Jan
15
2026
A person’s pair of hands holds a credit card, looking at its logo, card number, and chip

10 Surprising Credit Card Debt Facts

By | Credit, Debt Payoff, personal_loan | No Comments

If you’re like most Americans, you love your plastic and swiping or tapping through your day. In fact, about 74% of Americans have at least one credit card, according to the Federal Reserve Bank of New York, with the average wallet holding more than three, according to data from Experian®.

The national love affair with credit cards is built on their convenience, how they provide a line of credit to enable buying things we can’t quite afford to pay for with cash, and those enticing rewards that are often offered.

But the picture is not altogether rosy: As a nation, US citizens have more than $1.2 trillion in credit card debt. And with interest rates averaging over 20%, that debt can be hard to chip away at.

To help you better understand how credit cards work, how much credit card debt people typically have, and what are smart strategies for paying down credit card debt, keep reading. You’ll learn interesting facts as well as helpful hints.

Key Points

•   46% of Americans carry credit card debt: Almost half of active credit card accounts have an outstanding balance.

•   Average credit card debt is $6,731: High interest rates make repayment difficult, with balances growing over time.

•   65% of college students have credit card debt, often due to nonessential spending.

•   Research found that 33% of Americans have more credit card debt than emergency savings.

•   As more Americans look for an exit strategy from credit card debt, personal loans offer a cheaper, more predictable alternative.

10 Facts About Credit Card Debt

Ready to learn more about credit card debt, a form of revolving debt? These 10 credit card facts will help you better understand who has how much debt and where difficulties paying the balance typically crop up.

1. Almost Half of Americans Have Outstanding Credit Card Debt

Recent research shows that 46% of Americans carry a credit card balance as of late 2025. This indicates that carrying a balance is a common situation for many Americans, even with the eye-wateringly high interest that’s charged.

Recommended: Tips for Using a Credit Card Responsibly

2. People with Credit Card Debt Owe an Average of Almost $7,000

Americans had an average credit card balance of $6,731, according to TransUnion® data. Of those with a balance, most carried it for at least a year.

Just because this is the norm, it doesn’t mean that it’s ideal: The best-case scenario is to only charge as much as you can afford to pay off in full every month.


💡 Quick Tip: Credit card interest caps are a hot topic, as American credit card debt continues to rise. Balances on high-interest credit cards can be carried for years with no principal reduction. A SoFi personal loan for credit card debt may significantly reduce your timeline and could save you thousands in interest payments.

3. It Can Take More Than a Decade to Pay Off $7,951 in Debt

Racking up credit card debt takes much less time than getting rid of it. Say that, like the average American, you have $6,731 in credit card debt, as noted above.

At an interest rate of 20% on existing, with a $150 monthly payment, it would take you 84 months — or seven years — to pay that off. And you would pay $5,773 in interest, or almost as much as the original amount you charged!

But the more you can pay each month, the faster you’ll extinguish the debt. In this example, if you increase your monthly payment to $500, you’d pay off the debt in just 16 months and only spend $955 in interest. These scenarios are, however, assuming that you are not accruing new debt and therefore paying off larger credit card bills.

4. Gen Xers Have the Most Credit Card Debt

Ready for more credit card facts? Here is how age and debt intersect. Gen Xers, the generation that includes people born between 1965 and 1980, have the highest percentage who carry credit card debt at 55%. Next in line are Millennials, born between 1981 and 1996, with 49% carrying credit card debt.

5. Alaskans Have the Highest Credit Card Debt

In a state-by-state analysis of credit card debt, Alaska residents led the pack with $8,026 per person. Those who live in Iowa were found to have the lowest at $4,774.

6. 65% of College Students Have Credit Card Debt

The habit of carrying credit card debt unfortunately starts early, with more than six out of 10 college students carrying a balance on their credit cards. Some of this may well be due to nonessential purchases, such as impulse buys, Uber rides, or fancy coffees.

7. One in Three Americans Owes More On Credit Cards Than They Have Saved for Emergencies

This may be a scary fact about debt, but one in three US adults owes more on their credit card than they have saved for emergencies. In fact, 33% say this is the case. This shows a two-sided problem: too much spending and too little saving.

Recommended: Paying Off $10,000 in Credit Card Debt

8. Richer People Have Credit Card Debt Longer

More interesting credit card debt facts: According to recent data, 62% of those who earn $300,000 or more a year struggle with credit card debt. Perhaps this statistic suggests that high-earners feel they have the means to handle debt and therefore don’t rush to repay it.

9. Men Have More Debt Than Women

Men have an average of $6,357 in credit card debt, while women have an average of $6,232. Perhaps not a huge difference, but so much for the myth of women shopaholics using credit cards to fill an overflowing closet with shoes.

There are many potential reasons for this difference, but some studies have found that women are less comfortable with debt. Also, there is still a gender gap in earning, which could impact spending and debt.

10. There’s a Good Chance You’ll Die With Credit Card Debt

Here’s the last of these debt facts, and it can be a grim one: Nearly three-fourths of Americans are in debt when they die, according to one benchmark study.

And 73% die with credit credit card balances. That’s not exactly a desirable legacy. Although family members don’t generally become responsible for the debt, it may be taken out of the deceased person’s estate.

Why Is Credit Card Debt So Common?

There are many reasons that Americans have so much credit card debt, from rising healthcare and educational costs to lack of emergency savings to a cultural consumerism that encourages people to live beyond their means.

Regarding that last point, you may hear about the phenomenon referred to as Fear of Missing Out or FOMO spending, which is a modern version of “keeping up with the Joneses.” In other words, because your friends, coworkers, or influencers you follow on social media are buying something, you feel you should as well.

Or perhaps part of the problem can be explained by what is known as lifestyle creep. This situation occurs when you earn more money but your spending rises too, so your wealth doesn’t grow. For example, if you took a new, higher-paying job and decided to lease a luxury car or take a couple of lavish vacations, your wealth wouldn’t increase, though your credit card balance might.

Tips on Avoiding Credit Card Debt

Perhaps these facts about debt will motivate you to work on avoiding a credit card balance. If so, the following strategies could help.

•   Review different budgeting methods, and find one that works for you. Many people use the popular 50/30/20 budget rule, for example. Also, see if your bank offers tracking and budgeting tools to help you rein in spending.

•   Gamify savings. You might try sleeping on it rather than making impulse buys to see if the urge to spend passes; it often does. Or go on a spending freeze for a specific period of time or for a certain kind of purchase (say, no dining out in March; no clothing purchases in April).

•   Try buying with cash or your debit card vs. plastic. That will help prevent your debt from snowballing.

•   Consider trying a balance transfer card, which typically gives you a period of zero interest during which time you can pay down what you owe.

•   Credit card interest rates average 20%-25%, versus 12% for a personal loan. And with personal loan repayment terms of 2 to 7 years, you’ll pay down your debt faster.

•   Seek help if you are really struggling to get your debt under control. Nonprofit organizations can help you accomplish this.

The Takeaway

Now that you know some facts about credit card debt and ways to pay it off, you may be looking for a new card that better suits your financial and personal goals. Shopping around to compare features, such as interest rates and rewards, can be a wise move.

Whether or not you agree that credit card interest rates should be capped, one thing is undeniable: Credit cards are keeping people in debt because the math is stacked against you. If you’re carrying a balance of $5,000 or more on a high-interest credit card, consider a SoFi Personal Loan instead. SoFi offers lower fixed rates and same-day funding for qualified applicants. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

What are the main causes of credit card debt?

Credit card debt can crop up in a variety of ways. Sometimes it’s because expenses get pricier, whether due to lifestyle creep or inflation. Other times, it’s not being mindful about daily spending and making impulse buys. Given how many Americans have more credit card debt than money saved, it’s a common but challenging issue.

How much does the average person have in credit card debt?

Credit card debt facts reveal different angles on this number. The average American household has $6,731 in credit card debt.

How serious is credit card debt?

Credit card debt can be very serious. It’s high-interest debt, and it can be difficult to pay off. It can make it hard for individuals to save for their future and can negatively impact their debt to income ratio, which can be an issue when applying for loans.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Jan
12
2026
A man sitting at a table looks at a tablet while doing technical analysis for upcoming trades.

Using Technical Analysis to Research Stocks

By | Growing Wealth, Investing | No Comments

Using technical analysis to research stocks includes using data and indicators to help identify trends and patterns that can help guide investing or trading decisions. It’s one of the two main forms of stock analysis, the other being fundamental analysis.

Using technical analysis indicators to evaluate stocks isn’t necessarily easy, and can be risky for investors who may not know exactly what they’re doing. With that in mind, it may take a long time for investors to feel comfortable with their technical analysis skills — but knowing the basics of technical analysis can be helpful for investors of all experience levels.

Key Points

•  Technical analysis evaluates stock performance using various data points and indicators to help guide short-term trading decisions.

•  Technical analysis differs from fundamental analysis, which examines a company’s intrinsic value through financial statements and other factors.

•  History tends to repeat itself in technical analysis, with patterns and trends recurring over time.

•  Candlestick charts display price data through distinct “candlesticks” with three parts: the body and two lines (wicks or shadows).

•  Technical analysis involves various tools, including chart trends, momentum indicators, volume analysis, support and resistance levels, and moving averages.

What Is Technical Analysis?

Technical analysis uses numerous data points and indicators to evaluate stock performance, and help guide short-term trades. Technical analysis is an investment strategy by which investors try to forecast how a stock price will move based on data about its past movements.

Technical analysis relies on various stock movement indicators, such as price and volume, to identify patterns and trends. Technical analysis only considers a stock’s price and does not consider other factors, such as how a company operates, its earnings, or its assets.

How Technical Analysis Works

Technical analysts chart this data to help them identify patterns while trading stocks. Think of these charts as trails that stocks leave behind them as prices move up and down.

One of the basic tenets of technical analysis is that history tends to repeat itself. By examining market volatility more closely, analysts may see patterns emerge and can thereby make an educated guess about where stock prices might be headed when current patterns line up with historical patterns.

For example, it may become clear that stock prices move a certain way at a certain time of year on a stock chart. A retailer that might see an uptick in share price during the holiday season, for instance.

Or, maybe it becomes clear that a stock reacts a certain way during specific market conditions. For example, when the price of steel rises, analysts may see a shift in the stock price of auto manufacturers.

Anyone can use technical analysis while investing online, though some of the indicators that traders use to analyze stocks may be a bit on the complicated side. However, knowing some basics can be useful even for lay investors to help them make informed decisions about the stocks they choose.

What Are the Core Concepts of Technical Analysis?

Investors who use technical analysis have a number of tools available to help them analyze stock. That generally includes reading different types of stock charts, identifying market trends, as well as common market indicators.

How to Read Different Types of Stock Charts

Technical analysis is all about keeping track of the trail that stocks leave behind. One of the ways that investors and analysts organize this data when doing self-directed investing is with stock charts, including bar, line, and candlestick charts. These charts can cover wide or short time frames and show the patterns of how trades are executed.

You’re likely familiar with line and bar graphs in which the height of the bar or line illustrates the up and down movement of the stock. Candlestick charts may be a little bit less familiar and can be an extremely useful tool if you can read them.

Candlestick Charts

Candlestick charts are made up of distinct pieces, called “candlesticks,” that look like a cylinder with a line coming out of the top and bottom. The cylinder and the lines should be read as three parts. There are four pieces of data represented in each candlestick: opening price, closing price, and the high and the low.

Additionally, each candlestick represents a period of time. Say one candlestick represents five minutes. Within that five-minute period, the bottom of the body of the candlestick represents the opening price of a stock and the top of the body represents the closing price.

The line extending downward from the body represents the low within that time period, and the line extending upward represents the high. If the closing price is higher than the opening prices, the candlestick is colored green, and if it’s lower, the candlestick is colored red.

Each candlestick is read in the context of the other data points around it, and gives analysts a detailed look at how investors are buying and selling stocks over a given period of time. Certain candlestick shapes can be an indicator of distinct changes in the market.

A hammer candlestick has a low, low price, but its closing price is close to its opening price, indicating that prices have potentially hit a low and are reversing. Its inverse, a shooting star candlestick, indicates that prices may have peaked and are on their way down.

Identifying Chart Trends (Uptrend, Downtrend, Sideways)

Technical analysis looks for trends that can help indicate the direction a stock price is moving.

•  As the stock price goes up, it is on an upward trend.

•  As it goes down, it’s on a downward trend.

•  If a price remains relatively constant, the chart will look flat, or sideways.

By comparing current trends to historical data, technical analysts may be able to predict where the trend is headed and what points may represent its highs and lows.

Understanding Common Momentum Indicators (RSI, MACD)

Analysts can measure the strength of trends and movement in price by taking a look at momentum indicators. This indicator compares the most recent closing price to previous closing prices. In a stock chart, the momentum indicator is represented as a separate line from the price line.

Momentum indicators may be expressed as the difference between the current closing price and the closing price a certain number of periods ago. Or it may be expressed as a percentage, or rate of change, by dividing the current closing price by a past closing price.

In general, momentum indicators are used less to provide a signal that investors should make a trade than they are used to help support trades made based on other price actions. For example, if the price of a stock is moving down but downward momentum is slowing, it may help provide confirmation it’s a good time to buy if other indicators also show it’s a good time to buy.

There are numerous indicators, including the relative strength indicator (RSI), and moving average convergence divergence (MACD).

RSI

The relative strength index, or RSI, looks at price fluctuations during a given time period, and calculates average price losses and gains. It ranges from 0 to 100 — a score higher than 70 is considered overbought and under 30 is thought to be oversold. The RSI may identify a divergence, when the indicator moves in opposition to the price.

MACD

The Moving Average Convergence Divergence (MACD) helps investors gauge whether a security’s movement is rising or falling, and helps gauge the momentum of the trend. The MACD uses two different exponential moving averages (EMAs) to do so.

Volume

Stock volume is a measure of the number of shares that are being bought and sold during a given period. Another way to look at volume is that it represents investor interest in a stock. The more stock being traded, the heavier the volume and the greater the interest.

Investors can look at volume as an indicator that prices are changing, and rising volume can be a sign that stock price is starting to move in a significant way.

That said, it is possible that high volume can represent the end of a trend. For example, investors hoping to take advantage of a rise in a stock price may pile on at the end as the stock price is reaching its peak and just about to fall.

Support and Resistance Levels

One of the patterns that analysts will look out for when looking at stock charts are certain thresholds at which stock prices tend to rise or fall. The support level is a point to which a stock will sink but won’t usually fall any further before rising again.

It is essentially the level at which demand is strong enough to bolster the price. Conversely, there is also frequently a price ceiling that stocks will hit that may cause prices to fall back down.

This is the resistance level, the level at which selling is strong enough to prevent prices from rising. Investors may pay attention to these levels, choosing to buy when prices are near the support level or sell as prices meet the resistance level.

Moving Averages

Price movement over a given period of time can make a stock chart overwhelming to look at. The ups and downs of the line can be visually confusing and messy to look at. A way to simplify and show trends more clearly is by using a moving average.

This indicator focuses less on day-to-day movement and more on average price over time. A simple moving average (SMA) takes the sum of the closing prices over a given period of time and divides by the number of prices used. So if you were looking at a three-month period, you would add all the closing prices up over that period and divide by 90.

What Are Chart Patterns and What Do They Signal?

In the simplest terms, chart patterns reflect stock market data, and can be used to identify certain pricing trends. As discussed, there are several types of charts, and thus, several types of chart patterns that may be used to try and parse out market signals.

Those patterns could include candlestick patterns, mult-bar patterns that generate “triangles” or “rectangles,” and more. Trying to discern if these patterns are indeed signaling specific price movements, is a high-level endeavor undertaken mainly by professional traders. That is, they may be a bit too advanced for many inexperienced investors.

Technical Analysis vs. Fundamental Analysis

Fundamental analysis is another school of thought you may encounter when evaluating stocks. This strategy is quite distinct from technical analysis. For technical analysts, price movements are paramount. That’s why technical analysts are always looking at price, and always looking for price patterns that can indicate which positions to take.

The fundamental analysis school of thought takes a deeper dive into a stock’s intrinsic value by looking at factors such as the underlying company’s financial statements, its assets and liabilities, how the company is governed, and the overall market and economy.

Whereas technical analysis is focused almost entirely on numbers, fundamental analysis looks at both qualitative and quantitative measures to determine the fair market value of a stock and compare whether its current price on the market is over- or under-valued.

That said, technical analysts would argue that the factors examined through fundamental analysis are already accounted for in the price of stock. As a result, they might say that examining price and trends is a more efficient form of analysis.

How Beginners Can Start Using Technical Analysis

The average investor interested in experimenting with technical analysis can turn to a variety of sources to find data sets and indicators to track the past price and performance of stocks. This is primarily for short-term trades; technical analysis typically does not factor into long-term investment strategies like asset allocation.

It should be noted that accurately predicting the future price movement of stocks is impossible. In fact, the efficient market hypothesis states that because markets are efficient, a stock’s price reflects all available information about a stock. And nobody has a crystal ball — so, no matter how confident you are about a stock’s future movement, remember that there’s always risk involved.

Common Mistakes to Avoid With Technical Analysis

There are potential mistakes that investors can make when utilizing technical analysis tools. These can include things like emotional or impulsive trading, which could happen if an investor sees an emerging trend in the data and decides to make a quick decision, perhaps at odds with their broader investment strategy.

In short, the data or trends that technical analysis may uncover could spur investors to take actions that may be premature or otherwise outside of their intended strategy.

That could also include making investment decisions based on whatever data is in front of the investor, rather than sticking to a plan.

It’s also possible that investors can become overconfident in their skills or analysis abilities, leading to poor trading decisions. Investors could also use too many indicators or tools, overrely on a single indicator, and even misinterpret the data they are seeing.

Suffice it to say, there are myriad mistakes investors can make with technical analysis, which is why it may be a good idea to take a slow approach to it, and test your methods over time.

The Takeaway

Technical analysis refers to a series of tools and indicators that traders use for evaluating stocks or other securities. It leans on market and trend analysis tools to identify price patterns, and place trades to increase potential returns based on short-term price movements. It’s risky, of course, and there are many mistakes that investors can make while utilizing technical analysis.

Technical analysis is a sophisticated set of techniques that are best used by experienced traders.

Invest in what matters most to you with SoFi Active Invest. In a self-directed account provided by SoFi Securities, you can trade stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, options, and more — all while paying $0 commission on every trade. Other fees may apply. Whether you want to trade after-hours or manage your portfolio using real-time stock insights and analyst ratings, you can invest your way in SoFi's easy-to-use mobile app.

Opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.¹






¹Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease. See full terms and conditions.

FAQ

What is the best indicator for technical analysis?

There is no single best indicator for technical analysis, as it may depend completely upon an investor’s preference as well as the security they’re tracking. That said, some broad indicators may be popular, as they can give investors the largest top-down view of the market.

Can technical analysis predict a stock’s future price?

Nothing can accurately predict a stock’s future price, but technical analysis attempts to give investors an idea of where a stock’s value may be headed. It may be correct sometimes, and others, incorrect.

How long does it take to learn technical analysis?

An investor may never be “done” learning technical analysis, so there is no set time limit. That said, some investors can familiarize themselves with the basics in weeks or months, while others may practice for years.

Is technical analysis better for short-term or long-term trading?

Technical analysis is likely better for short-term trading, as it attempts to uncover short-term market trends or movements, which may not hold over long periods of time.

What are some free tools for practicing technical analysis?

Many brokerages and trading platforms provide technical analysis tools to investors or clients free of charge. There are also other web-based tools that can be accessed for free that investors can use to practice.


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For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

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.

SoFi can’t guarantee future financial performance, and past performance is no indication of future success.

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Jan
12
2026
A couple sits on the front steps of a pretty bungalow, toasting their home purchase with champagne glasses in hand.

What Credit Score Is Needed to Buy a House?

By | Credit, Family Finances, Home Ownership, mortgage, personal_loan | No Comments

What’s your number? That’s not a pickup line; it’s the digits a mortgage lender will want to know — your credit score for a mortgage application. Credit scores range from 300 to 850, and for most mortgage-seekers, a good credit score to buy a house is at least 620. The lowest interest rates usually go to borrowers with scores of 740 and above whose finances are in good order, while a score as low as 500 may qualify some buyers for a home loan, but this is less common.

Key Points

•   A credit score of at least 620 is generally needed to buy a house, but FHA loans may accept scores as low as 500 with a higher down payment.

•   Paying attention to credit scores before applying for a mortgage can lead to lower monthly payments.

•   A higher credit score can save borrowers money by securing lower interest rates over the loan’s term.

•   When two buyers are purchasing a home together, lenders look at both buyers’ credit scores.

•   Credit scores are not the only factor; lenders also evaluate employment, income, and bank accounts.

Why Does a Credit Score Matter?

Just as you need a résumé listing your work history to interview for a job, lenders want to see your borrowing history, through credit reports, and a snapshot of your habits, expressed as a score on the credit rating scale, to help predict your ability to repay a debt.

A great credit score vs. a bad credit score can translate to money in your pocket: Even a small reduction in a homebuyer’s mortgage rate can save thousands of dollars over time.

Do I Have One Credit Score?

You have many different credit scores based on information collected by Experian, Transunion, and Equifax, the three main credit bureaus, and calculated using scoring models usually designed by FICO® or a competitor, VantageScore®.

To complicate things, there are often multiple versions of each scoring model available from its developer at any given time, but most credit scores fall within the 300 to 850 range.

Mortgage lenders historically have focused on FICO scores. Here are the categories:

•   Exceptional: 800-850

•   Very good: 740-799

•   Good: 670-739

•   Fair: 580-669

•   Poor: 300-579

Here’s how FICO weighs the information:

•   Payment history: 35%

•   Amounts owed: 30%

•   Length of credit history: 15%

•   New credit: 10%

•   Credit mix: 10%

Mortgage lenders will pull an applicant’s credit score from all three credit bureaus. If the scores differ, they will use the middle number when making a decision.

If you’re buying a home with a non-spouse or a marriage partner, each borrower’s credit scores will be pulled. The lender will home in on the middle score for both and use the lower of the final two scores (except for a Fannie Mae loan, when a lender will average the middle credit scores of the applicants).

Recommended: 8 Reasons Why Good Credit Is So Important

What Is the Minimum Credit Score to Buy a House?

The median FICO score for homebuyers in late 2025 was a very healthy 735, according to Realtor.com® data. Fortunately, not everyone buying a home will need a score this high to qualify for a home loan. After all, the median credit score in the U.S. is 715. (Using the median versus the average credit score necessary to buy a house helps ensure that unusual buyers with extremely high or low scores don’t throw off the calculations.) How low can you go and still buy a house? The answer hinges on your mortgage.

Credit Score Requirements by Loan Type

What credit score do you need to buy a house? The answer will depend on the type of mortgage loan you’re seeking. If you are trying to acquire a conventional mortgage loan (a loan not insured by a government agency) you’ll likely need a credit score of at least 620. The best credit score to buy a house is 740 or better, because that will help you obtain a lower interest rate. But many buyers purchase a home with a lower score.

With an FHA loan (backed by the Federal Housing Administration), 580 is the minimum credit score to qualify for the 3.5% down payment advantage. Applicants with a score as low as 500 will have to put down 10%.

Lenders like to see a minimum credit score of 620 for a VA loan, though some will go lower, to 600.

A score of at least 640 is usually required for a USDA loan, though borrowers with strong compensating factors, such as a healthy savings, might qualify at 620.

A first-time homebuyer with good credit will likely meet FHA loan requirements, but a conventional mortgage will probably save them money over time. One reason is that an FHA loan requires upfront and ongoing mortgage insurance that lasts for the life of the loan if the down payment is less than 10%.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.

Steps to Improve Your Credit Score Before Buying a House

Working to build credit over time before applying for a home loan could save a borrower a lot of money in interest. A lower rate will keep monthly payments lower or even provide the ability to pay back the loan faster. Here are some ideas to try:

1.    Pay all of your bills on time. “Payment history makes a bigger impact on a person’s credit score than anything else — 35%. So the most important rule of credit is this: Don’t miss payments,” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi.

2.    Check your credit reports. Be sure that your credit history doesn’t show a missed payment in error or include a debt that’s not yours. You can get free credit reports from the three main reporting agencies. To dispute a credit report, start by contacting the credit bureau whose report shows the error. The bureau has 30 days to investigate and respond.

3.    Pay down debt. Installment loans (student loans and auto loans, for instance) affect your DTI ratio, and revolving debt (think: credit cards and lines of credit) plays a starring role in your credit utilization ratio. Credit utilization falls under FICO’s heavily weighted “amounts owed” category. A general rule of thumb is to keep your credit utilization below 30%.

4.    Ask to increase the credit limit on one or all of your credit cards. This may improve your credit utilization ratio by showing that you have lots of available credit that you don’t use.

5.    Don’t close credit cards once you’ve paid them off. You might want to keep them open by charging a few items to the cards every month (and paying the balance). If you have two credit cards, each has a credit limit of $5,000, and you have a $2,000 balance on each, you currently have a 40% credit utilization ratio. If you were to pay one of the two cards off and keep it open, your credit utilization would drop to 20%.

6.    Add to your credit mix. An additional account may help your credit, especially if it is a kind of credit you don’t currently have. If you have only credit cards, you might consider applying for a personal loan.

How Long It Takes to See Changes in Credit Score

Working on your credit scores may take weeks or longer, but it can be done. Should you find an error in a credit report, you can expect it to take up to a month for your score to change. And if you haven’t been paying bills on time, it could take up to six months of on-time payments to see a significant change.

Other Factors Besides Credit Score That Affect Mortgage Approval

Credit scores aren’t the only factor that lenders consider when reviewing a mortgage application. They will also require information on your employment, income, debts, and bank accounts. Your down payment will be a factor as well. Putting 20% down is desirable since it often means you can avoid paying PMI, private mortgage insurance that covers the lender in case of loan default. But many homebuyers — particularly first-time buyers — put down less than 20% and simply factor PMI into their monthly budget.

Other typical conventional mortgage loan requirements a lender will consider include:

Debt-to-Income Ratio

Your debt-to-income ratio is a percentage: the total of your monthly debts (car payment, student loan payment, alimony, etc) divided by your gross monthly income. Most lenders require a DTI of 43% or lower to qualify for a conforming loan. Jumbo loans may have more strict requirements.

Employment and Income History

A mortgage lender will want to verify your employment and income and may request pay stubs and w-2 statements. Don’t be surprised if the lender also reaches out to your employer to confirm your employment. If you are self-employed, you may be asked for a profit-and-loss statement for your business and for more than a year or two of tax returns. Lenders are looking for borrowers who have a steady income source and can be relied upon to repay a large sum over a long period of time.

Available Savings and Assets

Having cash reserves or investments that you can liquidate in the event that you need to pay your mortgage bill is another factor a prospective lender will consider. So lenders will ask you for information about your accounts, including savings and 401(k) accounts. The lender is also looking to be sure that you have the resources to cover the down payment amount and closing costs related to the home purchase.

A lender facing someone with a lower credit score may increase expectations in other areas like down payment size or income requirements.

If you want to see how all these factors come together in your financial profile to determine what size loan you might be approved for, you can first prequalify for a mortgage with multiple lenders. Ultimately, you may want to seek out mortgage preapproval from at least one lender so you have a very clear picture of your home-buying budget and can move forward swiftly when you find a home you love.

Recommended: 31 Ways to Save for a House

The Takeaway

What credit score is needed to buy a house? The number depends on the lender and type of loan, but most homebuyers will want to aim for a score of 620 or better. A better credit score is not always necessary to buy a house, but it may help in securing a lower interest rate.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What credit score is considered good for buying a house?

Generally speaking, you’ll want a credit score of 620 or better if you are looking at a conventional loan or VA loan. A USDA loan would require at least 640 from most borrowers. An FHA loan offers more lenient terms: You could qualify with a score as low as 500, though 580 will allow you to put down a low, 3.5% down payment.

Can I buy a home with a low credit score?

It is possible to get a mortgage and purchase a home with a credit score as low as 500 if you obtain an FHA loan and put down a 10% deposit. If you are looking at a different loan type, then you will likely need at least a 620 score, though if you have a healthy savings and solid income, you may be able to squeak by with a slightly lower credit score.

Do mortgage lenders use FICO or VantageScore?

Mortgage lenders have historically relied on FICO scores but now can use either FICO or VantageScore for loans delivered to Fannie Mae and Freddie Mac, the two entities that buy mortgages from lenders, thereby guaranteeing most of the mortgages in the U.S.

How can I improve my credit score before applying for a mortgage?

The most important thing you can do to help nurture your credit score before applying for a loan is to make your payments in full and on time. Other things, such as requesting credit line increases (but not spending up to the limit) or diversifying your credit mix by adding a personal loan to your credit cards, can help. So can not closing old, unused credit cards. But by far, on-time payments should be your number-one goal.

What other factors do lenders look at besides credit score?

A lender considering a mortgage application will look at your income (both the raw number and how consistent your earnings have been). Your debts, and the ratio of debts to income, will also be important, as will your savings in cash and other assets. Your down payment amount could also factor into a lender’s decision about qualifying you for a loan.

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.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.


*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency. †Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency. Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
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.
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 .

SOHL-Q126-006

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Jan
12
2026
Two pairs of hands, each holding a model of a house, extend into the center of the frame, one from the left and the other from the right.

Real Estate Trading: Can You Trade Houses with Someone?

By | Home Ownership, mortgage | Comments Off on Real Estate Trading: Can You Trade Houses with Someone?

House trading involves selling your home to someone while buying their property. You essentially swap residences. This can spare both parties the irritation of showings and the expense of agent commissions while giving each party their new next home.

Trading homes isn’t done every day, but it can occasionally be an option that works for the parties involved. Learn more here.

Key Points

•   House trading is a permanent, simultaneous swap of homes between two parties.

•   The process requires two simultaneous processes, including mortgage qualification, inspection, and title search for both homes.

•   The buyer of the more expensive home pays the difference to its seller at closing.

•   Benefits include potential savings on agent commissions and an easier time qualifying for a new mortgage.

•   Downsides include a limited market for partners and the risk of briefly paying two mortgages.

What Is House Trading?

House trading means that you sell your home to someone and simultaneously buy their place.

You’re likely familiar with home exchange programs when it comes to vacations. You dash off to a lovely apartment in Paris, and the owners come to your city to enjoy all that it has to offer. Both parties enjoy a vacation with a much lower price tag. Maybe you’ve even thought, “Can I trade my house for another house?” and daydreamed about a permanent swap with another homeowner.

With real estate trading, this kind of switch is made permanent. Perhaps you’re outgrowing your compact two-bedroom house as your family expands, and the empty nesters down the street in a four-bedroom are looking to downsize their home. You could proceed with a house trade, selling and buying each other’s places simultaneously.

💡 Quick Tip: SoFi’s mortgage loan experience means a simple application — we even offer an on-time close guarantee. We’ve made $9.4+ billion in home loans, so we know what makes homebuyers happy.‡

How Does House Trading Work?

Think of trading real estate as a win-win. You want to sell your house. You find a home you like, and the homeowner is interested in buying your home too. It happens.

What comes next? Can you trade houses with someone? Yes. There will be two transactions at once. You sell your home to the Joneses, and they buy yours, typically on the same day. Because you’re selling and buying at the same time, it’s much like a trade. This is not a simple transaction, though. You want the stars aligned on that day.

However, there are some similarities to buying a home the traditional way. Expect the home-buying process checklist to be the same:

•   Qualifying for a home loan

•   Getting a home inspection

•   Doing a title search

•   Closing with simultaneous transactions.

You pay off one mortgage, if you have one, and take on a new one if needed. At the same time, the other party will sign their purchase and sale agreement.

As much as doing all this at once may feel overwhelming, the upside is that you won’t have two mortgages on your hands at the same time. If both homes are owned free and clear, then the only money matters are transfer taxes and closing costs.

You’ll probably want a real estate lawyer who knows how these deals work at your side.

Recommended: How to Buy a House When You Already Have a Mortgage

What If the Homes Are Unequal in Value?

It’s quite probable that the two homes won’t be of equal value. That’s not a deal-breaker, though. What matters is whether each house meets the needs and desires of the other party.

It’s important for both parties to order home appraisals. If one home is more valuable than the other, the buyer of the more expensive home pays the seller the difference at closing.

How Common Is House Trading?

Home trading is not something that happens every day, but as people continue to search for creative ways to fulfill their dreams and technology helps connect like-minded folks, house trading has its place in the array of home-buying options out there.

Recommended: What Is a Bridge Loan and How Does It Work?

Pros and Cons of Trading Your House

Here’s a look at the upsides and downsides of trading houses. On the one hand, there’s something to be said for this unconventional way of buying and selling a home.

•   You may be able to buy a house without a Realtor®. If there is no real estate agent involved in the trade, both buyer and seller keep the money they would have shelled out to their agent.

•   You eliminate some of the hassle of moving day. Because both parties are working in concert, it makes orchestration of the move easier.

•   You skip the whole dog-and-pony show of potential buyers traipsing through your home and the stress of having it look perfect for showings.

•   You also may find that getting financing when trading a home is easier. Some homeowners encounter hurdles qualifying for a mortgage before their home is sold. However, if you have a contract to sell your current house (which you would in a home trade), your lender won’t count your monthly mortgage payments as debt if you apply for a mortgage.

Having this improved debt-to-income ratio can allow you to qualify for better terms on your new mortgage, which just might save you a ton of money as well.

Real estate trading isn’t without its issues, however. These are some of the concerns related to trading houses instead of selling in a conventional manner.

•   If you’re in a hurry to move, you may not be able to find someone who wants a house swap as quickly as you want to move.

•   In a big-picture way, house trading may mean you have fewer options, you may not get the neighborhood you have in mind, or you may not find a home with all your dream features.

•   If you owe more on your mortgage than your home is worth, you may have trouble getting financing. The only way a trade would work is if you pay the lender the difference between what you sell your house for and what is still owed on the mortgage.

•   Issues could arise as you think about how to swap houses with mortgages. If for some reason the purchase and sale don’t happen at the same time, you could be stuck for a time with two mortgages.

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Pros:

•   You may not need to use a real estate agent

•   Getting financing may be easier

•   Avoid the hassle of showing your home to multiple potential buyers

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Cons:

•   May not find a home as quickly as you want

•   Fewer options

•   Could have to temporarily pay two mortgages

Who Typically Trades Homes?

Home trading is usually a transaction between individual homeowners, although sometimes investors who own properties might trade homes within their portfolio with one another. Friends or relatives, older homeowners who wish to downsize, and people moving for work are among those who may be more likely than the average homeowner to engage in a house trade.

Common Scenarios for House Swaps

Here are a couple examples of how a house trade might play out:

The upsize, downsize trade A couple living in a small two-bedroom home is expecting their second child. They decide they would like to look for a larger place. They want to stay in their neighborhood, as it has great schools and their eldest child is starting kindergarten in the fall. And given that the baby is due in a few months, they want to move soon.

Meanwhile, an elderly couple living in a large house around the corner is thinking about downsizing into a smaller place. They, too, wish to remain local, as their children and grandchildren are in the area. Word travels quickly that each is looking to buy a house, and soon enough they are connected by a neighbor and start talking about a trade. Both properties are appraised, and the young couple agrees to pay the downsizers the difference between the two home prices. The larger house is a bit bigger than they were looking for, but there is very little for sale in the local market so they decide to move forward.

Once they are able to secure a mortgage for the new, larger home, the two families schedule a double closing. Each is represented by a lawyer in the transaction, and they also have to pay for title searches and title insurance. But no real estate agent is involved in the trade.

The job-transfer trade A marketing manager in a midwestern office of a large packaged-goods company sees an opportunity to move into a better job with her company by transferring to the Philadelphia headquarters. She owns a small house that she inherited from her grandparents, and she puts it on the market, but also posts on her social-media accounts that she is open to trading her midwestern house for a place in Philly.

To her surprise, she receives a message from a woman in Philadelphia who is looking to sell her condo and move back to her midwestern hometown. The two schedule virtual house “tours” and swap appraisal information. The Philly resident is head over heels for the midwesterner’s house. Meanwhile, the condo is satisfactory to the midwesterner as well — maybe it doesn’t have everything she wants, but as a first stop in the city, it’s fine, and she thinks it will hold its value.

In this case, the properties are valued about equally, and the two agree to a trade. Since neither of them has or needs a mortgage, the deal moves ahead with speed.

When House Trading Makes the Most Sense

As demonstrated in the two scenarios above, house trading makes the most sense when owners want to move soon and are willing to be somewhat flexible about what property they are buying. House trade has the added benefit of saving on real estate agents’ fees, so it may be especially appealing to cost-conscious consumers.

Trading Houses vs Conventional Selling

With home trading there’s a good chance you will be able to avoid using a real estate agent if you find your trading partner on your own, be it a relative, colleague, friend of a friend, or from a website. You can also avoid the hassle of staging your home and showing it to prospective buyers.

There are some things that are pretty much the same. Both parties may need new mortgages, and both may want home inspections. Both will probably want attorneys present.
Trading Homes Conventional Sale
Likely no real estate agent Usually buyer’s and seller’s agents involved
Small market Wide market
Deal with one buyer Handle multiple offers

Owners who are trading properties will want to hire an attorney who is familiar with real estate trades to help ensure that the trade is binding and all the appropriate paperwork is filed. And they will go through most of the same steps as anyone purchasing a house in the conventional way.

Mortgage Transfers and Financing

If one or both of the homeowners in a house trade needs a home loan, the first step will be to secure financing if one or both parties doesn’t already have mortgage preapproval. A lender will require an appraisal of the home, and each owner will need to determine the size of their down payment, screen potential lenders, and decide on a lending partner.

In rare cases, one or both parties may have a mortgage that is assumable, meaning the mortgage can be transferred with the house to the new owner of the property. This can be an attractive feature when mortgage rates are high, but it’s a pretty unusual situation. Both parties will also need to arrange for homeowner’s insurance on their new property.

Title, Inspection, and Closing Requirements

A title search will be necessary to ensure that the person selling the home does in fact own it. And one or both homebuyers may want to arrange for an inspection of the property they are acquiring to safeguard against any costly surprises after they take possession. If the inspection reveals any serious issues, it may be necessary to remedy them or to negotiate a change in home price before the closing. Good communication is essential throughout these processes so that both parties involved in a house trade can arrive at the closing date with all their ducks neatly in a row.

The Takeaway

Trading homes is a viable option for house hunters who find a trading partner who wants to own their home. While the home exchange approach is decidedly nontraditional, the steps of securing a home loan (if needed) and closing will be familiar.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Does house trading have tax benefits?

A house trade is still a sales transaction, so the tax situation is the same as it would be in an ordinary sale. When you sell your residence, you have to pay capital gains tax if your profit is more than $500,000 (for a married couple) or $250,000 (for a single person). It’s a good idea to seek advice from a tax advisor when preparing your return after a home sale.

Can two people just trade houses without buying and selling?

In theory, two people could trade houses without two sales transactions, but the likelihood that this would happen is small. The two houses would need to be of equal value, which is unlikely. The deed would still need to be recorded which involves a title search and lawyers. And if one or both parties has a mortgage, that would further complicate matters.

What salary do you need for a $400,000 mortgage?

Assuming a down payment of 7% (on a home priced at $430,000), and an interest rate of 7.00% on a 30-year loan, you would need to earn $130,000 per year to qualify for a $400,000 mortgage. Your credit score, income, and debts will influence the exact salary number for you.

How do mortgages work when you trade houses?

If one or both parties in a house swap has a mortgage, the process will probably work much the way it does if you were selling or buying a house as an isolated transaction. You’ll pay off your mortgage and take out a new loan, and the other party will do the same. If all goes well, having both transactions happening at the same time can prevent either of the parties from having to hold two mortgages simultaneously.

Is house trading a good option in a slow real estate market?

House trading may be a smart choice in a slow real estate market because, provided you can find someone to trade with, you won’t have to list your home and keep it open for viewings for months on end. Nor will you have to sit through round after round of price cuts in order to get a buyer. If you can find a trading partner, the deal can be done quickly and without involving a real estate agent (though you will want to hire a lawyer familiar with house trades).

Photo credit: iStock/AndreyPopov

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.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.


*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
‡SoFi On-Time Close Guarantee: If all conditions of the Guarantee are met, and your loan does not close on or before the closing date on your purchase contract accepted by SoFi, and the delay is due to SoFi, SoFi will give you a credit toward closing costs or additional expenses caused by the delay in closing of up to $10,000.^ The following terms and conditions apply. This Guarantee is available only for loan applications submitted after 04/01/2024. Please discuss terms of this Guarantee with your loan officer. The mortgage must be a purchase transaction that is approved and funded by SoFi. This Guarantee does not apply to loans to purchase bank-owned properties or short-sale transactions. To qualify for the Guarantee, you must: (1) Sign up for access to SoFi’s online portal and upload all requested documents, (2) Submit documents requested by SoFi within 5 business days of the initial request and all additional doc requests within 2 business days (3) Submit an executed purchase contract on an eligible property with the closing date at least 25 calendar days from the receipt of executed Intent to Proceed and receipt of credit card deposit for an appraisal (30 days for VA loans; 40 days for Jumbo loans), (4) Lock your loan rate and satisfy all loan requirements and conditions at least 5 business days prior to your closing date as confirmed with your loan officer, and (5) Pay for and schedule an appraisal within 48 hours of the appraiser first contacting you by phone or email. This Guarantee will not be paid if any delays to closing are attributable to: a) the borrower(s), a third party, the seller or any other factors outside of SoFi control; b) if the information provided by the borrower(s) on the loan application could not be verified or was inaccurate or insufficient; c) attempting to fulfill federal/state regulatory requirements and/or agency guidelines; d) or the closing date is missed due to acts of God outside the control of SoFi. SoFi may change or terminate this offer at any time without notice to you. *To redeem the Guarantee if conditions met, see documentation provided by loan officer. 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.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

This article is not intended to be legal advice. Please consult an attorney for advice.

SOHL-Q126-002

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