be king. Then the 20% down buyer, assuming they have at least decent credit.
Unfortunately, the lowest rung tends to be the FHA buyer, who can get approved with a 580 FICO score and 3.5% down.
Conversely, a conventional loan buyer using a loan backed by Fannie Mae or Freddie Mac needs a 620 FICO score. And there are fewer hoops to jump through in terms of a mandatory inspection being part of the appraisal.
So in practice, while FHA buyers shouldn’t be discriminated against, they will still be lowest in the pecking order when a seller evaluates offers, all else equal.
Perhaps some of the proposed solutions will help, but if sellers and their agents look at the loan like an underwriter would, and see a lower credit score combined with little money down, they might be less inclined to accept the offer.
And that’s not necessarily a bad approach or discriminatory. It’s weighing the options and determining which buyer has the best approval odds, which gets the home sold.
While there are no doubt issues that need to be addressed and resolved in the lending space, there are some actionable things you can do on your own.
Often, FHA loans are used because the borrower doesn’t qualify for conventional financing.
And sometimes this is due to a low credit score, as the chart above shows even high-income earners often wind up with FHA loans.
So something prospective home buyers can do is work on their credit before they apply for a home loan to ensure their three scores are all 620+.
At the same time, they can better educate themselves on their options so they’ll know if they’re eligible for a conforming loan before speaking to a lender.
Or they can outright ask the loan officer or mortgage broker if they qualify for a loan backed by Fannie Mae or Freddie Mac. And if not, why not?
If you get your ducks in a row early on, you’ll have more lending options at your disposal and be less impacted by any stigma attached to a given financing type.
You may even score a lower mortgage rate and get your offer accepted by the home seller in the process!
Read on: Conventional vs. FHA Pros and Cons
Source: thetruthaboutmortgage.com
Your credit score is unlikely to drop for no reason, but it might drop for reasons you do not expect. Simply applying for a new credit card, closing out an old one, or being late with a payment can affect your score. A drop in your credit score of 80 points may be enough to reduce your credit score from “good” to “fair,” which can mean you will pay significantly more to borrow money.
Here’s a look at the reasons your credit score might drop, how to monitor your score, and what to do if your credit score drops suddenly.
Your credit score is based on factors related to how you manage your debt. Specifically, whether you pay your bills on time, how much you owe creditors versus how much credit you have available, the length of your credit history, the types of debt you have, and how often you apply for a new loan or credit card. Bankruptcy and foreclosures are additional threats to your credit score.
Any one or a combination of these factors could cause your credit score to drop.
Credit score changes are fairly common and not always a cause for concern. However, an 80-point drop is worth looking into, as it could impact whether you get approved and receive favorable terms for a loan or line of credit.
For instance, if your score drops from 700 to 620, it’s no longer considered “good.” That means that you will not qualify for the best mortgage or credit card rates because a lender will consider you a riskier borrower and could charge you more for financing.
It’s important to first understand why the drop happened so you can correct any issues and begin getting your credit back on track. Monitoring your credit score can be a good place to start, as it allows you to track changes to your score and get insights into your financial health.
There are a few reasons why your credit score might go down. But bear in mind that it can take over a month for your credit score to update and reflect any changes in your credit situation.
If you apply for a new loan or a credit card, your credit score may go down because card issuers will perform a “hard pull,” or hard credit inquiry, when they look at your credit information. According to FICO™, a hard pull typically takes five points or less off your FICO Score. However, if you apply for several credit cards within a short period of time, it could have a greater impact on your score.
If you carry a balance on your credit card, you won’t just rack up interest charges — your credit score might drop, too. Thirty percent of your FICO Score is based on the amount of money you owe. A significant balance on a credit card could cause your score to fall and your credit utilization rate — or how much of your credit limit you’re using on your revolving credit accounts — to rise.
Around 35% of your FICO credit score is based on your payment history. Therefore, if you fail to make your monthly payments — or are late making a payment — your score could fall.2 Tools like a money tracker app can help you identify upcoming bills, create a budget, and more.
When you close a credit card account, especially one you’ve had for a long time, the average age of your accounts falls. That, in turn, could cause your credit score to dip, as the length of your credit history accounts for 15% of your FICO Score.
If your credit score drops by 80 points, there are some steps you can take to find out why and to rebuild your credit score.
Creditors can make mistakes and report inaccurate information to the credit bureaus. Fraudsters can steal your identity and use your accounts. So it’s worthwhile to check your credit report, including your payment history, and dispute any inaccurate information.
You can check your credit report for free from each credit bureau on AnnualCreditReport.com. You can also check your credit report for free with Experian and sign up for monthly updates.
A payment that’s over 30 days past due may be reported to the three major credit bureaus. If you fail to make a payment for 90 days, your creditor may refer your account to a collection agency. These records will remain on your account for seven years.
As you use more of your available credit, your credit utilization rate will increase. The higher your credit utilization rate, the more of a risk you are to a lender, and the more your credit score may decrease. Aim for a rate below 30%. For example, if your credit card has a credit limit of $12,000, don’t use more than $3,600, and ideally use $1,200 or less.
If you apply for a new loan or credit card, the lender will conduct a hard inquiry to check your credit score. As we mentioned, this type of check will only temporarily lower your score by a few points. But many hard inquiries over a short period can have a compounding effect on your credit score. This might occur if you apply for several credit cards at once. The impact of a hard inquiry will typically last a few months to a year.
Declaring bankruptcy and experiencing foreclosure on a property both cause a significant drop in your credit score. And both stay on your credit report for a long time: seven years for Chapter 13 bankruptcy, 10 years for Chapter 7 bankruptcy, and seven years for a foreclosure.
Building your credit score comes down to sensible fiscal management over time.
Whether your credit score dropped or not, there are steps you can take to help boost your numbers. Examples include:
• Paying bills on time
• Checking your credit report regularly for errors
• Lowering your credit utilization rate
• Keep spending in check — a spending app can help
Here are some scenarios where you might be surprised to find that your credit score has dropped.
Let’s say you have three credit cards: one with $5,000 in available credit, one with $8,000 in available credit, and one with $500 in available credit. That’s $13,250 of total available credit.
You have a total balance of $3,975 over all three cards, which gives you a credit utilization ratio of 30%.
Let’s also say you take out a debt consolidation loan to pay off all debt except for $250 on the card with a $500 limit. You then close out the two cards with no debt — taking with it $13,000 in available credit. You’ve kept open the card that has a $500 credit limit and a $250 balance.
This might seem like a good move because you’ve paid off over $3,000 in debt and eliminated two credit cards. However, you now have a 50% credit utilization rate, significantly higher than the recommended 30%. This may increase your credit score.
Another reason to think twice before closing credit card accounts? It could impact the length of your credit history, which accounts for 15% of your credit score. If you close old accounts, it could lower the average age of your credit history, and your score could take a dip as a result.
Every time you apply for a loan or a credit card, the lender performs a hard pull. If you apply for multiple new loans or credit cards within a short stretch of time, it could temporarily lower your credit score.
Credit scores continually fluctuate as information on your credit report gets updated. According to Equifax, your credit score can take 30 days or more to reflect payments you’ve made.
As we discussed, your credit score is calculated based on the following, according to the FICO scoring model:
• 35% of your score is based on your payment history.
• 30% is based on the amount you owe creditors and your credit utilization rate. Ideally, your rate should be around 10% and not higher than 30%.
• 15% is based on the length of your credit history.
• 10% is based on the types of debt you have. A mix of installment debt (such as student loans, mortgage, car loan, personal loan) and credit card debt (or lines of credit) is preferable.
• 10% is based on new credit.
There are no drawbacks to tracking your credit score, except for the time it takes to obtain your report.
On the other hand, there are plenty of pros to monitoring your credit score. You’ll know where you stand regarding future loans and what potential lenders will see on your credit report. You’ll also be able to spot inaccurate or incomplete information that you can have removed, which can help boost your credit score.
Federal law allows you to view a free copy of your credit report from each of the three national credit bureaus (Experian, TransUnion, and Equifax) at AnnualCreditReport.com. Check the reports carefully, and if you find something you don’t agree with, file a dispute to try to have the information removed.
You can also enroll in a credit score monitoring service. These automated services notify you of changes to your credit report that might occur if you qualify for a new credit card or loan, or fall behind on loan payments.
Your credit score might fluctuate without you realizing it. But a drop of 80 points may be worth investigating, as it could mean you pay significantly more to borrow money. You might be surprised to learn that if you apply for a new credit card, pay off the balance on a card, or close an old account, your credit score could be adversely affected.
It’s a good idea to obtain a copy of your credit report — it’s free — and check that the information given to the credit agencies is accurate. You can also help maintain a good credit score by not missing credit card and loan payments and by keeping your credit utilization ratio below 30%.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
Your credit score is based on factors related to how you manage your debt. Bankruptcy or foreclosure will have an obvious effect on your score, but if you have not paid your bills on time, your credit utilization rate is higher than 30%, or you close old credit card accounts and reduce your credit history, you may see a dip. Also, your credit score may be affected if you apply for a number of credit cards or loans in a short space of time.
Your payment history accounts for only 35% of your credit score. Other factors include your credit utilization rate, the length of your credit history, and the types of debt you have.
Even if nothing has changed for you fiscally, you may still see fluctuations in your credit score. There are various reasons why, such as a higher-than-normal credit utilization ratio, inaccurate information in your credit report, or identity theft.
Photo credit: iStock/katleho Seisa
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SORL-Q324-014
Source: sofi.com
In the moviemaking capital of Culver City, California, a stylish 2021-built duplex compound has recently landed on the market.
Priced at $3,400,000, the gated family compound consists of two inviting homes and an Accessory Dwelling Unit (ADU), with a private patio that overlooks a mature Chinese Elm tree — one that’s older than the city itself!
That’s right, the 100+ year-old tree predates Culver City, which was only officially incorporated in 1917 (and named after its founder, Harry Culver).
But beyond having a piece of living history in its backyard, there’s plenty to love about this stylish duplex. Let’s have a look!
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Sitting on a 6,753-square-foot lot in the heart of Culver City’s Historic District, the property consists of three different structures and was envisioned for a “live, work and play” lifestyle.
All in all, it offers 2,615 square feet of living space with 4 bedrooms and 5 bathrooms, and everything was built with the highest standard of quality.
“You don’t see this level of construction applied to a duplex. It’s just really a one-of-a-kind property,” says listing agent Daniel Lowe. “Every detail of this project was well thought out and expensive.” And it shows!
The main residence offers 2 bedrooms and 2 bathrooms and is the grander of the 3 structures, featuring standout design elements like high ceilings and exquisite custom-lit Caesarstone Concetto gemstone countertops paired with rift white oak cabinets.
With a polished, modern look, the main residence has a chef’s kitchen equipped with Wolf and Sub-Zero appliances, and a light and bright primary suite that exudes luxury.
Adjacent to the main residence, the second home on the property also offers 2 bedrooms and 2 bathrooms, and a clean, modern design.
Much like the primary residence, this second structure boasts an array of high-end features, creating a luxurious and comfortable living space with a modern vibe.
Through walls of sliding glass, the ADU awaits, offering endless possibilities as a communal hang-out space, large creative area, or gym.
“The accordion doors that open the Auxiliary Structure Unit to the front yard really provide that indoor-outdoor Southern California lifestyle that everyone craves,” listing agent Daniel Lowe tells us.
The whole property is controlled by a Control 4 system which runs the multi-zoned HVAC systems, invisible speakers in the ceilings, and security cameras.
The private patio is equipped with a Sun-Brite television and offers ample views of the 100+ year-old Chinese Elm tree that’s likely older than Culver City itself.
The charming duplex is currently on the market for $3,400,000, with Compass’ Daniel Lowe handling the listing.
More stories
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Source: fancypantshomes.com
Darrell Weekes of Purple Thread Marketing advises mortgage brokers to focus on two free tools for lead generation: Google Business profiles and LinkedIn. Read more: https://t.co/HT0PgwaMBu — Mortgage Professional America Magazine (@MPAMagazineUS) August 26, 2024 That shift has seen a growing number of companies pivot to a new business model, focusing on either a discount … [Read more…]
The Rove credit card pitches itself as “the first travel credit card to approve users without a credit history.” The $0-annual-fee card intends to use more than just an applicant’s credit scores to determine eligibility and will earn rewards on travel and everyday purchases. Plus, Rove says users will be able to redeem those rewards across 13 airline partners and at least one hotel program.
The card is not yet obtainable, and for now, interested applicants can only join the waitlist. The card is set to become available to some waitlist applicants beginning in December 2024 and then more broadly throughout early 2025, according to Arhan Chhabra and Max Morganroth, Rove’s co-founders.
Rather than focus solely on FICO scores to determine creditworthiness the way a traditional credit card does, Rove will also use data like income and account balances, for example, to evaluate whether an applicant is fiscally responsible. (Applicants will have to agree to link their bank accounts to Rove.)
Additionally, there’ll be a preapproval process, so interested customers will have a sense of their odds of qualifying — and what terms they might get — before officially applying. If you’re approved and accept a Rove card offer, only then will there be a hard inquiry on your credit report, which can temporarily affect your credit scores.
Using nontraditional underwriting to determine creditworthiness is not new, especially among alternative credit cards from startups. However, it is rare to find a travel card that considers applicants with no credit history or poor credit (FICO scores of 629 or lower).
Chhabra and Morganroth say that relying on more than an applicant’s credit score will allow those with no credit or who have worse than average credit, including a younger demographic, to have access to a travel card. The best travel credit cards typically require good or higher scores (FICO scores of at least 690).
The Rove credit card will earn the following:
3 points per $1 spent on travel booked through the Rove portal, which will include flight and hotel bookings, car rentals and experiences.
2 points per $1 spent on anything else.
Once the card launches, users will also have the opportunity to earn 4 points per $1 spent on every purchase, by referring new users. When your referred user gets a Rove credit card, you’ll earn that elevated reward rate for 30 days, or up to $2,500 in rewards, whichever comes first.
According to Rove’s co-founders, points are worth 0.75 cent each as cash back, but you’ll get better value when redeeming for travel. You can do that directly through the Rove travel portal, generally at a value of 1.25 cents per point. If you use the portal to book with one of Rove’s travel partners, however, points can be worth an average of 2 to 3 cents each.
Rove says it also plans to allow cardholders to redeem points with partners that offer alternate modes of transportation and experiences, like private jet and helicopter companies.
In addition to the credit card, Rove plans to offer an artificial intelligence travel agent called “The Rover.” The tool will act as an in-app travel concierge that can help users explore flight deals, suggest trip itineraries, and provide information about points usage for flights, hotels and experiences.
“Rover is about being everyone’s friend that knows how to travel-hack,” Morganroth says. “They don’t have to text someone asking them: It’s right there in the app for you.”
Source: nerdwallet.com
While there are many benefits to being an authorized user on another person’s account, you risk damaging your credit score if the primary cardholder isn’t responsible with the account.
Let’s take a look at the pros and cons of being an authorized user and how to prevent a credit score drop after being added to someone else’s account.
An authorized user means you’ve been added to another person’s credit account and can use it to make purchases. You’ll also receive your own card, though you can’t see the primary cardholder’s charges nor will you receive a bill. The primary cardholder is responsible for any charges made on the card.
The move comes with several benefits. You can have immediate access to credit without the need for a credit inquiry. Plus, it’s an opportunity to establish a credit history or help repair or build your credit.
However, there are limitations worth noting. The biggest one is that the primary cardholder’s behavior reflects on you. If he or she routinely misses payment due dates or uses up most of their available credit, for instance, your credit score (and theirs) can take a hit. What’s more, you can’t make changes to the account or add other authorized users, and you won’t be able to ask for credit limit increases.
If you find yourself stretching your finances every month, consider using a budget. A spending app can help you create a budget and spot upcoming bills.
When you’re added as an authorized user to an account, your credit could be impacted positively or negatively — or not at all.
For instance, if you’re added to an account with a record of timely payments, your credit score may improve. If you’re an authorized user on an account that’s not in good standing, your credit score could suffer. And if the credit card issuer doesn’t report authorized user activity to any of the three credit bureaus, your score won’t be impacted.
Credit score monitoring services can help you keep tabs on any changes in your credit score and see an overview of your debt balances.
Recommended: Why Did My Credit Score Drop After a Dispute?
Oftentimes, being added as an authorized user on a credit card account can help you establish credit or increase your credit score. But keep in mind that the primary cardholder is responsible for making payments, and the card’s use will be reflected on both of your credit reports.
Trust is key, so only consider asking someone who has a positive payment history, good spending habits, and low credit utilization ratio.
The process of adding an authorized user to an account varies by credit card. But generally speaking, you should be able to handle it online or by calling the issuer directly.
When adding an authorized user, you will likely need to know their personal information, such as their address, phone number, and Social Security Number. Once you’ve submitted your request, your credit card company should mail a new card to the authorized user.
The easiest way to remove an authorized user from your account is to contact your credit card company’s customer service department. However, depending on the card, you may be able to take care of this online. You’ll likely be asked to verify your account information.
Removing an authorized user from an account may not hurt your credit score, but it could impact theirs. If the card has a long record of on-time payments and low credit utilization, that positive history will be removed from the authorized user’s credit report. And if the account has been open for a long time, it could also decrease the average length of their credit history.
However, the authorized user may see a boost in their score if they’re removed from an account with a history of late or missing payments or high credit utilization.
Recommended: How to Check Your Credit Score Without Paying
Before you’re added as an authorized user, it can be helpful for you and the primary cardholder to understand the factors that affect your credit score. Here’s what goes into your FICO™ Score, which most lenders use.
• Payment history
• Amounts owed
• Length of credit history
• New credit
• Credit mix
Of those five factors, payment history and amounts owed have the biggest impact on your credit score. So ensure the primary cardholder makes on-time payments and avoid carrying a high balance, which can affect your credit utilization ratio.
How long does it take to build credit? Credit card companies typically report activity to the credit bureaus every 30 to 45 days.
Pro tip: You can often check your credit score for free through certain banks and credit cards. Many financial institutions will give regular credit score updates as a free service to their customers.
If yours doesn’t offer this service, you can sign up for a credit score monitoring service or use a tool like a money tracker app.
Though both share an account with another person, there are some important differences between an authorized user and a joint account holder.
Most notably, a joint account holder is equally responsible for making payments on the account, while an authorized user is not. Also, when you apply for a card as a joint account holder, the credit card issuer will perform a hard inquiry, which could cause your credit score to drop temporarily. A hard inquiry is generally not required when adding an authorized user.
Becoming an authorized user on an account comes with its share of benefits and drawbacks. Here are a few things to consider:
• Immediate access to credit
• Could help you build or improve your credit
• No responsibility to pay the debt
• May damage your credit score if the primary cardholder fails to make on-time payments or keep balances low
• Risk damaging your relationship with the primary account holder
• No control over account
Being added as an authorized user can help you build or improve your credit, but in some cases you may notice a drop in your credit score. This often happens when the account is not in good standing, perhaps because of late or missed payments or a high balance. To help protect your (and the account holder’s) credit score, ensure bills are paid on time and keep credit utilization low.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
While becoming an authorized user can help your credit, there are times when it can have the opposite effect. For instance, if you’re added to an account that has a history of missed payments or the credit utilization ratio is too high, your credit score could fall.
There’s no set number of points you receive when you become an authorized user. However, if the account you’re associated with is in good standing, you may see an increase in your credit score.
Generally speaking, it takes a month or two after you’ve been added as an authorized user for the account to show up on your credit reports.
Photo credit: iStock/Milan Markovic
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SORL-Q324-012
Source: sofi.com
Credit scores measure your financial health at a given point in time. Ideally, your score increases as you build your credit history, so a sudden decline can leave you wondering why.
Several things can cause a credit score to fall 100 points (or more), and late payments are often at the top of the list. Here’s a closer look at why credit scores decrease.
A credit score can drop by 100 points or more when there’s a significant change to your credit reports. Possible reasons for a credit score drop of 100 points or more include:
• Late payments
• Missed payments
• High balances relative to your credit limits
• Reduced credit limits
• Delinquencies and collection accounts
• Bankruptcy filing
• Foreclosure or repossession
• Judgments
• Multiple inquiries for new credit in a short timespan
• New credit accounts in your name1
These types of items can drag your score down. Paying off loans or closing credit card accounts can also cost you credit score points, even though you might consider them positive financial steps.
Identity theft and fraud can trigger a sizable drop in your credit score as well. If someone uses your identity to obtain loans or open lines of credit without your knowledge, that could leave you vulnerable to late or missed payments, delinquencies, and collection actions. A money tracker app can help you keep tabs on your credit score, and you’ll also get updates when it changes.
A credit score drop can be worrisome, especially if you weren’t expecting it. You may have cause for concern if you:
• Plan to apply for a mortgage or another type of loan soon
• Would like to refinance an existing debt that you have at a lower interest rate
• Suspect that someone may be using your identity to obtain credit fraudulently
Fluctuating credit scores could make it more difficult to get approved for new loans. If you are approved, a lower score could result in a higher interest rate.
Identity theft is a more serious matter. You may not even be aware that someone is using your identity to obtain credit in your name until you’re denied credit, or worse, sued for an outstanding debt you didn’t create.
Why did my credit score drop by 100 points for no reason? The short answer is that it didn’t. There must be some change to your credit report to result in a score decline.
Changes that can show up on your credit reports include:
• New accounts opened in your name
• Account closures
• Changes to your balances or credit limits
• Payment activity, including late payments or missed payments
• Delinquencies and accounts that are sent to collections
• Paid off balances
• Debt settlements, in which your creditors agree to let you pay off less than what you owe
• New inquiries for credit1
Inaccurate information can also harm your credit. Between 2021 and 2023, consumer complaints about credit report errors increased by 168%, according to the Consumer Financial Protection Bureau (CFPB). Credit report errors can range from payments being incorrectly reported to accounts listed as belonging to you that are not yours.2
In some cases, a credit score drop might be caused by someone else. This can happen when you cosign a loan for someone. As the cosigner, you’re legally responsible for the debt. Any activity relating to the account, including late or missed payments, can show up on your credit report.3
If your credit score drops by 100 points or more, the first thing to do is determine why. Obtaining copies of your credit reports can shed some light on what may be causing the decline.
Here are some things to look for as you review your reports:
• Missing or incorrect payment history
• Incorrect balance information
• Accounts that don’t belong to you
• Collections for debts that don’t belong to you
• Loan accounts you’ve paid off that still show a balance
• Open accounts that are listed as closed or vice versa
• Duplicate debts, meaning the same account is listed multiple times
If you identify what you believe is an error or inaccuracy, you have the right to dispute it with the credit bureau that’s reporting the information. Equifax, Experian, and TransUnion — the three major credit bureaus — all allow you to initiate credit report disputes online.4
Why did my credit score drop over 100 points when there were no errors? That’s trickier to answer, as it depends on the information in your credit file. If there are no errors or inaccuracies, then you’ll need to consider things like payment history, credit limits, and debt balances to see if they’ve had any impact on your score.
Hopefully, you never have to deal with a major credit score drop. But it may help to have some examples of what can cause your score to go down.
• You’re ready to buy a home and are shopping for a mortgage lender. You find the one you want to work with and apply for a loan. You’re approved, but the new inquiry and associated debt on your credit reports lead to a score drop.
• You cosign a car loan for your niece, on the promise that she’ll make the payments on time. She loses her job but doesn’t tell you and the loan payments go unpaid for six months. The lender repossesses the vehicle, which lands on your credit report and costs you credit score points.
• You make the final payment to your student loans. The account is now listed as closed and paid in full on your credit reports, but it lowers your score.
Again, not all things that lead to a credit score drop are negative. Paying off debt, for example, is something to celebrate even though it can ding your credit to a degree.
How long does it take to build credit? There’s no simple answer, as it can depend on what you’re doing (or not doing) to recover lost credit score points.
Some of the most effective strategies for building credit include:
• Paying bills on time to establish a positive payment history
• Keeping the balances on your credit cards low or paying in full each month
• Paying down debt that you already have
• Periodically requesting credit limit increases from your credit cards (but not running up new debt against them)
• Leaving older credit accounts open, even if you don’t use them
• Using different types of credit, such as loans and credit cards
• Limiting how often you apply for new credit
You can also build credit as an authorized user on someone else’s credit card. Authorized users have charging privileges on the card and account activity will show up on their credit reports, but they’re not legally responsible for the debt.5
Having a checking or savings account typically doesn’t affect credit scores. Banks can, however, report negative activity related to closed accounts to ChexSystems, a consumer credit reporting agency. A negative ChexSystems report could make it difficult to get approved for a new bank account.
If you recently checked your credit following a score drop, you may want to wait a while before checking it again. Credit scores change when there’s new information added to your credit reports, whether it’s something positive or negative.
It may be helpful to check your credit monthly or quarterly if you’re working on rebuilding your score. That way, you can track your progress against any steps you’re taking to improve your score to see what’s working.
At a minimum, it’s a good idea to check your credit at least once annually. That can allow you to see what’s changed over the last year and look for any suspicious or potentially fraudulent activity.
Pro tip: Use a free credit monitoring service to get regular credit score updates.
Recommended: How to Check Your Credit Score Without Paying
Closing credit cards can hurt your score if you still owe a balance at the time you close the account. Your credit utilization ratio measures how much of your available credit you’re using. When you close a credit card with a balance due, you automatically increase your credit utilization ratio.6
For example, let’s say you have a combined credit limit of $20,000 across five credit cards. You owe $6,000 in total debt to your cards, which makes your credit utilization ratio 30% ($6,000 / $20,000 = 0.3).
Now, assume that you owe $5,000 to one card alone. That card has a credit limit of $10,000. You close it, cutting your total credit limit in half. Now you have a credit utilization ratio of 60% ($6,000 / $10,000 = 0.6).
Some experts say that 30% or less is an ideal credit utilization ratio to aim for, while others target 10% instead. The main thing to remember is that the lower your credit utilization is, the less harmful changes can be to your score.
In terms of how to lower credit utilization, you can do so by paying down credit card balances and/or increasing your credit limits.
If you’re wondering what affects your credit score, it’s not just one thing. FICO credit scores, which are the most commonly used among top lenders, are determined by five factors.
• Payment history: 35% of your score
• Credit utilization: 30% of your score
• Credit age: 15% of your score
• Credit mix: 10% of your score
• Credit inquiries: 10% of your score7
VantageScores are based on some of the same factors, though they’re calculated differently. The VantageScore model was developed by the credit bureaus as an alternative to FICO scores.
Tracking your credit score can be beneficial but there are some potential downsides. Here’s a quick look at the advantages and disadvantages.
• Monitor your progress over time
• Get to know which factors are helping or hurting your score the most
• Easier to spot suspicious activity or potential fraud
• You may feel frustrated if your score isn’t climbing as quickly as you’d like
• Checking your score too often could cause you to obsess over even minor changes
• Keeping up with multiple credit scores could get confusing
Recommended: Why Did My Credit Score Drop After a Dispute?
Credit score monitoring services make it easy to track your credit scores and get notifications when there’s a change to your credit report. SoFi, for instance, offers free weekly credit score updates and access to a certified financial planner if you have questions about credit score changes.
Regardless of which service you use to monitor your credit, keep track of changes as they’re reported. Specifically, look at which changes are positive and which are negative. That can guide you toward what you might need to do to improve your score.
Seeing your credit score drop by 100 points or more can be disheartening, but it’s not the end of the world. There are things you can do to get your score back on track.
Tracking your money is a good place to start. Tools like a spending app connect all of your accounts in a single dashboard so you can understand the factors that are influencing your credit scores. You can also check your scores for free. It’s a simple way to take charge of your financial health while you work on building good credit.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
It may seem as if nothing has changed on your credit reports, but there must be some type of change for your score to be affected. If your score dropped, take time to review your credit reports thoroughly. Even a seemingly minor change, such as a new credit inquiry, could make a dent in your score.
Paying bills on time can help add points to your score, but it might still go down if you have a high credit utilization or apply for new credit frequently. Closing accounts could also hurt your score, even if you pay on time. Using a spending app to track bills and expenses can help you stay on top of your due dates.
You can’t dispute a credit score drop, but you can dispute the information on your credit reports that you believed caused the drop. Keep in mind, however, that disputing credit report information isn’t guaranteed to improve your score.
Photo credit: iStock/kate_sept2004
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SORL-Q324-009
Source: sofi.com
There are several explanations for why your credit score might fluctuate by a few points now and then. But if you’ve noticed that your score is down by as many as 20 points, and you can’t think of any reason for this dramatic drop, it’s a good idea to do some checking ASAP. This can help you determine what affected your score and what you should do about it.
Read on for some common reasons why your credit score could unexpectedly drop by 20 points, and how you can improve and protect your score going forward.
The fact that you even noticed that your credit score took a dip is proof that you’re paying attention to your finances, so give yourself a high five for that. If there’s a problem — a credit reporting error, for example, or possibly identity theft — you’ve got a head start on getting it fixed. And if it’s something you did without knowing it could impact your score (at least not by this much) you can resolve to do better in the future.
Even if you’re doing everything right — including paying bills on time, keeping low credit card balances, and using credit score monitoring to track how you’re doing — you can’t always know from month to month what will happen to your credit score. That’s because credit scoring systems like FICO® Score and VantageScore® use information from a credit report to assess your creditworthiness and assign it a number from 300 (the lowest score) to 850 (the highest).
If the information in your credit reports is up to date and correct, your credit score will reflect that. But it’s up to each individual lender to decide when or even if it will report information to the three major credit reporting agencies: Equifax, Experian, and Transunion. And sometimes the reports can be incomplete or incorrect. If that’s happened to you, your score may drop, or it may not be as high as you think it should be.
FICO® and VantageScore® use different formulas to calculate credit scores, but the same basic factors from your credit report can move your score up or down. And some things can have a bigger influence on your score than others.
Here’s how FICO® breaks down what affects your credit score:
• Payment history (35%): Your record of paying your bills late or on time can have the biggest impact on your FICO® Score. A spending app can help you keep tabs on upcoming bills.
• Amounts owed (30%): Even if you’re managing it well, carrying a lot of debt could affect your score. This category applies to the amount you owe overall, but it puts a priority on your credit utilization. Lenders generally like to see a credit utilization rate of 30% or lower.
• Length of credit history (15%): This category looks at the age of your oldest account, the age of your newest account, and the average age of all your accounts together.
• Credit mix (10%): Lenders also may want to see that you, as a borrower, can handle different types of financing, including credit cards, installment loans, retail accounts, and mortgage loans. So FICO® includes this in its credit scoring formula.
• New credit (10%): When you apply for some type of financing, whether it’s a new credit card or a new car, the lender may make what’s known as a hard credit inquiry, which could cause a dip in your score. The drop is typically small and temporary, but you might notice a bigger change if you make several credit applications at around the same time.
It’s normal to feel frustrated and concerned if your credit score drops suddenly, especially if you don’t understand what happened. But the good news is, it can be pretty easy to find out what’s up. If your financial institution, credit card company, or your favorite money tracker app offers you a way to get your credit score regularly, you may have access to a brief summary that explains what caused that number to go up or down. This can be a good place to start looking for clues as to why your score dropped by 20 points.
It’s also useful to know how to read a credit report so you can get the information you need to catch errors or spot identity theft. This can help you get to the bottom of what’s affecting your score and take steps to get that number back in line with what you think it should be. You have the right to request a free copy of your credit report from each of the credit bureaus once a year by visiting AnnualCreditReport.com.
Reasons Your Credit Score Might Go Down
It could be that something you did (or didn’t do) caused your score to drop, and you might not even know it. Maybe you closed an old account that you didn’t use anymore, or maybe you applied for a loan or new credit card. It’s also possible that you have an old unpaid balance hanging out there that you thought was cleared up but isn’t.
Examples of Credit Score Dropping
A combination of several factors could explain why your credit score seems to have suddenly and randomly dropped by 20 points. Here are some examples of why a credit score can go down:
Are you close to maxing out all the credit you have available to you? Did you recently make a large purchase with your credit card that pushed you close to your credit limit? Even if you’re paying your bills on time, if your credit utilization rate is higher than 30%, it could explain a reduction in your credit score.
It may seem counterintuitive (and super frustrating) that canceling a credit card can have a negative effect on your credit. But there are a couple of reasons why closing a credit card account can lower your credit score.
First, when you cancel a card, you reduce your available credit, which can cause a jump in your credit utilization rate. Second, closing an older account can affect the length of your credit history, which is another factor that goes into determining your credit score. It may make sense to close the account anyway if the card has high fees or if it’s hard to resist overspending. But if you do cancel a card, especially one you’ve had for a while, you can expect to see a temporary drop in your credit score.
Maybe you simply forgot to pay a credit card bill. Or maybe you failed to make a payment in a month when money was tight and figured you’d play catch-up with a bigger payment the next time. Either way, if the credit card company reported your late payment to a credit reporting agency, it could be the reason your credit score dropped. Remember: Payment history is the biggest factor in calculating your credit score.
When it comes to determining your credit score, your “credit mix” isn’t as big of a factor as your payment history or the amount of available credit you have. But if you recently paid off a car loan, personal loan, or some other type of installment loan — and your credit mix is now limited to just credit card debt — it could have an affect on your score.
That doesn’t mean you shouldn’t celebrate your accomplishment or that you should run out and apply for another loan. But it could help explain why your credit score is lower than you think it should be.
There are a few steps you may want to consider taking right away if you notice a big drop in your credit score.
If you find an error on your credit report, such as a payment incorrectly reported as late, the Consumer Financial Protection Bureau (CFPB) recommends filing a formal dispute, in writing, with both the credit reporting company and the entity that provided the information (such as a credit card company). By law, the credit reporting company must investigate your dispute and notify you of its findings.
If you notice signs that you may be the victim of identity theft (such as unknown accounts or unfamiliar debt), you may choose to alert the credit bureaus. You can also report identity theft on the Federal Trade Commission’s site, IdentityTheft.gov.
The biggest factor in determining your credit score is your payment history, so keeping track of your bills is important. If payment deadlines tend to get away from you, you may want to set up online bill pay to reduce your bill-paying burden. Or you can put payment due dates on a physical or digital calendar, then set up alerts on your phone so you know it’s time to pay.
When you pay a bill, be sure to note the details, such as the date, amount, and confirmation number if paid online.
You may want to wait until your credit score comes back up a bit before applying for a new credit card or loan. If you want to get the best interest rate or you’re worried about getting approved, you’ll want your credit to be shipshape. It also can be a good idea to avoid authorizing several companies to do a hard credit pull if you’re shopping for a mortgage, car loan, or credit card.
If you’ve been working to improve your creditworthiness, even a small dip in your credit score can be disappointing. But you don’t have to let a negative fluctuation deter you from your goal.
How can you continue to build your credit? Besides paying your bills on time, managing your credit utilization, and having a good credit mix, you also can help lenders see that you’re a good risk by paying down high-interest debt — and keeping it paid off.
There are several ways you can check your credit score without paying. Many credit card companies and financial institutions offer free credit reporting and scoring as a benefit to cardholders. (You may have to opt-in to begin receiving this service). If your personal information was compromised in a data breach, you may be offered free credit monitoring for a specific period of time. You also can pay for a credit monitoring service to get regular updates.
Though credit score updates can occur at any time, checking about once a month should provide a good gauge of how you’re doing. (You can check your own credit score any time you like without any negative impact.)
If you get a free credit score from your bank or credit card, you’ll probably receive a new score monthly. With a credit monitoring service, on the other hand, you may receive an alert any time there’s a significant change in your score or some type of suspicious activity.
Tracking your credit score can help you protect your credit and may provide added incentive to keep working on your financial health. Here are some pros and cons to consider:
• Tracking your score can help you spot a problem or possible fraud or theft so you can quickly take action.
• If you plan to apply for a credit card, mortgage, or some other type of loan, you’ll have a better idea of what your creditworthiness looks like to lenders. Your score helps lenders decide if you’re a risky borrower or a fairly safe bet.
• If you know that even small fluctuations in your score will make you nervous, you may want to limit how often you check it.
• It may take a while before your score reflects the good (or bad) moves you’ve made. You may want to allow at least one full billing cycle to pass before checking on why your number didn’t move even though you expected it to.
Recommended: Why Did My Credit Score Drop After Dispute?
A 20-point drop in your credit score can be worrisome. But there are several steps you can take to determine what caused such a significant change and then try to fix it.
It also can be helpful to be proactive instead of reactive when it comes to your credit score. By paying attention to the factors that can have the biggest impact on your credit, such as your payment history and credit utilization, you can keep working to build and protect your credit.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
It may seem as though your credit score dropped randomly, but there’s usually something behind a dip of 20 points or more — and it’s worth looking into. It could be a late payment, an error on your credit report, a sign of identity theft, or some other reason.
A change in your credit score reflects a change in a credit report. It may be that you made a late payment and you didn’t think your credit card company would report it. Or maybe you made a major purchase that changed your credit utilization rate. If you’re concerned, you may want to check your records against your most recent credit reports.
A credit score can drop for many reasons. Though a 25-point dip is something you’ll probably want to check into (if you can’t figure out why it happened), there are steps you can take to dispute information in your credit report and repair your credit score.
Photo credit: iStock/milan2099
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SORL-Q324-002
Source: sofi.com