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Households in the Lone Star State earn an income that’s just below the U.S. median. The U.S. Census Bureau reports that the median household income in Texas is $73,035. In comparison, the median annual income in the U.S. is $75,149.

Diving deeper into Texas’ income data can offer more clarity about how your income compares to peers in your city and county. We’ve gathered data from the Census Bureau’s American Community Survey, Bureau of Labor Statistics (BLS), Massachusetts Institute of Technology (MIT), and others to help uncover the average salary in Texas across these categories so you know where your income stands.

Here’s a closer look into what the average salary in Texas is.

Average Salary in Texas by Age in 2023

Generally, your income grows as you gain experience and seniority in the job market. Your peak income years are between ages 35 and 54, according to the BLS. The average salary in Texas typically decreases as workers transition into retirement, around the age of 65.

Below is the average income by age, according to a Scholaroo analysis of publicly gathered data.

Whether you have a good salary for your age as a Texas resident depends on your assets versus financial obligations. You can use a net worth calculator by age to determine where your finances are today so you can make moves to reach your financial goals.

Then, with this information in mind, consider using a budget planner app to set budgeting and savings goals.

Median Salary in Texas by City in 2023

While the average salary in the U.S. is higher than a typical Texan’s annual income, salary data varies greatly based on the city where you live. Below is a list of the most-populated cities in the state and the median salary of their residents.

Median Salary in Texas by County in 2022

The Census Bureau offers the median household income across various Texas counties. Below are the median salaries, in order of lowest to highest.

Depending on which Texas county you live in, median salaries vary widely. Although some of the more popular counties can offer higher incomes, if they also come with a higher cost of living, you may find it harder to maximize your income. Add other financial obligations, like loan and credit card debt, and saving toward your future goals, and your income might start looking lean.

Using a money tracker tool can help you stay on top of your necessary and discretionary spending. You can create specific budgets so you can track your progress toward a number of goals.

Recommended: What Is a Six-Figure Salary?

Examples of the Highest-Paying Jobs in Texas

Finding a well-paying job in Texas can help you achieve a more comfortable lifestyle. Fortunately, Texas is home to lucrative business sectors that offer a good entry-level salary, from aerospace and defense to energy production, thanks to the state’s abundant natural resources.

Here are just a few of the highest-paying jobs and their average salary in Texas, according to BLS data:

•   Radiologists: $327,850. These medical professionals use imaging tools, like x-rays, magnetic resonance imaging, ultrasound, and other techniques to view patients’ internal anatomy and provide diagnostic images.

•   Petroleum engineers: $155,290. As a petroleum engineer, you’re responsible for developing a plan to extract natural resources, like oil and gas, from the earth in a safe and efficient way.

•   Aerospace engineers: $132,800. In this profession, you’ll design and develop aircrafts, shuttles, satellites, and defense-use missiles and rockets. You’re also responsible for inspecting designs and testing their functionality according to project goals.

•   Industrial production managers: $130,850. In the manufacturing industry, industrial production managers are responsible for ensuring smooth operations when it comes to meeting production goals, managing staff, communicating with customers and suppliers, and more.

•   Information security analysts: $119,480. These individuals design, implement, and monitor computer networks and systems, like firewalls, intranet, and more for an organization or company. They also test for vulnerabilities, make enhancements, and stay ahead of any new technologies that impact security within an organization.

There are many career opportunities to explore, whether you enjoy engaging with teammates and clients or are interested in jobs for introverts that don’t require a lot of person-to-person interaction.

Recommended: 25 Highest Paying Jobs in the US

The Takeaway

The average salary in Texas by age ranges from $38,563 to $52,331, which falls short of the average pay in the United States. Incomes greatly depend on where you are in your career — whether you’re just starting out, in your peak-earning years, or preparing for retirement.

How far your salary goes is also dependent on your existing assets, debt, and where you live. Learning how to calculate your net worth can help you determine where you are financially.

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.

FAQ

What is a good average salary in Texas?

The median household income in Texas is $73,035, according to the Census Bureau. Depending on where you live, your expenses, how many people are in your household, and other factors, that salary could provide you with enough money for a comfortable lifestyle.

What is the average gross salary in Texas?

According to BLS data, the average salary in Texas, across all occupations and industries, is $61,240. The average hourly wage in the state is $29.44. This is as of May 2023, the most current data available from the BLS.

What is the average income per person in Texas?

In 2023, the average salary in Texas is $65,422 per capita, meaning per person, according to the Federal Reserve Bank of St. Louis.

What is a livable wage in Texas?

In terms of a living wage, a good average monthly salary in Texas is $3,626 for an adult with no children., For a family of four with two working adults, a living wage is about $4,195 per earner, assuming both adults earn the same income.

Photo credit: iStock/Moon Safari

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.

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

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

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

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When it comes to defining a “good” salary, there’s no one magic number. The Bureau of Labor Statistics (BLS) reported that the average salary in the U.S. is $65,470, as of May 2023. Based on this data point, $70K a year is a good salary for a single person — one that puts you above the national average.

But just how far $70,000 can carry you varies from person to person. Existing debt and financial obligations, spending habits, and where you live can all significantly impact how comfortable you’ll be on that salary.

Let’s take a closer look.

Median Income in the US by State in 2024

When you examine income through the lens of the average pay in the U.S., you could be misled by certain outliers, like a group of people with an unusually high income. Another way to consider pay is by looking at median income. The median income in the United States in 2022 was $74,580, according to the latest data available from the U.S. Census Bureau. Below is the median annual household income of every state.

Recommended: The Average Income by Age in the U.S.

Average Cost of Living in the U.S. by State in 2024

The Missouri Economic Research and Information Center aggregated and averaged cost-of-living (COL) indices from various metropolitan areas and cities throughout the U.S. It then determined the cost of living index by state.

As the chart below shows, Hawaii, Massachusetts, and California had the three highest costs of living on the index.

Recommended: Average U.S. Salary by State

How to Budget for a $70K Salary

Having established guard rails within your budget can help you live within your means. A popular strategy is the 50/30/20 plan, based on your after-tax income. Here’s how it works:

•   50% is for necessities. Necessities include your housing costs, utilities, car payments, groceries, transportation, health care, and other monthly debt obligations.

•   30% is for wants. This bucket includes non-essentials, like dining out, vacations, streaming subscriptions, shopping, etc.

•   20% is for savings. This category lets you set money aside toward an emergency fund, home down payment, retirement, or other long-term investment for yourself.

Maximizing a $70K Salary

$70K can be a good salary for a single person, depending on your circumstances. But if you’d like to stretch your income as much as possible, here are a few ideas:

•   Determine your monthly budget. A budgeting and spending plan that works for your lifestyle and long-term goals is essential. A budget planner app lets you set custom budgets and categorize your spending so you can see where your money goes.

•   Track your overall finances. Using a money tracker tool can help you monitor your everyday money habits, sometimes including your credit score. You can review useful visuals about your financial data, learn insights, and track how well you’re sticking to your plan.

•   Consider getting a roommate. Housing costs (i.e. rent/mortgage, utilities, internet, furnishings, etc.) make up a substantial part of your budget. Although getting a roommate isn’t the best fit for everyone, it lets you share the financial load so you can maximize your $70K salary.

•   Move to a cheaper area. If you live in a costly neighborhood, explore the possibility of relocating to another part of town that has a lower cost of living.

•   Invest in yourself. Don’t let your disposable income languish in a low- or no-interest checking account. Instead, consider depositing extra cash in a high-yield savings account or retirement account.

Is $70,000 a Year Considered Rich?

Only you can determine whether $70,000 per year is rich by your preferred quality of life. One way to approach this question is by learning how to calculate your net worth. For some workers, age factors into the decision of whether a certain salary is adequate.

To dig deeper into your net worth, use a net worth calculator by age.

Is $70K a Year Considered Middle Class?

According to the Pew Research Center, approximately half of U.S. adults are considered middle- class. Determining your income class as a single person earning $70,000 is a moving target depending on where you live.

Pew’s income calculator lets you quickly uncover your income tier, based on your state, metropolitan area, net income, and household size — in your case, one. For instance, $70K a year is a good salary in an upper-income tier, as a single-person household in the Gadsden area of Alabama. By comparison, in Texas’s San Antonio-New Braunfels area, earning $70K annually puts you in the middle-income class.

Example Jobs that Make About a $70,000 Salary

If you’d like to earn about $70,000 per year, here are a few jobs for introverts and extroverts alike and their median salary:

•   Loan officers: $69,990

•   Insurance underwriters: $77,860

•   Railroad worker: $73,580

•   Police officer and detective: $74,910

•   Zoologist and wildlife biologist: $70,600

For more inspiration, here’s a list of the highest-paying jobs by state.

The Takeaway

Whether $70K is a good salary for a single person is dependent on the context of your situation. A combination of factors, like your existing finances, your area’s affordability, and how lean or lavish your lifestyle is can sway the pendulum one way or the other.

As a single person, earning $70,000 annually might be completely comfortable if you live a modest-to-spendy lifestyle in a city with a low cost of living. Living in a high cost-of-living city, like Los Angeles or New York, might also be possible when you split housing costs with a roommate or relative. Assess your current bills, debts, and spending to see where you can make adjustments toward a lifestyle you enjoy.

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.

FAQ

Can I live comfortably making $70,000 a year?

It’s possible. Depending on where you live and the area’s cost of living, a $70,000 annual salary might offer a comfortable lifestyle. Your current outstanding monthly debt, family size, and financial goals can also impact whether $70,000 is enough to live comfortably.

What can I afford with a $70,000 salary?

Housing is generally the most costly monthly expense you’ll need to budget for. If you earn $70,000 and are purchasing a home, you can afford a house up to $229,813. Assuming your monthly debt is $250, your mortgage rate is 7% fixed, and you got a 30-year term with $20,000 down, your monthly payment would be $1,837.

How much is $70,000 a year hourly?

A $70,000 salary equates to an hourly salary of $33.65. This assumes that you’re working a full-time schedule of 40 hours per week.

How much is $70,000 a year monthly?

If breaking down $70,000 in annual base wages by month, you’d earn $5,833.33 per month. Keep in mind that this figure doesn’t account for taxes and deductions that are applied to your paycheck during payroll.

How much is $70,000 a year daily?

A $70,000 base salary comes out to $269.23 per day. This amount was calculated under the assumption that you get paid to work eight-hour work days for over 260 weekdays throughout a year.

Photo credit: iStock/PeopleImages

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.

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.

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Thinking about relocating to Ohio? The average salary in the state is $60,320, according to the U.S. Bureau of Labor Statistics. For comparison, the average salary in the U.S. is $63,795, per 2022 data from the National Average Wage Index.

Of course, an individual’s income is dependent on a number of factors: Age, occupation, and education level can all play a role.

Average Salary in Ohio by Age in 2023

As in other states, the median salary in Ohio tends to increase with age and experience and decline in the retirement years. This can be good news if you have an entry-level position and are looking to earn more.

Here’s a look at the median salary in Ohio by age range:

Salaries also often rise with your level of education, as the Census Bureau data below shows:

•   No high school diploma: $29,967

•   High school diploma: $36,589

•   Some college/two-year degree: $42,903

•   Bachelor’s degree: $59,928

•   Graduate/professional degree: $73,752

Regardless of where you are in your career path, it’s a good idea to stay on top of your finances. Online tools like a money tracker can keep tabs on where your money is coming and going and provide valuable insights.

Recommended: U.S. Average Income by Age

Average Salary in Ohio by City in 2023

Where you live in Ohio can make a difference in how much money you earn. The more populated a metropolitan area is, the higher incomes tends to be. Let’s take a look at the median salary of households in 11 major cities in Ohio:

Average Salary in Ohio by County in 2023

Another way to look at salaries in Ohio is by county. The ten most-populous counties in the state have the following median incomes:

Recommended: How to Calculate Your Net Worth

Examples of the Highest Paying Jobs in Ohio

Ohio has high-paying jobs in many different sectors, such as medical, business, aviation, and technology. As a result, the state has opportunities for introverts and professionals who love working with people.

Here’s a list of the highest-paying jobs in the state:

In contrast, the lowest average salaries in Ohio appear primarily in service industries. Baggage porters and bellhops, cashiers, short order cooks, childcare workers, and housekeeping cleaners are examples of jobs that make an average of less than $30,000.

If you’re looking to maximize your salary, online tools like a budget planner app could help. Besides monitoring spending, it helps you set a budget and track your progress.

The Takeaway

Pay depends on many different factors, including age, occupation, education, and location. In Ohio, the average salary is $60,320, according to BLS data. That’s slightly lower than the national average salary of $63,795. The state is also home to plenty of jobs with six-figure salaries, especially in the medical, business, aviation, and technology fields. Ohioans enjoy a cost of living that’s lower than the national average, which can help workers stretch their wages even more.

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.

FAQ

What is a good average salary in Ohio?

A good salary is one that meets your basic needs while leaving you with some money for savings. Pew Research Data found that in order to be considered middle class in Ohio, you need to earn $61,664 a year.

What is the average gross salary in Ohio?

In Ohio, the average gross salary — or money earned before taxes and other payrolls deductions are taken out — is $72,146 a year, per data from Talent.com

What is the average income per person in Ohio?

The average income per person in Ohio is $60,320, according to data from the U.S. Bureau of Labor Statistics.

What is a livable wage in Ohio?

A livable wage in Ohio for a single adult is $40,352. Households with multiple people will need more. For example, if you and your spouse both work and have one child, you could get by on around $82,409 a year in Ohio, according to MIT’s Living Wage Calculator.

Photo credit: iStock/jacoblund

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.

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.

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If you’re a Florida resident, you may wonder how your salary stacks up against your peers in other states. Or you might wonder about the type of salary you might earn if you move to the Sunshine State.

The U.S. Census Bureau American Community Survey reveals that of all Florida’s workers, those aged 45 to 64 see the highest median household income, at $82,587. The overall median household income in Florida is $69,303.

But what is the average salary in Florida across the board? A typical worker here collects an average annual salary of $48,966 in 2024, or $4,080 per month.

We’ll examine the average salary in Florida in a few different ways: by age, city, and county. We’ll also share examples of the highest-paying jobs in Florida to give you a better understanding of Floridians’ take-home pay.

Average Salary in Florida by Age in 2024

What is the average salary in Florida by age? The most recent data shows the following annual average income by age among Floridians:

•   Under 25 years: $42,617 annually

•   25 to 44 years: $77,487 annually

•   45 to 64 years: $82,587 annually

•   65 years and over: $52,625 annually

As you can see, a gap exists between the salaries of under-25 residents (which can include high school and college-aged students) and those aged 25 to 44. Average salaries peak for workers aged 45 to 64, and decline among those aged 65 years and older.

Floridians’ salaries reflect a national trend in peak earning years. Earnings typically reach their highest point when workers are in their late 40s to late 50s. Women’s peak earning years occur between ages 35 and 54, and men’s peak earning years hit between 45 and 64.

According to data from the Social Security Administration, the average salary in the U.S. is $63,795. And just like in Florida, a few factors contribute to earnings: location, industry, education level, and demand, to name a few.

Average Salary in Florida by City in 2024

It’s important to note that while we’re listing the average salary in Florida by city in the next section (and by county in the section after that), it’s just an average — the number of incomes divided by the number of workers. You may earn above or below the average salaries listed.

Per ZipRecruiter, some average salaries in Florida by city include the following:

•   Island Walk: $85,574

•   Juno Beach: $78,624

•   Ocean Breeze Park: $78,184

•   Meadow Oaks: $77,940

•   Harbor Bluffs: $77,661

•   Port St. Lucie: $60,862

•   Boynton Beach: $57,346

•   Sunrise: $57,086

•   Orlando: $56,808

•   Miramar: $56,673

Standards of living — and the salary you need to earn to maintain them — vary by city. For example, a low-end middle-class income in Miami, Fort Lauderdale, and West Palm Beach is $43,000, while a high-end middle-class income is $128,000. No matter where you live in the state, a budget planner app can help you make the most of every dollar you earn.

Recommended: What Is the Average Pay in the United States Per Year?

Average Salary in Florida by County in 2024

The average salary in Florida by county can depend on a wide range of factors, including that area’s need for skilled workers. For example, living in a large metropolitan area with a variety of jobs can draw residents and change the trajectory of a county’s average salary.

The median household income in select counties in different parts of Florida includes:

•   Palm Beach County: $70,979

•   Collier County: $62,660

•   Seminole County: $60,623

•   Hamilton County: $56,945

•   St. Johns County: $56,425

•   Glades County: $52,466

•   Citrus County: $46,763

•   Hendry County: $48,891

•   Madison County: $39,023

•   Holmes County: $34,379

From September 2022 to September 2023, employment increased in all of Florida’s 26 counties, according to the Bureau of Labor Statistics. In Miami-Dade County, employment increased particularly in the areas of healthcare and social assistance.

Examples of the Highest-Paying Jobs in Florida

Some of the largest industries in Florida include advanced manufacturing, aerospace and defense, clean energy, information technology, life sciences, and logistics and distribution.

You might be curious about snagging one of the highest-paying jobs in Florida. Here’s a list of the average salary of some of the highest-paying jobs in Florida:

•   Finance services director: $211,022

•   Staff psychiatrist: $205,364

•   Associate medical director: $195,656

•   Physician: $193,805

•   Clinic physician director: $189,373

•   Physician extender: $186,136

•   President/chief executive officer: $185,121

•   Family practice physician: $184,438

•   Pain management physician: $184,207

•   Vice president of sales: $184,032

Many types of high-paying jobs require advanced degrees, and as you can see from the list above, some job titles, including that of a physician, require a significant amount of education.

Therefore, you may also want to consider the most in-demand jobs in Florida, which include the following:

•   Mental health counselor: $30,112 to $142,147 annually

•   Occupational therapist: $40,215 to $136,890 annually

•   Management analyst: $41,118 to $104,843 annually

•   HR manager: $48,124 to $102,655 annually

•   Financial analyst: $48,631 to $97,214 annually

If none of the above fit your credentials or interests, many options abound, including jobs for introverts and for those just starting their careers.

Wherever you are in your professional journey, it’s a good idea to have some short- and long-term financial goals in mind. Tools like a money tracker can keep tabs on where your money goes and also provide valuable insights on your finances.

Recommended: What Is a Good Entry-Level Salary?

The Takeaway

Planning to relocate to the Sunshine State? The average annual salary is $48,966, which is lower than the national average. Still, Florida offers no shortage of opportunities for job seekers, no matter your field or interest area. If you want to lock yourself into a certain salary, research job opportunities in your field, check out the educational requirements, and consider interviewing individuals in the area you’re interested in to learn more about their path and trajectory.

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.

FAQ

What is a good average salary in Florida?

In Florida, a good average salary might start at $69,000 for a single individual (without kids). On the other hand, a couple might require up to $94,500 to make ends meet and allow money for fun as well. However, every individual is different, and budgeting techniques can help you carve out money for fun and relaxation no matter your income.

What is the average gross salary in Florida?

The average annual salary is $48,966 in Florida in 2024. This number includes all counties and cities in Florida. However, many factors determine your earning potential, including your location, the cost of living, the job market, industry in an area, and the surrounding competition.

What is the average income per person in Florida?

The Florida average annual salary in 2024 is $48,966. However, this number takes into account all individuals in the Sunshine State, including all ages and all career types. You may earn above or below that amount, depending on your field, location, and other factors.

What is a livable wage in Florida?

A good average salary in Florida of $69,000 breaks down to a monthly salary of $5,750 and a biweekly salary of $2,653.85. It also translates to a weekly salary of $1,326.92, and an hourly wage of $33.17.

Photo credit: iStock/franckreporter

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.

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.

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Your credit score is one of your most valuable assets, and it’s important to take action if you notice that yours is dropping. Many credit card issuers now offer customers free credit monitoring, and there are other ways to check your credit score without paying.

Let’s dive in.

Reasons Why Your Credit Score Can Drop

There are several factors that affect your credit score. Here’s a look at some common scenarios:

Late or Missing Payments

When it comes to determining your FICO score — a type of credit scoring model used in 90% of lending decisions in the U.S. — your payment history matters. A lot. It’s the largest factor in FICO’s credit scoring formula. Missed or late payments can cause your score to drop by as much as 180 points and could remain on your credit reports for up to seven years. Signing up for autopay is one way to help ensure your bills are paid on time.

Credit Utilization Increased

Credit utilization refers to how much of your credit you’re using, and it can indicate to potential lenders how well you manage your finances. It’s also the second-largest factor in your FICO credit score. The general rule of thumb is not to use more than 30% of the credit available to you. If your credit utilization rate is higher than that, you may see a drop in your credit score.

If you need help keeping tabs on where your money is going, consider using online tools like a money tracker. Besides monitoring spending, it can also provide insights on your finances.

Recent Application for a Mortgage, Loan, or Credit Card

Applications for new credit may only make up 10% of your FICO credit score, but that can still have an impact. That’s because lenders often pull a hard inquiry when you apply for credit, which may cause your score to fall slightly. The good news is, the dip is usually temporary.

A Credit Limit Decreased

If your credit limit decreases, that means you have less available credit. And this can cause your credit utilization rate — or debt-to-credit ratio — to increase. Why does that matter? Your credit utilization rate is one of the factors lenders consider when you apply for credit. In general, lenders consider a debt-to-credit ratio of 30% or below as “excellent.”

You Closed a Credit Card

You may want to think twice before closing a credit card, especially if it’s one you’ve had in good standing for a while. When you close a credit card, your total credit line decreases and your debt-to-credit ratio may increase. This could temporarily lower your credit score.

Inaccurate Information on Your Credit Report

Need another reason to routinely keep a close eye on your credit report? Having inaccurate information — say, defaults on loans you don’t have — could potentially hurt your credit. If you spot a credit report error, be sure to dispute it (more on that below).

Recommended: Does Checking Your Credit Score Lower Your Rating?

Major Event Such as Foreclosure or Bankruptcy

Having your home foreclosed or filing for bankruptcy are major issues that have the potential to damage your credit score for several years. For instance, Chapter 13 bankruptcy stays on your credit report for seven years, while Chapter 7 bankruptcy stays on for 10 years. Meanwhile, a foreclosure remains on your report for seven years.

Check Your Credit Report

If you’ve noticed a significant drop in your credit score, it’s worth looking over your credit report. Typically, your credit report updates every 30 to 45 days and includes key information about your credit history such as:

•   Your history of on-time and delinquent payments

•   How often you’ve applied for credit

•   How many accounts you have open and closed

•   Any accounts that are in collections

Every 12 months, you can get a free copy of your credit report from each of the three major credit reporting companies at AnnualCreditReport.com. Be sure to carefully review reports from all three companies, as there may be some differences between what’s reported with Transunion vs. Equifax vs. Experian.

Another option? Signing up for credit score monitoring, which can offer score updates and financial insights.

Dispute Credit Report Information You Believe to Be Incorrect

If you find information on your credit report that’s not accurate, you have the right to dispute it. And the good news is, doing so won’t negatively affect your credit score.

To get the ball rolling on resolving errors, you’ll need to file a formal dispute with the credit reporting company. You can contact them online or by mail or phone. The Consumer Financial Protection Bureau (CFPB) also offers helpful tips on how to file a dispute .

Take Actions to Build Your Credit

Is your credit score not where you want it to be? There are things you can do to help improve it.

One helpful step to take is to pay all of your bills when they’re due, as consistent, on-time payments can significantly raise your credit score over time. Automating your finances is one way to help ensure you don’t miss a due date. It’s also a good idea to focus on catching up past-due accounts so they’re current.

Another step to consider is to limit your credit utilization ratio so your credit balances aren’t too high in relation to your credit limit. You can explore setting up balance alerts that alert you when you’re nearing the recommended 30% credit utilization ratio. You may also want to consider paying your credit card bill more frequently, say, twice a month instead of once a month.

A third strategy is to pay off what you owe. Having a debt repayment plan in place can help, and there are several approaches to consider. Two common ones are the snowball method (where you pay off debts in order from the smallest balance to the largest) and the avalanche method (where you pay off accounts in order from the highest interest rate to the lowest).

What Is a Good or Bad Credit Score?

FICO credit scores run the gamut from 300 to 850, so where does a “good” credit score fall? While there’s no one magic number, most lenders consider scores between 670 and 739 “good.” If your FICO score is between 740 to 799, it’s classified as “very good”; 800 and higher is “exceptional.”

What about scores below 670? If yours falls in the 580 to 669 range, it’s considered “fair.” That means it’s below the average score of consumers, though you may not have issues getting a lender to approve you for a loan. A score of 580 or less is considered “poor,” and could signal to lenders that you’re a risky borrower.

Credit Score Tips

Since paying your bills on time factors heavily into your credit score, you should take steps toward preventing late payments. One good way to do that is to enable auto-pay on your credit cards and other loans.

You can also reduce your credit utilization by trying to minimize the outstanding balances reported to the credit bureaus. For example, if you make payments just before your statement closing date, the lower balance is reported, which reduces your credit utilization.

The Takeaway

Your credit score is invaluable. Lenders use it as they review your applications for credit, as do landlords, prospective employers, and utility providers. So it’s crucial to keep track of your credit score and take action when it falls.

If your score takes a noticeable dip, the first step is to find out why your credit score fell. This may involve carefully checking your credit reports and disputing errors with the credit reporting company. Next, it’s a good idea to take steps to improve your score, which can include paying bills on time, paying off debt, and limiting your credit utilization ratio.

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.

FAQ

Should I be worried if my credit score dropped?

Changes in a credit score are normal. That said, if yours dropped significantly, and you don’t know why, then you should consider reviewing your credit report and disputing any inaccuracies. However, if the drop is small and expected, then there’s no reason for concern. For example, if you applied for a new credit card, you might see your credit score temporarily drop a bit.

How long does it take to recover from credit score drop?

It all depends on the size of the drop and the cause. If you have higher credit utilization, for instance, your score will likely recover when your utilization ratio drops. But if you have a record of delinquent payments or a default, it can take much longer to recover. And with major events, such as bankruptcy or foreclosure, it may take many years until your credit score fully recovers.

Why is my credit score going down when I pay my bills on time?

While your payment history is the most important factor in your credit score, it’s not the only one. If you are paying your bills on time, your credit score could still drop if your credit utilization is increasing or you have a short credit history.

Photo credit: iStock/Pekic

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