Zillow chief economist Skylar Olsen noted, “If this relief from mortgage rates continues, we should see more buyers restarting their hunt for a home.” Olsen added that while rate locks among homeowners are easing, they may not be as motivated to sell, given the still-low inventory. This could lead to increased competition and sales as … [Read more…]
A passbook loan is a loan that allows you to borrow against the money you have in your savings account. In other words, your savings serve as collateral for the loan.
While you will likely have to pay interest when borrowing money in this way (which you wouldn’t have to do if you used your savings directly), a passbook loan can help you build credit if your financial institution reports the activity to the credit bureaus and you manage the loan well. Passbook loans may also be a valuable financial tool if you’re having trouble securing a personal loan or find their interest rates to be higher than you can afford.
Keep reading for all the details about how passbook loans work, plus their pros and cons.
Here, learn more about the definition and history of passbook loans as well as how they usually work.
Passbook loans (often called share-secured or savings-secured loans) are a way to borrow funds, typically at a lower interest rate, by using your savings as collateral.
Passbooks are physical books that record a bank account holder’s transactions. These passport-sized books originated in the 18th century; bank tellers and postmasters could record account transactions in them. For example, a bank teller could write the date of a transaction, the amount deposited or withdrawn, and the amount of money available to the customer. In the late 20th century, bank statements began to make their appearance and replaced passbooks to a large degree. (For those who want them, however, passbook accounts are still available from some financial institutions and can provide a customer with a classic booklet to track transactions.)
A passbook loan borrows from the name of these old-fashioned books. With passbook loans, you use your savings account, held at the same institution, as collateral for a loan, and you may pay a relatively low interest rate. Putting the money in your account up for collateral, however, means your lender can seize that cash if you default on your loan payments.
Here’s how a passbook loan works:
• First, you’ll have to find a bank or lending institution that offers passbook loans. Most banks don’t offer them, so you might consider checking at a credit union.
• Once you find a potential lender and establish a savings account or a certificate of deposit (CD) there, the financial institution will usually let you borrow up to 90% to 100% of the money in your savings account. For example, if you have $20,000 in your savings account, you may be able to borrow $18,000 to $20,000. Check with the lender to learn the exact amount.
• Once you receive the loan from your financial institution, it’s important to note that you can’t access your savings. The financial institution might put a hold on your account, or you might have to hand over your savings passbook until the loan is repaid.
• As you repay your loan with interest, your lender will usually release the amount you repay from your withheld savings.
• Your payments may be reported to the national credit bureaus, but check with your lender to be sure. Timely payments can help build your credit score, while making late payments on your passbook loan can damage your score.
Next, take a closer look at the usual eligibility and requirements, interest rates, and repayment terms for passbook loans.
You’ll need a funded savings account or certificate of deposit to be eligible for a passbook loan, and it’ll typically have to be held at the institution you plan to borrow from. These types of loans are usually easier to get and less risky to the lender because they use collateral to back them (unlike unsecured loans, which don’t require collateral).
It’s important to understand passbook loan interest rates (the amount you repay in addition to the principal), particularly because you’re basically paying interest on your own money.
These loans can offer some of the lowest interest rates of any type of loan, likely because, since they are secured, they pose less risk to your financial institution. For instance, BankFive charges passbook loan rates of 3.00% to 3.50% APR (annual percentage rate) over the interest rate of the savings account used as collateral.
You repay the loan in regular, monthly installments over a specified period, such as three years.
You’ll have to fill out an application for a passbook loan. Each bank or credit union has its own application. Simply request the application from your financial institution. Depending on the lender’s requirements, you may be able to complete the application online, in person, over the phone, or via mail.
You may find the paperwork simpler and shorter than what is required for other kinds of loans. That can reflect the fact that you are already a customer of the financial institution and that you are borrowing against your own money.
It’s important to consider the pros and cons of passbook loans before you pursue one.
First, the upsides of passbook loans:
• Lower interest rates: Passbook loans typically carry a lower interest rate than other types of loans, which means the amount you pay back (principal plus interest) could total less than what you’d pay for other types of loans.
• Credit building: Passbook loans may help you build credit, provided your lender reports the loan activity to the credit bureaus and you make your payments on time.
• Few approval requirements: You usually don’t have to meet as many approval requirements to get a passbook loan as you would with other types of loans. That’s because your savings account, typically at the same financial institution, serves as collateral.
Now, the downsides of passbook loans:
• Credit may not improve: Though unlikely, your lender may not report your passbook loan payments to the credit bureaus. In that case, a passbook loan might not help you build your credit, even if you are meticulous about paying it back on time. It’s wise to check this point in advance. (Also, you must manage the debt responsibly to build credit if the lender does report your activity.)
• Uses your account as collateral: If you fail to make your payments on your passbook loan, your financial institution can take the money from your savings account.
• Cannot access your money while you borrow: You cannot access your savings account when you borrow money using a passbook loan. This can put you in a tricky situation if you need money immediately.
• Paying the bank for your own funds: At a basic level, a passbook loan means you’re paying the bank to borrow your own money.
• Restricted amount: In a best-case scenario, you can only borrow the amount you have in the bank. So if you have $3,000 in your savings account but are hoping to borrow $10,000 via a passbook loan to buy a car, you won’t be able to do so.
Passbook loans may not be the right fit for your situation, so you might consider these options instead.
• Personal loans: Personal loans, which generally range between $1,000 to $50,000, are unsecured loans that come from a wide variety of financial institutions, including banks and credit unions. You can use them for any purpose, including home improvements, debt consolidation, and more. Personal loans may cost you more in interest compared to passbook loans, and repayment terms usually range from two to seven years.
However, you typically don’t need collateral for a personal loan, unless it’s a secured personal loan.
Use a personal loan calculator to learn more about how much a personal loan might cost you.
• Credit-builder loans: If you have little to no credit, a credit-builder loan may help you improve your credit score. These loans, which usually range between $300 and $1,000, involve depositing money into a certificate of deposit (CD) or savings account, which the lender holds as collateral. You don’t receive a lump-sum disbursement upfront, as you do with many loans. Instead, you make fixed monthly payments toward the loan (principal plus interest). Your lender may release some of the borrowed funds when you make a monthly payment, or they might hold the full amount till you make the final payment. Interest and fees are usually deducted from the amount you receive. This activity is reported to credit bureaus and contribute to an uptick in your score.
• Secured credit cards: You may want to consider a secured credit credit card instead of a passbook loan. A secured credit card is a credit card that requires a security deposit, which becomes your line of credit. If you don’t make your payments on time or default on your loan, your lender can take your deposit. However, using the credit card responsibly can help you build credit because your lender typically reports your payments to the three major credit-reporting agencies — Experian®, Equifax®, and TransUnion®.
Recommended: What Is the Average Interest Rate on a Personal Loan?
There are many uses for funds borrowed via a passbook loan, such as:
• Purchases, such as a new laptop
• Expenses, like homeowners insurance or summer camp for the kids
• Debt consolidation, such as paying off your credit card bill
• Buying a car
• Home improvement projects
• Wedding costs
• Medical or educational expenses
• Vacations
Ultimately, you can use a passbook loan for whatever you want.
Will passbook loans be part of the future financial landscape? Given all the other financial products currently available (such as the personal loans described above), consumers may not want to pay interest to borrow against their own savings.
Passbook loans are not very common, having seen their popularity ebb over the years. Their usefulness is often limited to those who want to build their credit in this particular way or are seeking an especially low interest rate. If you find yourself in that situation, you may want to check with various lenders, especially credit unions, to see what’s available.
On the other hand, market data indicates that personal loans are gaining popularity.
Passbook loans are a way of borrowing money against your savings, which can be useful for some people looking to build their credit. Ultimately, however, you end up paying a financial institution to borrow your own money with a passbook loan.
If you’re looking to access funds for debt consolidation, home improvement projects, a wedding, or other needs, you might want to consider a personal loan instead.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
Yes, passbook loans are still available today. Not every lender offers them, so search online for options. You may find that credit unions are more likely to fund these loans.
Typically, you need a savings account or a certificate of deposit (CD) account for a passbook loan, typically with the institution you intend to borrow from.
If you default on a passbook loan, your lender could seize your savings (the loan’s collateral) to repay the delinquent balance. Defaulting on your loan can also hurt your credit score.
Photo credit: iStock/Jinda Noipho
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Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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.
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Source: sofi.com
Montana’s wide-open spaces and breathtaking landscapes make it a dream destination for many. But what about living here affordably? We’ve done the homework for you and found the most budget-friendly cities in Big Sky Country.
Whether you’re looking for lower rents or just want to stretch your dollar further, these Montana towns offer affordable living without sacrificing the natural beauty and charm that Montana is known for. Here are the top five cheapest places to live in Montana, along with a brief overview of some of the largest employers and most affordable attractions in each area.
Average rent: $1,182
Sidney tops our list as the most affordable city in Montana, with an average rent of $1,182. This small town offers some of the most reasonable housing options in the state, especially when considering its proximity to the Bakken oil fields. Renters can find studio apartments for as low as $1,040, while a one-bedroom averages $1,205, and a two-bedroom comes in at $1,302.
Sidney might be small, but it has a solid economic backbone. The energy industry, particularly oil and gas, plays a significant role in the local economy. For affordable fun, nearby Makoshika State Park is perfect for a budget-friendly day of hiking or exploring the stunning badlands.
Apartments for rent in Sidney | Houses for rent in Sidney | Homes for sale in Sidney
Average rent: $1,415
Missoula’s average rent of $1,415 makes it a close second on our list. Despite being one of Montana’s larger cities, Missoula manages to keep living costs relatively low. Studio apartments in Missoula average $1,250, and you can find a one-bedroom for around $1,195. If you need more space, a two-bedroom will set you back about $1,800.
University of Montana is one of the largest employers in Missoula and the driving force behind the city’s status as one of the top Montana college towns. The city’s outdoor attractions, like the Clark Fork River and Mount Sentinel, are ideal for those seeking free or low-cost fun under the sun. Missoula’s booming downtown also puts on free events year-round, including the popular River City Roots Festival, making it a budget-friendly place to live with plenty to do.
Apartments for rent in Missoula | Houses for rent in Missoula | Homes for sale in Missoula
Average rent: $1,425
In Billings, the average rent is $1,425. Studio apartments start at around $1,141, and one-bedroom units average $1,441. A two-bedroom apartment in Billings will cost you about $1,692.
Billings is Montana’s largest city, and its economy reflects that, with major employers like Billings Clinic and Phillips 66. The Rimrocks and Pictograph Cave State Park are favorites for outdoorsy types. For your culture fix, the Yellowstone Art Museum offers free admission on certain days, ensuring that entertainment doesn’t have to cost a fortune.
Apartments for rent in Billings | Houses for rent in Billings | Homes for sale in Billings
Average rent: $1,547
Whitefish is known for its awe-inspiring landscapes, and with an average rent of $1,547, it remains affordable. Studio apartments here average $1,295, while a one-bedroom will cost you around $1,450. If you’re looking for more space, two-bedroom apartments go for about $1,895. While slightly pricier, Whitefish offers value through its proximity to Glacier National Park and world-class skiing.
Tourism and outdoor sports are key drivers of Whitefish’s economy, with major employers like Whitefish Mountain Resort and the local healthcare industry. The town’s natural beauty provides endless free or low-cost activities, from hiking Whitefish Mountain to enjoying a day at Whitefish Lake. Winter sports enthusiasts can also find deals on ski passes, making it possible to enjoy the outdoors without overspending.
Apartments for rent in Whitefish | Houses for rent in Whitefish | Homes for sale in Whitefish
Average rent: $1,661
Rounding out our list is Kalispell, with an average rent of $1,661. Studio apartments here are around $1,150, making them a more budget-friendly option, but rents increase significantly with size. A one-bedroom averages $1,715, and a two-bedroom goes for $2,117. While on the higher end, Kalispell’s location near Glacier National Park and Flathead Lake offers unparalleled access to Montana’s natural beauty, which could justify the higher rent for outdoor lovers.
Kalispell is a hub for healthcare and retail, with major employers like Kalispell Regional Healthcare and the Kalispell Center Mall. The town’s arts scene, including the Hockaday Museum of Art and free outdoor concerts in Depot Park, ensures that residents can enjoy a rich cultural life on a budget.
Apartments for rent in Kalispell | Houses for rent in Kalispell | Homes for sale in Kalispell
All cities must have over 5,000 residents per the US Census and have an average rent price under or within $350 of the median rent price for the state – which is $1,320 per month according to Redfin data. Average rental data from Rent.com July 2024.
Source: rent.com
Chapel Hill, often referred to as “The Southern Part of Heaven,” is a charming town filled with possibilities. With its picturesque landscapes, vibrant neighborhoods, and a rich cultural scene anchored by the University of North Carolina at Chapel Hill, it’s no wonder that many people dream of calling this town their home. However, life in this idyllic setting comes with its own set of challenges. So whether you’re searching for a cozy apartment in Southern Village or a peaceful apartment in Meadowmont, you’ve come to the right place.
In this ApartmentGuide article, we’ll explore the various pros and cons of living in Chapel Hill, helping you decide if this beautiful town is the right place for you.
Chapel Hill is renowned for its educational opportunities, primarily due to the presence of UNC, one of the oldest public universities in the United States. The town’s commitment to education extends beyond the university, with highly rated public schools and a focus on lifelong learning. This academic atmosphere fosters a community of thinkers, making Chapel Hill an ideal place for students, educators, and those who value education.
While Chapel Hill offers many amenities, it comes with a higher cost of living compared to other towns in North Carolina. The overall cost of living in Chapel Hill is about 5% higher than the national average, with housing being the most significant factor. The median sale price for a home in Chapel Hill is around $605,000, and the average rent for a one-bedroom apartment in Chapel Hill is $1,751 per month. While utilities are 8% lower than the national average and transportation costs are 6% less, groceries and healthcare expenses are slightly above average, contributing to the overall higher cost of living.
Chapel Hill is known for its picturesque landscapes and outdoor recreational opportunities. The town is surrounded by lush greenery, rolling hills, and beautiful parks, making it an excellent location for those who love nature. Residents can enjoy hiking, biking, and picnicking in places like the North Carolina Botanical Garden, the Carolina North Forest, and various trails that weave through the town. The mild climate also means that outdoor activities can be enjoyed year-round.
Commute times to popular outdoor destinations
Chapel Hill does have a public transportation system, including the free Chapel Hill Transit bus service, which is a great benefit for residents. However, the town’s public transportation options are limited, especially when compared to larger metropolitan areas. Many residents rely on personal vehicles for commuting, which can lead to traffic congestion during peak hours. The town’s walkability is good in certain areas, particularly around the university, but less so in outlying neighborhoods.
Chapel Hill’s transportation scores
Chapel Hill boasts a vibrant arts and culture scene that rivals much larger cities. The town is home to numerous galleries, theaters, and music venues that host a variety of performances and exhibitions throughout the year. The Ackland Art Museum, PlayMakers Repertory Company, and the Cat’s Cradle music venue are just a few examples of the cultural gems in the area. Additionally, Chapel Hill’s close proximity to Durham and Raleigh expands access to even more cultural experiences.
As a small town with a large university, Chapel Hill can experience significant traffic congestion, particularly during the academic year. The influx of students, faculty, and visitors can lead to crowded streets and limited parking, especially in downtown areas and near the campus. While the town is working on improving infrastructure and traffic management, residents may still face delays during peak times.
Chapel Hill has a robust job market, particularly in sectors such as education, healthcare, research, and technology. The presence of UNC and its affiliated hospitals provides numerous employment opportunities in education and healthcare. Additionally, the Research Triangle Park (RTP), located nearby, is a major hub for technology and research companies, offering a wide range of job prospects in various fields.
Top employers in Chapel Hill
Chapel Hill’s desirability as a place to live has led to high demand for housing, which can make it challenging for new residents to find affordable options. The competitive real estate market, combined with the town’s limited housing supply, has driven up home prices and rents. This trend is expected to continue as more people are drawn to the area for its quality of life and educational opportunities.
Chapel Hill is home to some of the best healthcare facilities in the region, thanks to the presence of UNC Health Care. The university’s hospitals and clinics offer comprehensive medical services and are known for their cutting-edge research and patient care. This access to high-quality healthcare is a significant benefit for residents, particularly those with specific medical needs or those seeking employment in the healthcare industry.
Chapel Hill’s climate is generally mild, but the summers can be quite hot and humid. Average high temperatures in the summer months often reach the upper 80s to low 90s, with humidity levels that can make it feel even warmer. This can be uncomfortable for some residents, particularly those who are not accustomed to Southern summers. However, the town’s abundance of trees and shaded areas can provide some relief from the heat.
Chapel Hill is steeped in history, with roots dating back to its founding in the late 18th century. The town’s historic districts, landmarks, and preserved architecture offer a glimpse into its past, while cultural institutions like the Morehead Planetarium and Science Center and the Carolina Performing Arts continue to enrich the community. This blend of history and culture creates a unique and vibrant environment for residents and visitors alike.
North Carolina’s property taxes are generally moderate, but in Chapel Hill, they can be higher than in other parts of the state. The combination of town, county, and school district taxes can add up, making property ownership more expensive. This is something prospective homeowners should consider when budgeting for a move to Chapel Hill.
Chapel Hill offers a diverse and thriving food scene, with a wide range of dining options that reflect the town’s multicultural population. From farm-to-table restaurants to international cuisine, there is something to suit every palate. Franklin Street, the town’s main thoroughfare, is lined with cafes, bars, and eateries, making it a popular destination for both locals and visitors. Additionally, the town’s farmers’ markets provide fresh, locally-sourced produce and artisanal goods.
Popular restaurants in Chapel Hill
Chapel Hill’s location in the Piedmont region of North Carolina provides easy access to a variety of outdoor recreational activities. The town is close to several state parks, including Eno River State Park and Jordan Lake State Recreation Area, where residents can enjoy hiking, camping, boating, and fishing. The nearby Blue Ridge Mountains and North Carolina coast are also within a few hours’ drive, offering additional opportunities for outdoor adventures.
Other outdoor activities in Chapel Hill
Curious about what makes North Carolina special? Be sure to check out our article on what North Carolina is known for.
Currently all of the landing pages for the FNBO Best Western cards are resulting in an error and not accepting new applications. Reader Harry Nguyen has stated that as of 8/18/24 these cards have been discontinued. We reached out to FNBO and they provided the following statement:
Yes, our applications for new cards are unavailable at this time. This doesn’t affect our existing Best Western cardholders.
At the time of publication Best Western did not respond.
Source: doctorofcredit.com
Kids, it turns out, need their parents even after they’re all grown up.
About 6 in 10 parents say they’ve helped their young adult children financially within the past year, according to a report released earlier this year from the Pew Research Center. The most common forms of assistance? Household expenses, cell phone bills and subscriptions to streaming services.
“Parents have always helped their children, but one of the real questions is, ‘How much is too much?’” says Anne Lester, author of “Your Best Financial Life.” The answer, she explains, depends on how much parents can afford to help, as well as each family’s parenting values.
To navigate the challenge of helping young adults achieve financial independence, money experts suggest these strategies:
Setting up young adults for self-sufficiency starts when they’re younger and still living at home, says Mindy Oglesby, certified financial planner and founder of Oglesby Wealth Strategies in Watkinsville, Georgia.
To help children become financially independent as adults, she says, “it’s important to help them with the mindset of making small sacrifices for something they want,” she says. For example, kids can earn an allowance by doing chores around the house.
Then, Oglesby adds, once they have their own money to manage, parents can show them how to apply a budgeting strategy and immediately put some of that money into a savings account for the future. They can also use a portion to buy something they want, like a toy. “It teaches them to set goals and work for things,” she says.
Rose Niang, CFP and director of financial planning at Edelman Financial Engines, says it’s also helpful to talk to your children about money steps you’ve taken for yourself, such as paying off credit card debt or saving for retirement. “These are conversations that can be sprinkled in anytime, and it will help them later,” she says.
As those kids become adults, living at home with parents is a popular way to delay bigger expenses. About 57% of young adults between ages 18 and 24 live with their parents, according to the Pew report. Most say they contribute financially to the household in some way. That can include paying for groceries, bills or rent.
Charging young adults to live at home is a good way to foster financial independence, Oglesby says, especially if the parent puts those “rent” payments into a savings account for the child to one day use toward their own home.
The ideal amount of “rent” really depends on each individual situation, she says, adding that “not everyone will be able to contribute,” and that’s OK, too. It can be a goal they work toward.
Instead of providing blanket financial support, Lester suggests assisting young adults with specific expenses, such as helping them make a down payment on a first home or covering food and rent while they are looking for a job or in school. “Because if you just have an open checkbook, nobody learns,” she adds.
Niang says it can also be helpful to focus on helping a young adult with their “needs,” such as food and housing, while letting them figure out how to handle “wants,” such as a new car or concert tickets, on their own.
Niang suggests setting and communicating realistic deadlines so your kids can prepare for when parental support runs out. For example, you could tell your child that as soon as they start their first real job with a steady paycheck, they will be taking over payments for their cell phone bill.
Coinciding with milestones, like a first job, helps greatly, Niang adds.
Elaine King, CFP and founder of the firm Family and Money Matters, says withdrawing financial support is easier on young adults if it’s done slowly. Parents might want to reduce their support of lifestyle costs from 100% to 80%, then 50% before getting to zero. “Don’t do it all at once so they can get an additional job or adjust,” she says.
Lynnette Khalfani-Cox, a personal finance expert and author of “Bounce Back: The Ultimate Guide to Financial Resilience,” suggests helping young adult children in ways that help them build their own wealth, a technique she calls the “wealth starter kit.”
For some, this approach can include purchasing property for children, which she did for her own kids. When her daughter was in college, she and her husband bought a condo for her to help her establish in-state residency for school. That helped keep tuition costs down while also providing her a place to live and an asset that grew in value over time.
“This investment strategy paid off in spades,” Khalfani-Cox says. It worked so well that she and her husband repeated the strategy with their son. She emphasizes that each child is different and some may need more support than others.
A similar but less expensive way to help adult kids build their wealth could be to help them set up retirement accounts and figure out an ongoing strategy for helping them grow.
One of the most important rules for parents is to first make sure their own finances are shored up before offering support to their adult children. According to the Pew report, 36% of parents who helped their young adult children financially in the past year say it has hurt their own personal finance situation at least some amount.
“Try to show them in your own life that you are being financially stable,” Oglesby suggests. “You’re leading by example.”
Source: nerdwallet.com
“Applications were lower last week, led by a 15% decrease in refinance activity despite the 30-year fixed mortgage rate declining for the third consecutive week,” Kan said. He noted that refinance applications, though lower, were 23% higher than a month ago, and recent weeks have shown the strongest readings since 2022. FHA refinance applications, however, … [Read more…]
A minor drop in your credit score — like the less-than-five-point drop you’ll temporarily encounter after a hard inquiry when applying for credit — is nothing to sweat in the long term. But a 40-point drop is more worrisome.
Are you asking yourself, “Why did my credit score drop 40 points after paying off debt,” following a credit dispute or for no reason at all? We’ll break down what might be happening to your score below.
Your credit score is a number based on several factors that appear on your credit reports from various credit bureaus. And in fact, you have more than one credit score, though the most common one people refer to is your FICO Score. Because it’s complex — and there’s more than one — there are many reasons your credit score may have dropped 40 points.
There are several reasons your credit score could have gone down. Here are the main culprits:
• You made a late payment (or several late payments), which were reported to the credit bureaus. A spending app can help you track upcoming bills so you don’t miss a due date.
• You paid off a loan or credit card, which decreased your average age of credit and your credit mix and also affected your credit utilization.
• You applied for a new loan, which resulted in a hard inquiry.
• You’ve increased your credit utilization, perhaps by maxing out your credit cards.
Often, a sudden 40-point decrease in your credit score is the result of two or more of these actions happening all at once or close together. A hard inquiry, for instance, results in only a five-point decrease in your credit score. But if that hard inquiry was for a credit card that you immediately maxed out and then missed a payment on, you’re much more likely to see a larger decrease in your credit score.
There’s one other important reason your credit score may have dropped 40 points: You could be the victim of identity theft, meaning someone is using your personal information to open new lines of credit in your name and then maxing them out to purchase things for them.
Recommended: How Do I Check My Credit Score Without Paying?
A minimal drop in your credit score is no cause for concern, but a larger drop, such as 40 points, should be alarming.
If your credit score dropped because of your own actions — overspending on credit cards, missing payments, etc. — do your best to get your financial habits back on track. Tools like a money tracker can help you monitor your spending and credit score.
However, if your credit score dropped by 40 points for no reason, you could be the victim of identity theft. Check your credit reports for signs of suspicious activity. If you notice any, you need to freeze your credit reports and begin the remediation process. Here’s how to report identity theft.
If your credit score has dropped by 40 points, here are some things you can do:
• Make on-time payments. Ensure all your bills are paid on time and in full, every month.
• Reduce your credit utilization. Stop swiping your credit card unless you can immediately pay it off. Pay off as much of your card as you can, but resist the temptation to spend more with it. Lowering your credit utilization is crucial to repairing your credit score.
• Keep old accounts open. Average age of credit is one of the major factors that affect your credit score. Keeping an old account open, even if you don’t use it, will help keep your score from falling further.
• Review your credit report for errors. Simple reporting errors could be hurting your score. It’s a good idea to familiarize yourself with common credit report errors and how to dispute them.
• Report identity theft. If someone has opened a credit card in your name, follow the proper steps to report the identity theft to the lender, the credit bureaus, and the authorities.
Recommended: Why Did My Credit Score Drop After a Dispute?
While establishing and improving credit takes time, there are several steps you can take now to help repair your score after a 40-point drop. Here are some basic actions you can take:
• Make on-time payments. Turn on autopay for all your bills, and make sure there’s always enough money in your checking account to cover the costs.
• Stop spending on credit. Having a credit card with a high credit limit makes it easy to spend more than you should. But you should only use a credit card if you have the money to pay it off immediately (or for emergencies).
• Keep old cards open. Don’t forget — old cards that you don’t use help keep your credit utilization down and help keep your average age of credit higher.
• Monitor your credit. Regularly monitor your credit report and dispute any errors.
• Don’t apply for credit often. Apply for credit only if you absolutely need it, like to buy a car or a house.
Several factors impact your two main credit scores (FICO Score and VantageScore). The two scoring companies use different algorithms to calculate your score; we’ll focus on FICO because it’s more common.
Here are the five major factors that affect your credit score — and how much weight each one has on your score:
• Payment history: This accounts for 35% of your score. Lenders want to see that you make on-time payments for all your debts. Mortgage and rent payments, utility bills, and other loan repayments (such as credit cards or personal loans) will show up on your credit report.
• Amounts owed: This is your credit utilization, and it accounts for 30% of your score. Creditors love to see that you have a high credit limit available to you, but that you use very little of it. This shows you’re a responsible borrower.
• Length of credit history: This accounts for 15% and is why keeping old cards and accounts open is important. It demonstrates to lenders that you’ve been borrowing responsibly for a long time.
• Credit mix: This makes up 10% of your FICO Score. Lenders like seeing that you can manage a healthy mix of credit accounts (credit cards, installment loans, home loans, etc.).
• New credit: If you open too much new credit all at once, that sends a sign to creditors that you may be a high risk. This makes up 10% of your score.
After a major drop, it’s tempting to want to monitor your credit score every day for signs of an upswing. But be patient — it can take time before you see an improvement.
While credit score updates happen fairly often, they don’t happen on a set date. That’s because a lender or creditor can send information to the main credit bureaus at different times, which will impact when a score changes. That said, you can plan on an update occurring at least every 45 days.
Considering closing a credit card account? You may want to think twice, as doing so could negatively impact your credit score.
When you close a credit card, the amount of your available credit decreases. This, in turn, may lead to a higher credit utilization, which as we mentioned above counts for 30% of your score. Closing a card also decreases the length of your credit history, which makes up 15% of your score.
However, there might be times when closing a credit card makes the most sense for you, such as a separation or divorce or a card with a high annual fee. The good news is, there are ways to cancel a credit card without affecting your credit score.
You can monitor your credit score in a number of ways. Your bank or credit card issuer may offer credit score insights in your mobile banking app, and you can check your FICO Score for free with Experian. Several money management apps offer free credit score monitoring, including access to your FICO Score or VantageScore.
Credit monitoring services offer several advantages, but there may be drawbacks to consider.
• Real-time alerts when your score changes
• Analysis and insights to help change borrowing behavior
• Identity theft protection
• Potential cost
• May not offer insights to all three bureaus
A sudden, unexpected drop in your credit score can be scary. This is especially true if you’re trying to build credit and have been responsibly paying your bills on time and keeping your credit utilization in check. It’s wise to use credit monitoring services so you’re always updated when something changes on your credit report, as it can help you spot errors or even stop identity theft before it gets out of hand.
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.
Even if you make on-time payments, your credit score can drop if you open too many new accounts at once or use up all your available credit every month. A major drop in your credit score could also indicate errors on your credit report or, even worse, identity theft.
If nothing has truly changed in your finances, your credit score would likely only drop because of an error on your credit report or identity theft. It’s always important to monitor your credit to stay aware of these things. If it’s not a case of error or identity theft, consider your recent credit actions: Did you max out a card or close an old account? These can lead to drops in your credit score.
If your credit score dropped 40 points and nothing changed on your end, check your credit reports with all three major credit bureaus immediately. It’s possible there is an error or that you are the victim of identity theft, meaning someone is using your name to open new credit accounts.
Photo credit: iStock/Miljan Živković
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-Q324-001
Source: sofi.com
Kansas City, Missouri, is a place where Midwestern charm meets urban flair. Known for its legendary barbecue, rich history, and welcoming community, this city has a lot to offer to those who decide to call it home. But, like any city, Kansas City isn’t for everyone. Whether you’re drawn by the affordable cost of living, the vibrant arts scene, or the city’s strong sports culture, there are certain things you need to know before making the move. Not sure if KC is for you? Read on to find out what to expect if you’re considering a move to the Kansas City area in 2024.
You know it from: 42, Kansas City, The Assassination of Jesse James
Average 1 bedroom rent: $1,320 | Kansas City apartments for rent, Kansas City houses for rent
Average home price: $301,000 | Kansas City homes for sale
Average cost of full-service moving services: $158/hr for 2 movers
Average cost to rent a moving truck: $19 – $39/day
Top industries: Biosciences, Technology, Distribution
Move here for: Live music, the food, the nightlife
Be sure to bring: A bathing suit and an instrument
Kansas City is world-famous for its barbecue, and locals take it very seriously. From iconic spots like Joe’s Kansas City Bar-B-Que to lesser-known gems like Q39, the city offers an unparalleled BBQ experience. Expect to debate with friends over which joint has the best ribs, burnt ends, or brisket. Barbecue isn’t just food here; it’s a part of the culture. Whether you’re hosting a backyard cookout or tailgating at a Chiefs game, barbecue will be front and center.
In Kansas City, you’ll experience all four seasons in full force. Summers are hot and humid, with temperatures often climbing above 90°F, while winters can bring snow and ice, with temperatures dipping below freezing. Spring and fall are more moderate, offering beautiful blooming flowers and vibrant autumn leaves. If you love variety in your weather, you’ll be right at home here. Just make sure your wardrobe can handle everything from tank tops to parkas.
One of the best things about Kansas City is its affordability. The cost of living is about 6% lower than the national average, which means your dollar stretches further here. Housing is particularly affordable, with a variety of options ranging from historic homes in Brookside to modern apartments Downtown. This affordability is a big draw for future residents. You’ll find that your money goes a lot further in Kansas City than in many other major metropolitan areas.
Kansas City might not be the first place you think of when it comes to the arts, but the city has a thriving creative community. The Crossroads Arts District is a hub for galleries, studios, and live music venues. The Kauffman Center for the Performing Arts hosts world-class performances, and the Nelson-Atkins Museum of Art offers free admission and a stunning collection. From First Fridays in the Crossroads to jazz in 18th & Vine, Kansas City’s arts scene will keep you inspired.
While Kansas City is known for its barbecue, the city’s food scene has much more to offer. You’ll find everything from farm-to-table restaurants in Westport to authentic Mexican cuisine in the Historic Northeast. The River Market is a foodie’s paradise, with fresh produce, local vendors, and a variety of international foods. Whether you’re craving comfort food or fine dining, Kansas City’s culinary landscape has something for every palate.
Sports are a big deal in Kansas City. The city is home to the Kansas City Chiefs, one of the NFL’s most passionate fan bases, and the Kansas City Royals, a team with a storied history in Major League Baseball. Sporting Kansas City, the city’s Major League Soccer team, also has a dedicated following. Whether you’re tailgating at Arrowhead Stadium or catching a game at Kauffman Stadium, sports are a major part of life here. Don’t be surprised if game days feel like holidays.
One unique aspect of Kansas City is that it straddles the state line between Missouri and Kansas. While Kansas City, Missouri, is the larger and more vibrant part of the metro area, many residents live and work on both sides of the line. This can create some confusion, especially when it comes to taxes and school districts. Understanding the differences between the two states is key to navigating life in the metro area.
Kansas City has a rich jazz history, and you can still hear its influence today. The 18th & Vine Jazz District is home to the American Jazz Museum and the historic Blue Room, where live jazz performances keep the tradition alive. The city’s jazz scene isn’t just for history buffs—new generations of musicians are continuing to push the genre forward. If you’re a fan of live music, you’ll find plenty to enjoy in Kansas City’s jazz clubs.
Kansas City has a diverse and growing job market, with opportunities in healthcare, finance, technology, and more. Major employers include Cerner, H&R Block, and Garmin, as well as a burgeoning startup scene. The city’s central location also makes it a hub for logistics and transportation. With a low unemployment rate and a relatively low cost of living, Kansas City is an attractive place for job seekers.
While Kansas City has made strides in improving public transportation, it’s still a car-centric city. The streetcar system downtown is free and convenient, but it only covers a small portion of the city. Buses are available, but routes can be limited depending on where you live. Most residents rely on their cars to get around, so having a vehicle is almost essential. If you’re moving from a city with extensive public transit, this could be an adjustment.
Kansas Citians are proud of their city, and that pride shows in everything from the upkeep of public spaces to the support of local businesses. You’ll see KC logos on everything from hats to T-shirts, and locals are quick to boast about the city’s attributes. The pride extends to the city’s history, architecture, and neighborhoods. If you move to Kansas City, you’ll likely find yourself becoming a part of this enthusiastic community spirit.
Kansas City’s neighborhoods are diverse and each offers a unique experience. The Country Club Plaza is known for its upscale shopping and Spanish-inspired architecture, while the Crossroads District is a hub for art and creativity. Westport is the place to be for nightlife, and Brookside offers charming homes and a strong sense of community. No matter what kind of environment you’re looking for, there’s likely a neighborhood in Kansas City that will feel like home.
If you love the outdoors, Kansas City won’t disappoint. The city has over 200 parks, including the expansive Swope Park, which is home to the Kansas City Zoo, Starlight Theatre, and miles of hiking trails. Nearby, you’ll find lakes for boating and fishing, as well as the scenic Katy Trail for biking. Whether you prefer a leisurely walk in Loose Park or a more adventurous outing at Cliff Drive, Kansas City offers plenty of ways to enjoy the outdoors.
Methodology: Average rent prices sourced from Rent.com August 2024. Home prices sourced from Redfin August 2024. Average moving costs sourced from MoveBuddha. Employment data sourced from KC Today.
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Source: doctorofcredit.com