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The median annual salary for a paralegal is $59,200, according to the latest figures from the Bureau of Labor Statistics. But depending on where you live, your area of expertise, and your level of experience, you could make upwards of $121,110 or more a year.

A career as a paralegal can be a fulfilling choice for those interested in the law. While the job can be demanding and the hours sometimes long, it can also provide professional satisfaction and a chance to help others in your community.

What Are Paralegals?

A paralegal works under the supervision of a lawyer and performs supportive legal tasks. Administrative duties require a knowledge of the law, but you don’t have to have a law degree or a law license.

Paralegals are often responsible for the following tasks:

•   Draft motions and pleadings for an attorney and file it with the court.

•   Research cases. Paralegals research current and old legal cases to help discover relative precedents and understand past rulings.

•   Interview clients and witnesses involved in a case.

•   Communicate with clients throughout the phases of the legal process.

•   Collect documents, client testimonials, and expert witnesses on behalf of the attorney.

•   Draft reports and legal documents for cases.

•   Factcheck legal filings and documents for accuracy.

•   Gather supporting documents that a lawyer may use or file with the court.

•   Coordinate cases, including their schedules and deadlines.

•   Assist and support lawyers during trials.

Being a paralegal is not a job for antisocial people, as it typically involves being a liaison between clients, attorneys, investigators, witnesses, and court officials.
💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.

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How Much Do Starting Paralegals Make?

Whether they’re fresh out of school or have been working for several years, paralegals can be paid hourly or earn a yearly salary. A typical rate for a brand-new paralegal is $19.20 an hour or $55,332 a year.

An entry-level salary or hourly rate for a paralegal varies by work environment. Smaller firms and nonprofits tend to pay less, while bigger corporate law firms may offer more competitive pay.

Paralegals can specialize in certain areas, including litigation, real estate, divorce, intellectual property, immigration, and bankruptcy. Honing your skills in a particular area of the law could help position you for higher-paying opportunities.

No matter the size of your salary, it helps to keep a close eye on your finances and the progress you’re making toward your financial goals. Online tools like a money tracker app can help you create a budget, monitor your credit score, and more.

Recommended: Is a $100,000 Salary Good?

What Is the Average Paralegal Salary by State?

Like most jobs, the amount of money you can earn as a paralegal is impacted by geography. As the chart below shows, salaries in this field can fluctuate from state to state.

The Median Salary by State for a Paralegal in 2022

State Median Salary
Alabama $48,620
Alaska $61,490
Arizona $59,050
Arkansas n/a
California $69,790
Colorado $65,010
Connecticut $63,490
Delaware $59,660
District of Columbia $87,610
Florida $52,190
Georgia $51,420
Hawaii $58,630
Idaho $48,500
Illinois $60,370
Indiana $47,710
Iowa $52,660
Kansas $48,490
Kentucky $48,810
Louisiana $50,310
Maine $54,710
Maryland $58,760
Massachusetts $63,360
Michigan $58,780
Minnesota $60,380
Mississippi $43,590
Missouri $55,410
Montana $55,270
Nebraska $50,610
Nevada $61,180
New Hampshire $50,960
New Jersey $61,040
New Mexico $48,320
New York $62,730
North Carolina $51,340
North Dakota $48,740
Ohio $50,580
Oklahoma $48,490
Oregon $63,980
Pennsylvania $62,080
Rhode Island n/a
South Carolina $48,190
South Dakota $54,100
Tennessee $48,420
Texas $56,310
Utah $52,820
Vermont $60,560
Virginia $59,500
Washington $69,260
West Virginia $47,990
Wisconsin $49,970
Wyoming $52,000

Source: Bureau of Labor Statistics

Paralegal Job Considerations for Pay and Benefits

Thinking about becoming a paralegal? Consider the following:

•   Areas of interest. Paralegals can work in any number of specialties: corporate law, patent law, health care, and more. Thinking about which field best suits your interest can help guide your training and job search.

•   Career goals. Is career advancement and an annual pay raise important to you? Is having a flexible schedule a priority? Discuss your options with a hiring manager before accepting a position.

•   Benefits. Many full-time and part-time paralegals are eligible for benefits, including, health, vision, and dental insurance, a 401(k), tuition assistance, and paid time off.

•   Time and energy commitment. Some areas of law, like litigation, are more stressful than others and may require longer working hours.

Recommended: How to Create a Budget in 5 Steps

Pros and Cons of Being a Paralegal

Ultimately, deciding if becoming a paralegal is a good fit depends on your interests, skills, and goals. Like any profession, working as a paralegal has its positives and negatives:

Pros:

•   Salary. Paralegals stand to earn excellent pay, especially if they train for specific roles. A courtroom presentation specialist, for instance, may earn between $67,500 and $125,000 a year.

•   Job outlook. Paralegals are in high demand. According to the Bureau of Labor Statistics, jobs in the field are projected to grow 4% from 2022 to 2032.

•   Variety of work. On any given day, a paralegal may juggle a number of cases and assorted tasks — from paperwork to writing motions to speaking with witnesses.

•   Stimulating work. Creative problem-solving skills and analytical reasoning are put to use every day as a paralegal. The job also requires staying up-to-date on new and changing laws.

•   No law school. Becoming a paralegal requires much less education than is demanded of lawyers. A bachelor’s degree in any field and completing an accredited paralegal program are often all that’s needed.

Cons:

•   Long hours. Paralegals often work more than the traditional 40-hour week. As deadlines and court dates approach, you may find yourself working late nights and weekends.

•   High stress. In addition to assisting lawyers with complex legal issues, paralegals may work closely with demanding clients.

•   Lack of autonomy. When you’re a paralegal, you work directly under and are supervised by a licensed attorney. And since you are not certificated to practice law, you cannot advise your clients on legal matters or represent them in court.

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

The Takeaway

While the hours can be long and the environment sometimes stressful, being a paralegal can provide you with an opportunity to help others, stay intellectually stimulated, and earn a good salary. While the average paralegal salary is around $59,200 a year, you may be able to earn more depending on your experience, specialty, and location.

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.

With SoFi, you can keep tabs on how your money comes and goes.

FAQ

What is the highest-paying paralegal job?

One of the highest-paying paralegal jobs is a courtroom presentation specialist, which typically pays between $67,500 and $125,000 a year.

Do Paralegals make 100k a year?

Depending on how much experience you have, your area of expertise, and your employer, you could make $100,000 or more a year as a paralegal.

How much do paralegals make starting out?

When they’re just starting out, a paralegal earns an average of $19.20 an hour or $55,332 a year.

Photo credit: iStock/sturti

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. (Must click on the link to be eligible.) 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 into SoFi accounts such as cash in SoFi Checking and Savings, SoFi credit cards or loan balances, and fractional shares 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.

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

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.

SORL1023014

Source: sofi.com

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A personal trainer earns an average of $67,012 a year, according to the latest data from Salary.com. However, salaries typically fall somewhere between $48,347 and $82,320.

How much you can make as a personal trainer depends on several factors, including where you live, who you work for, your training experience, and your areas of expertise. Let’s unpack this.

What Are Personal Trainers?

A personal trainer develops customized exercise programs for clients based on individual skill levels, health goals, physical limitations, and other considerations. These professionals work with clients of all ages and skill levels to improve strength, flexibility, and endurance; complete workouts safely and without injury; support them on their weight loss journey; and more.

Trainers are often paid hourly, but they may earn a yearly salary if they work for a gym or high-end client. How much money a personal trainer makes depends on the range of services and level of attention they provide — in general, the more, the better.

It also helps if you have good people skills, as you’ll be working closely with clients. (Not much of a people person? You may want to look into jobs for introverts instead.)
💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

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How Much Do Starting Personal Trainers Make an Hour?

The average entry-level wage for a personal trainer in the United States is $29 per hour, or $61,104 a year, according to ZipRecruiter. But depending on a host of factors, personal trainers can earn anywhere from $11.06 to $51.92 an hour.

So is it possible to make $100,000 a year or more as a personal trainer? Short answer: yes. A six-figure income may be attainable once you gain enough experience and establish a steady client base. But keep in mind that those things often take time to develop.

Recommended: What Is Competitive Pay?

What Is a Personal Trainer’s Yearly Salary by State?

Location can play a major factor in a personal trainer’s income. A professional who’s established in their career may earn an average of $67,012, but as the chart below shows, take-home pay can vary significantly from state to state.

The Average Personal Trainer Salary by State

State Median Salary for a Personal Trainer
Alabama $53,023
Alaska $59,756
Arizona $54,514
Arkansas $45,525
California $61,037
Colorado $57,837
Connecticut $53,361
Delaware $66,789
Florida $43,714
Georgia $49,394
Hawaii $57,813
Idaho $58,505
Illinois $53,350
Indiana $55,666
Iowa $53,072
Kansas $49,804
Kentucky $47,885
Louisiana $48,567
Maine $59,455
Maryland $64,637
Massachusetts $60,291
Michigan $47,929
Minnesota $55,627
Mississippi $52,898
Missouri $51,521
Montana $53,693
Nebraska $63,126
Nevada $56,502
New Hampshire $57,587
New Jersey $58,470
New Mexico $55,489
New York $64,556
North Carolina $49,937
North Dakota $58,914
Ohio $54,118
Oklahoma $61,134
Oregon $58,939
Pennsylvania $59,132
Rhode Island $54,591
South Carolina $50,988
South Dakota $55,680
Tennessee $51,669
Texas $58,217
Utah $51,630
Vermont $63,225
Virginia $65,639
Washington $71,304
West Virginia $45,668
Wisconsin $57,762
Wyoming $56,523

Source: ZipRecruiter

Recommended: The Highest-Paying Jobs in Every State

Personal Trainer Job Considerations for Pay and Benefits

When you’re just starting out as a personal trainer, there are many factors that may influence the direction of your career. For instance, working at an established commercial gym can offer an opportunity to gain experience, build up a client network, and receive job benefits.

If you’re more of a self-starter and prefer a degree of independence, working as a self-employed personal trainer might be the better fit. You’ll have the ability to set your own hours and hourly rate; however, you’ll also have to pay for health benefits and set money aside for retirement.

Here are some questions to ask yourself when starting a career as a personal trainer:

•   How many hours are you willing to work?

•   Would you rather work for someone else or be your own boss?

•   Do you need health insurance benefits?

•   Where do you see yourself in five to 10 years?

•   What type of clients do you want (ex. senior citizens, athletes)?

•   Are you willing to commute or relocate?

•   What additional certifications might you need?

•   What are your financial goals?

Establish what you need to earn as a personal trainer in order to cover your expenses and maintain the lifestyle you want. It can help to sit down and create a budget.

As your personal trainer career gets going, you can lean on financial tools like a money tracker app to help you monitor your spending and saving.

Tips to Increase a Personal Trainer’s Salary

Clients can come and go for a number of reasons, but there are some things you can do as a personal trainer to keep the ones you have and attract new ones. Here are some strategies to consider:

•   Listen to your clients, and be willing to adapt to their needs.

•   Sharpen your motivational skills. Pay attention to other successful trainers and how they inspire their clients.

•   Be empathetic. Many clients may struggle during their workouts, both physically and psychologically. Empathy can go a long way in maintaining healthy client relations.

•   Go where you’re needed. Investigate niches where your expertise can be of use, be it an elderly care center, health center, or a new neighborhood gym.

•   Network and market yourself. Chat up members at your gym and discuss their fitness goals. You can also promote your own fitness journey and methods on social media.

•   Earn new certifications. Get certified in CPR, yoga, Pilates, and nutrition. The more you know, the more in-demand you may be.

Pros and Cons of Being a Personal Trainer

As with any job, there are pluses and minuses to working as a personal trainer. Here are some of the benefits and challenges of the field:

Pros:

•   Flexible hours. You can often schedule clients when you want to.

•   Professional control. You’re able to build up your business through marketing and networking, adding clients as you raise your earning goals.

•   Staying physically fit. You’ll have to practice what you preach. Staying in shape is a job requirement.

•   Personal satisfaction, especially when you help a client meet their goals.

Cons:

•   Fluctuating income/job security. There’s no way to predict how many clients you may have month-to-month or year-to-year.

•   Lack of benefits. Many personal trainers work for themselves and have to pay for their own health and dental insurance, plus save for retirement.

•   Nontraditional work hours. Although you have the ability to make your own schedule, most of your working clients will likely request early morning, evening, or weekend sessions.

•   Shorter career lifespan. Even the most in-shape trainer ages, and there may come a day where you struggle to physically keep up with your clients.

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

The Takeaway

A personal trainer’s salary can rise and fall with the ebb and flow of clients, but there is also no limit to the amount of money you can make. Whether you are working with a few dedicated clients or creating your own global fitness brand, being a personal trainer can be a great way to earn a salary while keeping yourself and your finance goals in shape.

With SoFi, you can keep tabs on how your money comes and goes.

FAQ

What is the highest paying personal trainer job?

Personal trainers to wealthy clients and celebrities typically command lucrative salaries. The most popular fitness influencers on TikTok and Instagram, for example, can make over $1 million a year.

Do personal trainers make $100k a year?

A well-established personal trainer can make $100,000 a year with experience, marketing savvy, good time management skills, and a loyal client base.

How much do personal trainers make starting out?

The average starting wage for a personal trainer in the United States is $29 per hour, or $61,104 a year.

Photo credit: iStock/Drazen Zigic

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. (Must click on the link to be eligible.) 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 into SoFi accounts such as cash in SoFi Checking and Savings, SoFi credit cards or loan balances, and fractional shares 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.

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.

SORL1023013

Source: sofi.com

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The best travel rewards are the ones that get you where you want to go, and some do a better job of that than others. Airline miles can help you book free flights and hotel points can help you book free rooms, but transferable points (like Chase Ultimate Rewards and AmEx Membership Rewards) can do both — and more.

Here are six reasons why transferable points are at the apex of travel rewards, and why you should prioritize earning them over other types of points and miles.

1. Transferable points provide flexibility

Suppose you’re in the market for a new travel credit card and you’ve narrowed your decision to two choices: the first card earns points that can be redeemed with your favorite airline, while the second card earns points that can be redeemed not only with your favorite airline, but also with your favorite hotel chain. The cards are functionally identical otherwise. Which do you choose?

The second card is the obvious answer. The option to redeem with both airline and hotel partners makes the rewards you earn from it more useful, since they can meet a broader range of award travel needs. In short, the rewards earned by the second card are more valuable because they’re more flexible.

Transferable points programs expand on that premise by partnering with a variety of airline and hotel loyalty programs, giving you a diverse range of redemption options instead of just one.

Flexibility isn’t the only ingredient needed to add value, since making points transferable doesn’t necessarily mean transferring them is worthwhile. For example, you can transfer Hilton Honors points to more than two dozen airline partners, but in most cases the transfer ratio is a dismal 10:1 (i.e., 10,000 Hilton points becomes 1,000 airline miles).

That provides marginal value because it’s only useful in marginal situations, like if you urgently need a small number of miles to book a highly valuable award flight. While Hilton Honors points are technically “transferable,” their transferability doesn’t add much.

In contrast, the major transferable points programs generally offer neutral or favorable transfer ratios, as well as transfers that process quickly (or in many cases, instantly). That kind of flexibility adds more clear and consistent value.

2. Transferable points have greater upside

Suppose you’re booking a long weekend trip from Denver to San Francisco in the spring. You’ll be attending a wedding at the Hyatt Regency San Francisco and plan to pay out of pocket for your room there, but you have 60,000 United Airlines MileagePlus miles you can use to book your flight.

You want to arrive Thursday morning and return Sunday evening, so you search United’s website and find an itinerary that suits your needs for 32,200 miles and $11.20 in fees. You compare that with the cash price of $375.72 and calculate a redemption value of 1.13 cents per mile. That’s quite close to NerdWallet’s valuation of 1.2 cents per mile, so you’re satisfied.

Now imagine that instead of United miles, you have a reserve of 60,000 Chase Ultimate Rewards points. Instead of being able to redeem them solely for United flights, you can transfer those points to 11 airlines and three hotels based on which one suits your needs and offers the best value.

For example, instead of booking with United, you could transfer points to Southwest Airlines and book a comparable (though not identical) itinerary for 27,577 points and $11.20 in fees, versus a cash price of $386.97.

Assuming you’re not bothered by the earlier outbound departure and you don’t have a strong preference for one airline, the ability to choose between them saves you about 4,600 points on your flight.

Alternatively, you could transfer points to Hyatt to book your stay at the Hyatt Regency San Francisco. The award cost is 17,000 points per night, totaling 51,000 points for your three-night visit.

Cash rates start at $323 per night, but the cheapest rates require advance purchase and are nonrefundable, while booking with points generally allows you to cancel with no penalty until two days before arrival.

A cash rate with a comparable cancellation policy totals $1,386.22 after taxes and fees, which yields a redemption value of over 2.7 cents per point (more than double what you’d get by redeeming for the United flights above).

This is just one example about a set itinerary, but it illustrates how the versatility of transferable points provides an upside when you’re not locked into specific travel providers.

Having more redemption options yields more opportunities to use points efficiently, which in turn raises the expected value of each redemption.

3. Transferable points have more favorable expiration policies

Many loyalty programs have expiration policies that can cause your rewards to vanish over time. While you’ll generally have 12 to 36 months to keep rewards active, some points and miles expire in as little as six months.

It’s easy to let rewards lapse and disappear in that timeframe if you’re not a frequent traveler and you don’t monitor your loyalty accounts vigilantly.

In contrast, transferable points generally don’t expire as long as your account remains open and in good standing. That means you won’t have to keep track of when you last logged activity in each loyalty program or take action to keep dormant rewards from expiring.

4. Transferable points offer lucrative transfer bonuses

Most transfers to airline and hotel partners are done at a 1:1 ratio, so transferring typically gets you the same number of rewards you put in.

For example, transferring 1,000 Chase Ultimate Rewards points to United Airlines gets you 1,000 United miles, or transferring 1,000 Citi ThankYou Rewards points to Wyndham Hotels gets you 1,000 Wyndham points. While exchange rates vary depending on the loyalty program and credit card you’re using, a 1:1 transfer ratio is the industry standard.

However, transferable points programs offer occasional transfer bonuses that boost the exchange rate, commonly by 20%-50%. Instead of the usual 1:1, every 1,000 points you transfer with a bonus could get you 1,200 to 1,500 points with the partner program (or in some cases, more).

These higher exchange rates can save you points when a transfer bonus aligns with your travel plans, since booking the trip you want requires fewer transferable points than it would normally.

Transfer bonuses also create opportunities to top up your loyalty account balances by sending points to the programs you use most (even if you don’t have immediate plans to redeem them).

5. Transferable points reduce the risk of devaluation

Loyalty programs change over time, and while they sometimes add features, lower award prices or introduce new redemption options that make rewards more valuable, the opposite is more common.

Devaluations are a regular occurrence among airline and hotel programs and sometimes take place with no warning. When your points or miles are suddenly in decline, you have little recourse.

Transferable points programs aren’t immune from devaluations; they add, remove and modify features just like airline and hotel programs.

However, transferable points are insulated from devaluation by the sheer number of available redemption options — when a single airline or hotel program devalues, other transfer partners are unaffected, so transferable points retain the bulk of their worth.

In short, earning transferable points is the award travel equivalent of diversifying investments: By having a share of many loyalty programs, you’re less affected by a downturn in one of them.

6. Transferable points offer alternative redemption options

Transfers to airline and hotel partners tend to be the most valuable use of rewards, but transferable points programs feature a variety of other ways to redeem them.

One is to book flights, hotels or other travel directly through the program’s travel portal, especially with programs that offer added value for travel portal redemptions. For example, Chase Sapphire Reserve® cardholders get 1.5 cents per point when redeeming through the Chase Ultimate Rewards travel portal.

Chase Sapphire Reserve®

NerdWallet Rating

Annual fee

$550

Some programs also offer added value when redeeming for cash equivalents like statement credits or gift cards. For example, the American Express Platinum Card for Schwab lets you redeem Membership Rewards points at 1.1 cents apiece for cash deposits to an eligible Charles Schwab account. Terms apply.

Even though cashing out yields a lower average return than transfers to travel partners, it’s nice to be given the option when you need it, as it’s one you generally don’t have with other points and miles programs.

Why you should be using transferable points

Among travel rewards, transferable points have the best chance to provide useful redemption options, yield a high return and retain their value over time.

That’s why they’re broadly prized above rewards from individual airline and hotel programs, and why earning them should be the focus of your award travel strategy.

How to maximize your rewards

You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2024, including those best for:

Source: nerdwallet.com

Apache is functioning normally

A fair credit score falls in the mid-lower range of the credit-scoring spectrum. With the FICO® scoring model, which ranges from 300 to 850, a fair score is 580 to 669.

Fair credit is better than poor credit but below the average credit score. While you’ll likely be able to get a credit card or loan with fair credit, you probably won’t qualify for the most favorable rates and terms.

Read on to learn how fair credit compares with other credit score ranges, the difference having good credit can make, and what you can do to build your credit.

What Is Fair Credit?

What “fair credit” means will depend on the scoring model. With FICO, the most widely used credit scores by lenders in the U.S., fair credit is a score between 580 and 669. With VantageScore®, another popular scoring model, fair credit is a score of 601 to 660.

The fair credit range is above poor credit but below good credit, and is considered to be in the subprime score range.

Credit scores are calculated using information found in your credit reports (you have three, one from each of the major consumer credit bureaus). People typically have multiple, not just one, credit score, and these scores can vary depending on the scoring model and which of your three credit reports the scoring system analyzes. While each score may be slightly different, they typically fall into similar ranges and scoring categories, such as poor, fair, good, and excellent/exceptional.
💡 Quick Tip: A low-interest personal loan from SoFi can help you consolidate your debts, lower your monthly payments, and get you out of debt sooner.

Is Fair Credit Good or Bad?

As the name “fair” implies, this score is okay, but not great. A fair credit score isn’t the lowest category on the FICO chart — that’s the poor credit category, which runs from 300-579. But it’s definitely not the highest either. Above fair credit, there is good credit (670-739), very good credit (740-799), and exceptional credit (800-850).

With a fair credit score, lenders will likely see you as an above-average risk and, as a result, charge you more upfront fees and higher interest rates. They may also approve you for a lower loan amount or credit limit.

With fair credit, you might also have difficulty getting approved for certain financial products. For example, you might need a higher credit score to get the best rewards cards or certain types of mortgages. Landlords and property managers may also have credit score requirements. You might have to pay a larger security deposit if you have a fair credit score.

Is a 620 Credit Score Fair?

Yes, 620 is within the 580-669 range for a fair FICO score and, thus, would be considered a fair credit score. A 620 is also in the VantageScore range for fair (580 to 669).

Recommended: 8 Reasons Why Good Credit Is So Important

Why Do I Need to Know My Credit Scores?

A credit score is a three-digit number designed to represent someone’s credit risk (the likelihood you’ll pay your bills on time). Lenders use your credit scores — along with the information in your credit reports — to help determine whether to approve you for a loan or credit line and, if so, at what rates and terms. Many landlords, utility companies, insurance companies, cell phone providers, and employers also look at credit scores.

Knowing your credit scores can help you understand your current credit position. It also provides a baseline from which you can implement change. With time and effort, you may be able to build your credit and gradually move your credit score into a higher category, possibly all the way up to exceptional.

Recommended: How Often Does Your Credit Score Update?

Using Credit Bureaus to Find Credit Scores

It’s a good idea to periodically review your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) to make sure all of the information is accurate, since errors can bring down your scores. You can get free weekly copies of your reports at AnnualCreditReport.com .

However, your credit reports will not contain your credit scores.

Fortunately, there are easy ways to get your credit scores, often for free. Many credit card companies, banks, and loan companies have started providing credit scores for their customers. It may be on your statement, or you can access it online by logging into your account.

You can also purchase credit scores directly from one of the three major credit bureaus or other provider, such as FICO. Some credit score services and credit scoring sites provide a free credit score to users. Others may provide credit scores to credit monitoring customers paying a monthly subscription fee.

Recommended: How to Check Your Credit Score for Free

Reasons Your Credit Score Might Be Fair

Your credit scores are based on information in your credit reports, and different things can help or hurt your scores. FICO scores are based on the following five factors.

1. Payment History

This looks at whether you’ve made your debt payments on time every month and is the most important factor in computing your FICO credit score. Even one payment made 30 days late can significantly harm your score. An account sent to collections, a foreclosure, or a bankruptcy can have even more significant and lasting consequences.

2. Amounts Owed

This notes the total amount you’ve borrowed, including how much of your available credit you’re currently using (called your credit utilization rate). If you’re tapping a sizable percentage of your available credit on your credit cards (such as 30% or more), for example, that can have a negative impact on your score.

3. Length of Credit History

Experience with credit accounts generally makes people better at managing debt (research bears this out). As a result, lenders generally see borrowers with a longer credit history (i.e., older accounts) more favorably than those that are new to credit. All things being equal, the longer your credit history, the higher your credit score is likely to be.

4. Credit Mix

This looks at how many different types of debt you are managing, such as revolving debt (e.g., credit cards and credit lines) and installment debt (such as personal loans, auto loans, and mortgages). The ability to successfully manage multiple debts and different credit types tends to benefit your credit scores.

5. New Credit

Research shows that taking on new debt increases a person’s risk of falling behind on their old debts. As a result, credit scoring systems can lower your score a small amount after a hard credit inquiry (which occurs when you apply for a new loan or credit card). The decrease is small, typically less than five points per inquiry, and temporary — it generally only lasts a few months.

Steps That Can Help Improve Fair Credit

While you may still be able to qualify for loans with fair credit, building your credit can help you get better rates and terms. Here are some moves that may help.

•   Pay your bills on time. Having a long track record of on-time payments on your credit card and loan balances can help build a positive payment history. Do your best to never miss a payment, since this can result in a negative mark on your credit reports.

•   Pay down credit card balances. If you’re carrying a large balance on one or more credit cards, it can be helpful to pay down that balance. This will lower your credit utilization rate.

•   Consider a secured credit card. If you’re new to credit or have a fair or low credit score, you may be able to build your credit by opening a secured credit card. These cards require you to pay a security deposit up front, which makes them easier to qualify for. Using a secured card responsibly can add positive payment information into your credit reports.

•   Monitor your credit. It’s a good idea to closely examine the information in your three credit reports to make sure it’s all accurate. Any errors can drag down your score. If you see any inaccuracies, you’ll want to reach out to the lender reporting the information. You can also dispute errors on your credit report with the credit bureaus.

•   Limit hard credit inquiries. Opening too many new credit accounts within a short period of time could hurt your scores because credit scoring formulas take recent credit inquiries into account. When shopping rates, be sure that a lender will only run a soft credit check (which won’t impact your scores).

Reasons to Improve Your Credit Score

Building your credit takes time and diligence, but can be well worth the effort, since our scores impact so many different parts of our lives.

Loans

Credit scores are used by lenders to gauge each consumer’s creditworthiness and determine whether to approve their applications for loans. A higher score makes you more likely to qualify for mortgages, auto loans, and different types of personal loans. It also helps you qualify for more favorable lending rates and terms.

Credit Cards

Credit card issuers typically reserve cards with lower annual percentage rates (APRs), more enticing rewards, and higher credit limits for applicants who have higher credit scores. A fair credit score may qualify you for a credit card with a high APR and little or no perks. Improving your credit score could potentially give you the boost you need to qualify for a better credit card.

Security Deposits

Just found your dream apartment? A fair credit score could mean a higher security deposit than if you had a good or better credit score. With a poor or fair credit score, you may also be asked to pay security deposits for cell phones or basic utilities like electricity.

Housing Options

A fair or poor credit score can even limit which housing options are available to you in the first place. Some landlords and property management companies require renters to clear a minimum credit bar to qualify.

Recommended: Typical Personal Loan Requirements Needed for Approval

Can You Get Personal Loans With Fair Credit?

It’s possible to get a personal loan with fair credit (or a FICO score between 580 and 669) but your choices will likely be limited.

Personal loan lenders use credit scores to gauge the risk of default, and a fair credit score often indicates you’ve had some issues with credit in the past. In many cases, borrowers with fair credit may be offered personal loans with higher rates, steeper fees, shorter repayment periods, and lower loan limits than those offered to borrowers with good to exceptional credit.

Although some lenders offer fair credit loans, you’ll likely need to do some searching to find a lender that will give you competitive rates and terms.
💡 Quick Tip: Generally, the larger the personal loan, the bigger the risk for the lender — and the higher the interest rate. So one way to lower your interest rate is to try downsizing your loan amount.

The Takeaway

Having a fair credit score is better than having a poor credit score and doesn’t necessarily mean you won’t qualify for any type of credit. However, the rates and terms you’ll be offered may not be as favorable as those someone with good or better scores can get. With time and effort, however, you can move up the credit scoring ladder. If you work on building your credit score until you have good or better credit, you’ll gain access to credit cards and loans with lower interest rates and more perks.

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 2023 winner for Best Online Personal Loan overall.

FAQ

Is fair credit good or bad?

A fair credit score is neither good nor bad, it’s just okay. FICO credit scores range from 300 to 850 and a fair score is 580 to 669. It’s better than a poor credit score but below the average credit score.

What’s considered a fair credit score?

According to the FICO scoring model, which ranges from 300 to 850, a fair credit score is one that falls between 580 and 669. It’s one step up from a poor credit rating but below good, very good, and exceptional.

Is a 620 credit score fair?

Yes, a 620 credit score is considered to be in the fair range. According to the FICO scoring model, which ranges from 300 to 850, a fair credit score is one that falls between 580 and 669.

Photo credit: iStock/Ivan Pantic

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

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Source: sofi.com

Apache is functioning normally

Imagine slashing your monthly mortgage payment to zero or, better yet, turning a profit from the very place you call home. This isn’t a daydream for the financially savvy few; it’s the reality of house hacking.

Through the eyes of those who’ve made it work, house hacking transforms your living situation into an opportunity for financial freedom. From young professionals to families, people across the country are finding that their biggest expense—housing—can actually become their biggest asset.

What is house hacking?

House hacking is a strategy that involves purchasing a primary residence with the intention of living in one part while renting out the rest as a rental property. This could mean buying a multifamily home and living in one unit, renting out the others, or even renting out spare bedrooms in a single-family home. The rent collected from tenants goes towards the mortgage and other property-related expenses, potentially allowing the owner to live for free or even make a profit.

A Spectrum of Possibilities

The beauty of house hacking lies in its flexibility. Here are a few scenarios to illustrate its range:

  • The Multi-Unit Maven: Alex buys a duplex, lives in one unit, and rents out the other. The rent from the second unit covers the mortgage, meaning Alex lives mortgage-free.
  • The Single-Family Sharer: Jamie purchases a four-bedroom house, occupies one room, and rents out the other three. The rental income covers all housing costs.
  • The Basement Dweller: Casey acquires a home with a separate basement apartment. Living in the basement, Casey rents out the main floor, using the rent to pay the mortgage and save for future investments.

These examples highlight how you can house hack to adapt to different housing markets, personal living preferences, and financial goals. Whether you’re drawn to the idea of living rent-free, eager to dive into real estate investment, or looking for a way to reduce your housing expenses, house hacking offers a practical path to achieving your objectives.

Tailoring the Strategy to Your Lifestyle

Choosing the right house hacking approach depends on your lifestyle, financial goals, and how comfortable you are sharing your space. Considerations include the type of investment property, your desired level of interaction with tenants, and local market conditions. The key is to find a balance that works for you, ensuring your home remains a comfortable place for you while optimizing its income potential.

By embracing the concept of house hacking, you can transform your approach to homeownership, turning a typically expensive part of your life into a source of income. With careful planning and a bit of creativity, your journey towards financial independence might just start at your own front door.

Benefits of House Hacking

House hacking isn’t just a real estate strategy; it’s a lifestyle adjustment that opens doors to numerous financial and personal benefits. Let’s dive into the advantages, supported by real-world examples and data, to understand why so many are turning to house hacking as a way to improve their financial health.

Financial Freedom Faster

One of the most compelling benefits of house hacking is the accelerated path it provides toward financial freedom. By significantly reducing or eliminating one of life’s largest expenses—housing—you can allocate funds towards paying down debt, investing, or saving for future goals.

For instance, consider the case of Sam, who purchased a triplex, lived in one unit, and rented out the other two. The rental income not only covered the mortgage but also allowed Sam to save an additional $1,000 a month. This extra savings contributed to Sam’s ability to retire early, a dream that seemed unreachable before house hacking.

Access to Better Financing Options

House hackers often enjoy more favorable financing terms. Owner-occupants can qualify for lower down payments and better interest rates compared to traditional investment property loans.

For example, an FHA loan might require as little as 3.5% down for a multi-unit property, provided one of the units will be owner-occupied. This lower barrier to entry makes real estate investment accessible to more people. Data shows that owner-occupied financing options can save homeowners thousands of dollars over the life of a loan, making the investment in house hacking even more appealing.

Learning the Ropes of Real Estate Investing

House hacking serves as an invaluable hands-on education in real estate investing and property management. This benefit is difficult to quantify, but incredibly valuable.

Take Angela, who started her real estate journey through house hacking. By managing her duplex, Angela gained firsthand experience in screening tenants, handling maintenance issues, and understanding the financial aspects of real estate investments. This knowledge empowered her to expand her portfolio and become a full-time real estate investor.

Tax Advantages

House hacking can also lead to potential tax deductions, including mortgage interest, property taxes, and expenses related to renting out part of your home. These deductions can significantly lower your taxable income.

For example, let’s say John allocates 50% of his property’s square footage to tenant use. John can deduct 50% of the mortgage interest, property taxes, and maintenance expenses on his tax return, providing a substantial financial benefit at the end of the fiscal year.

Building Wealth Over Time

House hacking stands out not just for its immediate financial relief on living expenses but also for its profound long-term impact on wealth accumulation. By strategically applying rental income towards mortgage payments, those who house hack effectively build equity without dipping into personal savings. This method of leveraging other people’s money accelerates wealth building, offering a tangible path to increasing net worth over the years.

Instead of allocating a significant portion of their income towards housing, house hackers can redirect these funds into savings, investments, or debt reduction. This shift not only enhances financial security but also amplifies the potential for future financial growth

While outcomes can vary based on numerous factors like market dynamics and property management, the foundational strategy of house hacking provides a compelling approach to financial independence and wealth building.

Case Studies That Inspire

The real magic of house hacking comes alive through the stories of those who’ve embraced it. From the young professional who used house hacking to eliminate student debt to the couple that built a real estate empire starting with a single house hack, these narratives underscore the transformative power of this strategy.

By analyzing their journeys, we uncover a common thread—a strategic approach to living and real estate investing that turns conventional wisdom on its head and opens up new possibilities for financial independence.

Exploring Your Options: Five House Hacking Strategies

So, now that you understand what housing hacking is and what the benefits are, how do you get started? Well, depending on your goals, here are four different ways you can go about it.

1. Rent out a portion of your home

The most common way to get started house hacking is by buying a home and then renting out a portion of it. For instance, if you bought a two-story home, you could rent out the downstairs. Or, if you buy a home with a finished basement, you could live upstairs and rent out the basement.

This house hacking strategy is good in low-cost living areas because the rental income could actually cover your monthly mortgage payments. However, this may not work out in parts of the country that have a high cost of living.

2. Rent out your home entirely

If renting out a portion of your home isn’t enough to move the needle financially, then you could try renting your entire house. This could be a suitable option for anyone who is young and able to find an alternative, affordable living situation.

For instance, if you could temporarily live in a trailer or rent an apartment with a roommate, you could rent out your home for more money. This would allow you to pay off the house and cover your monthly rent payments.

3. Rent out by the room

If you’re just looking for a little extra money every month and don’t want to sacrifice the majority of your home, you could just try renting out one room. For instance, if you have a large four-bedroom home, you could rent out one room.

This gives you some extra money to put toward your mortgage payments, but you still get to enjoy the benefits of being a homeowner.

4. Rent out an additional unit

Many of the options on this list are ideal for young, single people. But what if you’re married and have a family? In that case, the idea of living with full-time roommates might not interest you.

If so, you could buy a multifamily property and rent out the other units. You could also rent out units attached to your home. This could be a unit that either comes with the house or one that you build yourself.

This will take some effort because you’ll need to fix it up and turn it into a space someone would want to rent. But if you have the interest, this could be the best way to house hack your primary residence while still protecting your family’s personal space.

5. Do a live-in flip

Live-in flipping is a popular real estate investment strategy where the investor purchases a residential property and lives in it while making improvements to increase the property’s value. The investor will then resell the property at a higher price than they originally paid for it, resulting in a profit. This strategy is often used by investors who are looking to build equity quickly.

Living in the property allows you to get to know the neighborhood, research the local market, and avoid paying rent while working on the property. The improvements you make can include anything from painting and landscaping to remodeling the interior of the home.

Legal and Tax Implications of House Hacking

Venturing into house hacking offers financial benefits but also introduces a set of legal and tax considerations that are crucial for a successful strategy. Here’s a concise overview to guide you through these aspects:

Local Zoning Laws

  • Zoning Requirements: Check your local zoning ordinances to ensure that your house hacking plans comply with regulations regarding rental properties, especially if you intend to modify a single-family home into a multi-unit property.
  • Permits: Obtain any necessary permits for renovations or conversions to avoid legal issues and ensure the safety and legality of your property for tenants.

Tax Benefits and Liabilities

  • Rental Income Reporting: Understand that rental income must be reported on your tax returns. Proper documentation of income and expenses is essential for accurate reporting.
  • Deductible Expenses: Familiarize yourself with what can be deducted, such as mortgage interest, property taxes, maintenance costs, insurance, and depreciation. These deductions can significantly reduce your taxable income.
  • Capital Gains: If you sell your property for a profit, be aware of capital gains tax. Living in the property for two of the five years before selling can qualify you for an exclusion on capital gains tax up to a certain limit.

Compliance with Landlord-Tenant Laws

  • Legal Responsibilities: As a landlord, you’ll need to adhere to state and federal laws regarding tenant rights, fair housing, and safety standards. This includes understanding eviction procedures, security deposit regulations, and the requirement for habitable living conditions.

Proper Reporting and Documentation

  • Keeping Records: Maintain meticulous records of all financial transactions, leases, and communications with tenants. This documentation will be vital for tax purposes and in the event of legal disputes.

Professional Advice

  • Consultation: Given the complexity of tax laws and real estate regulations, consulting with a tax professional and a real estate attorney can provide tailored advice and ensure you’re maximizing your benefits while minimizing legal risks.

House Hacking Checklist: Preparing for Success

House hacking requires careful planning and consideration. To ensure you’re well-prepared, we’ve compiled a comprehensive checklist. This guide will help you work through the initial stages, make informed decisions, and set you up for a successful house hacking experience.

1. Assess Your Financial Readiness

  • Evaluate Your Financial Health: Check your credit score, debt-to-income ratio, and savings. Your financial stability will affect loan approval and interest rates.
  • Budget for Upfront Costs: Calculate potential down payments, closing costs, renovation expenses, and an emergency fund for unexpected repairs.

2. Understand Financing Options

  • Research Loan Types: Familiarize yourself with different mortgage options, including FHA loans, conventional loans, and VA loans, if applicable.
  • Pre-Approval: Before house hunting, get pre-approved for a mortgage to understand how much you can afford and demonstrate your seriousness to sellers.

3. Choose the Right Property

  • Analyze the Potential ROI: When selecting a property, assess key return on investment (ROI) metrics, including cash flow, cash-on-cash return, net operating income (NOI), and cap rate. These metrics will help you understand the financial performance and potential profitability of the property.
  • Location: Select a location with high rental demand, considering factors like proximity to schools, employment centers, and public transportation.
  • Property Type: Decide whether a single-family home, multifamily property, or another type of property, suits your goals and budget best.
  • Condition: Be realistic about the amount of work you can handle. A fixer-upper may offer a higher return but requires more investment upfront.

4. Plan for Landlord Responsibilities

  • Understand Landlord-Tenant Laws: Research local laws regarding landlord responsibilities, eviction processes, and tenant rights.
  • Create a Lease Agreement: Draft a clear and comprehensive lease agreement that outlines rent, rules, and responsibilities. Consider seeking the advice of a legal professional.

5. Prepare for Property Management

  • Tenant Screening: Develop a process for screening tenants, including credit and background checks, to ensure reliability and compatibility.
  • Maintenance and Repairs: Plan for regular maintenance and emergency repairs. Consider whether you’ll handle repairs yourself or hire professionals.

6. Consider Privacy and Lifestyle Changes

  • Set Boundaries: Think about how you’ll maintain privacy and manage shared spaces, especially if renting out part of your primary residence.
  • Adjust Expectations: Living with tenants or managing a rental property can bring challenges. Be prepared for a lifestyle adjustment.

7. Develop an Exit Strategy

  • Long-Term Goals: Consider your long-term real estate and financial goals. How does house hacking fit into your broader investment strategy?
  • Resale Considerations: Keep potential resale value in mind when choosing and maintaining your property. Making wise improvements can enhance future profitability.

8. Continuous Learning

  • Educate Yourself: Real estate and property management are complex fields. Continually seek knowledge through books, podcasts, and networking with experienced investors.

This checklist is your starting point for a thoughtful and structured approach to house hacking. By addressing each item, you’re laying a solid foundation for your real estate investment journey, poised to navigate the challenges and reap the rewards of this strategic endeavor.

Bottom Line

House hacking is a creative way to pay off your mortgage, improve your monthly cash flow, and gain real estate experience. You can begin house hacking as a way to earn a little extra cash every month, or you could treat it like a long-term real estate investment strategy. You can put as much or as little into it as you want.

Just make sure you do your due diligence before getting started. Make any necessary adjustments to the house, choose your tenants carefully, and take your responsibilities as a landlord seriously. This allows you to make the most of your house hacking experience.

Source: crediful.com