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It is possible to use your utility bill payment history to help build credit. However, utility bills, like your gas, water, and power bills, aren’t automatically reported to the credit bureau agencies. To get them reported — and thus to have your utility bills affect your credit score — you’ll typically need to work through a third-party company that reports your utility bill payments so they show up on your credit report.

If you’re interested in making this happen, read on, and also learn other options to help establish your credit score.

How Do Utility Bill Payments Appear on My Credit Report?

Utility bill payments typically do not automatically appear on your consumer credit report. That’s because they’re not considered credit accounts. When you pay for utilities, you are paying for a service, rather than opening and maintaining a line of credit, or borrowing money that you then repay over time.

However, utility bill payments can appear on your credit report if you work with a third-party service that does the reporting on your behalf. These services typically charge a small monthly fee, but there are companies that offer this free of charge. If you’re paying utility bills on time, then getting that information reported to the credit bureaus could help to build credit.

Recommended: What Is a Charge Card?

How Do Utility Bill Payments Affect Your Credit Score?

While utility bill payments don’t appear on your credit report, they still can ding your credit score if you fall behind on payments, and the balance you owe becomes delinquent and goes to collections. Under the Fair Credit Reporting Act, debt can linger on your credit report for up to seven years. Because your payment history makes up a lion’s share of your credit score, a debt that enters collections and then remains on your report can have a significant impact on your credit score.

On the flipside, utility bills also have the potential to build credit. As mentioned, this could occur if you sign up to have your utility payments reported to the three major credit bureau agencies, and you consistently make your payments on time. To ensure this happens, you might consider setting up automatic bill payments.

Utility bills could also help build your credit score if you opt to pay bills with a credit card. Staying on top of your credit card payments is a key determinant of your credit score though, so just make sure to pay off your statement balance on time and in full when it becomes due. That way, you’ll avoid late payment consequences and also dodge paying interest on the utility bill payments charged to your card.

By making credit card payments when they are due, you’ll avoid late payment consequences and also dodge paying interest on the utility bill payments charged to your card.

Can Late Utility Bill Payments Affect Credit?

Late utility bill payments can hurt your credit if you miss enough payments for your account to enter “delinquent” status, after which it would get sent to collections or get handled as a charge-off. If this happens, that information can stay on your credit report for up to seven years. (It can be wise to check your credit report at least once a year, to make sure that it properly reflects your history.)

Similarly, if you sign up for a credit reporting service but then are late on making payments, that late payment activity could negatively impact your score. Often services will not report late payments for utility bills too.

Still, given the potential consequences of late payments, organizing your bills is a good idea to help ensure you pay on time and don’t lose track of due dates.

Recommended: How to Avoid Interest on a Credit Card

What Other Bills Help You Build Credit?

Your payment of the following bills will generally show up on your credit report and as such will have an impact on your credit score:

•   Car payments

•   Credit card payments

•   Student loan payments

•   Mortgage payments

Similarly to your utility bills, some bills have the potential to impact your credit, but don’t automatically show up on your credit report. However, you may be able to sign up for a credit reporting service or pay them using your credit card to have them help build your score. These types of bills include your rent payments, insurance payments, and bills for services like internet and cable.

Other Ways to Build Credit

Beyond your utility bills, there are other ways you can establish credit. This includes:

•   Opening one of the different types of credit cards and then using it responsibly.

•   Taking out an auto loan to pay for your next car.

•   Getting a secured card, which is easier to qualify for than a traditional credit card because it requires a deposit.

•   Taking out a personal loan and then staying on top of payments.

•   Becoming an authorized user on the credit card account of someone with a solid credit history and responsible credit usage.

•   Getting your timely rent payments reported to the credit bureaus.

•   Taking out a credit-builder loan, which gives you the funds once you pay it off.

Recommended: Tips for Using a Credit Card Responsibly

The Takeaway

While paying utilities doesn’t automatically establish credit, it can help your score if you work with a third-party service to have your payment activity reported and pay those bills on time. There are other ways you can build credit from scratch as well, such as taking out a personal loan or opening a credit card account, and then handling payments responsibly.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What is the impact of paying your utility bills early on your credit score?

Typically, utility bills are not reported to the credit bureaus and therefore don’t impact your credit score. However, if you work with a third-party service, you could have your utility bills reported. In this instance, paying your utility bills on time could help build your score.

Are utility bill payments reported to a credit reporting service?

Utility bill payments can be reported to a credit reporting service if you sign up for an account and opt in to have your utility bills reported. You might need to pay a monthly fee for this service though.

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Photo credit: iStock/tommaso79

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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

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

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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It can take six to 12 months to build credit with a secured credit card. This can be a good route for those who are new to credit or are seeking to build a low score, and it requires managing your card responsibly and paying your bill on time. Learn more about how to get the most out of a secured card.

What Is a Secured Credit Card?

A secured vs. unsecured credit card is one that requires the cardholder to put down a deposit (basically, collateral) in order to open an account. The deposit typically acts as the credit limit. For example, if you make a $500 deposit when opening a secured credit card, the issuer grants you a $500 credit limit.

These types of credit cards are usually meant for those with no or limited credit history who need to build their credit history. Since these types of borrowers appear more risky — there’s no or limited evidence of their behavior as borrowers — secured credit cards reduce the risk for the lender.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

How Do Secured Credit Cards Work?

Secured credit cards require the cardholder to “secure” their debt by putting down a refundable deposit. The credit card issuer will use this amount as the credit limit. The cardholder can then use the card as they would a more traditional credit card, which may be more in line with their idea of what a credit card is.

Cardholders can make purchases (and take out cash advances, depending on the terms of the card) up to the credit limit. Some secured credit cards even offer rewards, such as cash back or points toward travel.

At the end of each statement period, the issuer will send a credit card statement detailing all applicable transactions, the minimum amount due, and the payment due date. Your payment activity is typically reported to the credit bureaus — late payments could negatively impact your score.

Depending on your card issuer’s terms, you may be able to upgrade to an unsecured credit card (where you don’t need to put down a deposit) and get your deposit refunded if you can consistently make on-time payments for a predetermined amount of time.

Recommended: When Are Credit Card Payments Due?

Building Credit From Scratch With a Secured Credit Card

When it comes to building credit from scratch with a secured credit card, you can typically do so in the following ways:

•   Establishing payment history: Getting a secured credit card means the issuer will report your payment activity to the credit bureaus, in addition to letting them know you opened an account. Since your payment history is one of the most important factors that determine your credit score, making on-time payments helps to establish that you’re a responsible borrower.

•   Maintaining a low credit utilization ratio: Your credit utilization is the percentage of the overall credit limit available to you on your revolving accounts (like a secured credit card) that you’re using. This is another major factor that’s used to calculate your credit score. A general rule of thumb is keeping your credit utilization at 30% or less. Meaning, if your credit limit is $750, don’t carry a balance of more than $250 on your card. A high credit utilization may signal to lenders that you’re not as responsible with debt, which could hurt your score.

Recommended: Tips for Using a Credit Card Responsibly

Pros and Cons of Building Credit Using a Secured Credit Card

Trying to decide if a secured credit card is the right route to build credit? Here are the pros and cons to consider:

Pros	Cons
•   Typically easier approval than other types of credit cards •   Deposit is refundable •   May be able to upgrade to an unsecured card after evidence of responsible borrower behavior •   May offer rewards	•   Can carry high interest rates •   Can’t use deposit amount for as long as you have the card open •   May have to pay an annual fee •   Credit limits are usually lower

Recommended: What Is the Average Credit Card Limit?

Tips for Getting the Most Out of a Secured Credit Card

Using a secured credit card can be a great solution to establishing credit. While it’s hard to tell how fast a secured card will build credit, you can get the most out of using one by taking these suggestions into consideration.

Make On-Time Payments

Consistently paying your credit card bill on time can help you to establish a positive credit history. Late payments tend to come with late fees and penalties like additional interest, on top of negative remarks on your credit report.

Pay Your Balance in Full

While you’re only required to make the minimum payment, paying off your balance in full could lower your credit utilization ratio. Further, doing so will help you avoid paying interest on purchases.

Recommended: How to Avoid Interest On a Credit Card

Watch Your Credit Utilization

You can technically spend up to your credit limit, but doing so could negatively impact your score. Instead, keep track of your balance and aim to keep it as low as you can — ideally at 30% off your overall credit limit or less.

Keep in mind that the credit limit for secured credit cards is usually low. To avoid a high credit utilization ratio, you might consider using the card for smaller purchases like subscription services or your daily latte. That way, you’re less at risk of nearing your credit limit.

Monitor Your Credit

Checking your credit report can help you to determine whether your payment activity is being correctly reported to the credit bureaus. This is essential as you’re building your credit from scratch. If there are any errors, it’s best to get those fixed as soon as possible.

Request an Upgrade

A secured credit card can be one of the first steps to accessing other types of credit. It’s helpful to think of the next steps — like upgrading to an unsecured credit card — as you continue to use your current card. Doing so will usually require making on-time payments consistently, and asking your card issuer how getting an upgrade works. While some automatically do it, others may require you to formally submit a request.

Alternative Ways to Build Credit

If you feel like a secured credit card isn’t for you, here are some alternatives to consider to help you build credit:

•   Get your rent, cell phone, and/or utilities payments reported to the credit bureaus. There are many services available if your landlord doesn’t offer this as an option.

•   Become an authorized user on someone else’s credit card.

•   Take out a credit builder loan, with which you can show responsible borrowing behavior for the purpose of establishing credit.

•   Get a cosigner on a personal loan so you can more easily qualify, and then handle repayment responsibly.

•   Consider retailer, gas, or student credit cards, which are generally easier to qualify for.

•   Take out a secured loan, like an auto loan.

The Takeaway

Using a secured credit card to build credit can take time. Exactly how long it takes to build credit with a secured credit card will depend on your financial behavior. Your best course of action is to continue to show your issuer that you’re a responsible user, always make payments on time, and monitor your credit regularly to see where you stand.

If you’re responsible with your secured credit card, you can likely upgrade to an unsecured credit card.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How do the credit bureaus see unsecured vs secured credit cards?

The credit bureaus see both types of credit cards as a type of credit account. As such, there is virtually no difference in how your activity gets reported.

How often should I use my secured credit card to build credit?

It’s generally a good idea to use your secured card regularly so that more activity gets reported to the credit bureaus. To keep your credit card utilization low, however, consider using the card for smaller purchases.

What are the best ways to use a secured credit card to build my credit?

In most cases, the best ways to use a secured credit card are to make consistent on-time payments, attempt to pay off the balance in full each month (or at the very least, make the minimum payment required), and keep an eye on your credit usage.

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Photo credit: iStock/PeopleImages

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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

Third Party 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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Most people in the market for a new dwelling will buy an existing home that more or less fits their needs. But new homes don’t come with the problems that old homes might, from lead paint to a kitchen crying out for remodeling. And building a house may seem attractive because you can construct it to fit your specifications, from the number of bathrooms to building an outdoor kitchen.

If you’re ready to build your own house, here are the steps to take.

10 Steps to Building Your Own Home

Condo. Townhouse. Single-family home. Modular or manufactured home. Cabin or even houseboat. A house hunter has all of those types of homes to choose from. If you’re building a home, you’ll have a lot of choices to make as well, starting with where your home will be located. Here are the steps to building your own home:

1. Find a Location

The first thing you’ll need to do is find a site that’s zoned for a residential property. Look into local building regulations to see how much of the site you are allowed to build on and how far from property lines the building must be set back. Check ordinances that might limit size or height. Is there a homeowners association (HOA)? Scour the rules.

It’s generally suggested that you not spend more than 20% of your total budget on the building site. When you purchase the land, you will acquire a property deed, which will also act as the house deed.

2. Obtain Permits

Before a shovelful of earth is turned, the local building department must OK the plans and provide permits for the whole shebang: grading, zoning, construction, electrical work, plumbing, and more. When the permits are in hand, construction can start.

On a related note, at various points during construction, the home will need to be inspected for code compliance. If you are using a loan for new construction, your lender may also send an inspector to keep track of construction status before releasing payments from a construction loan.

3. Prep the Site and Your Finances

Site Prep

Before you start building, you’ll need to prepare the building site. You’ll want to be sure that soil conditions are stable. You may want to engage a civil engineer to give the site a look. A site surveyor can stake the property boundaries. Then you’ll need to clear brush and debris at least to 25 feet around the planned perimeter of the house.

Size and Cost

The cost of building a house averaged $313,884 in 2022, according to HomeAdvisor, the directory of service pros, but a typical range is from around $137,000 to $582,000. Obviously location, materials, and level of detail affect the bottom line.

But size is the biggie. The larger the build, the more labor and material costs you should expect. The average new home in the country has about 2,200 square feet at $150 per square foot, HomeAdvisor notes.

After the peak of the pandemic, there were months-long delays to receive materials, from appliances to garage doors, and construction costs increased. Oil prices significantly increased transportation expenses. Rising inflation left its mark, but prices leveled off in 2023. All of which is to say, cost numbers are a moving target.

Finance Options

When you build a home, you may need a loan that covers the purchase of land, buying materials, and hiring labor. In this case, you may want to look into a construction loan. Unlike mortgage loans, construction loans are not secured by an existing home, so approval might be tricky and take a bit longer.

The money is paid to your builder in installments. You’ll often only pay interest on the portion of the loan that has been withdrawn. After the typical 12 to 18 months of a construction-only loan, the usual route is to take out a mortgage and pay off the construction loan.

Other financing options are a home equity loan, if you already own a home.

A personal loan of up to $100,000 can pay for part of the construction (or maybe all, for a modest build).

If you’re buying the land, Federal Housing Administration (FHA) one-time close loans cover the lot purchase, construction, and permanent mortgage. But the loans can be hard to find and are tougher to qualify for than traditional FHA loans.

Check out these additional resources for homeowners.

Choosing Materials

Only an experienced and highly organized person may want to act as their own general contractor for a new house build. Most people will put the job in a contractor’s hands, and add 20% to 30% for the cost of materials and labor.

General contractors already have priced and sourced many of the materials when making a bid. They usually have relationships with wholesale distributors, lumberyards, and retailers.

That said, you may have some skills that you could apply to cut costs. For example, you could look into how much it costs to paint a house and determine if painting the home’s interior could help you save.

Building a Work Team

If you choose to fly solo, you’ll be on the hook for finding subcontractors yourself.

A general contractor will hire all of the team members needed to complete the project and charge 20% to 30% of the overall cost of the home. However, they also typically have regular relationships with subcontractors, who may charge them less than they would a person who hires them on a one-off basis.

As a result, you may not end up saving much or any money by finding subcontractors yourself.

4. Pour the Foundation

Once the building site is cleared, construction can begin, starting with the foundation. Some houses are built on level slabs of concrete that are poured on the ground, leaving space in which to run utilities, like plumbing and electrical.

A home with a full basement requires that a hole is dug and that footings and foundation walls are formed and poured. The concrete will need time to cure, and no construction will take place until it has set properly.

5. Set Up Plumbing

Once the concrete has set, crews install drains, water taps, the sewer system, and any plumbing going into the first-floor slab or basement floor, and then backfill dirt into the gap around the foundation wall.

6. Assemble the Frame, Walls, and Roof

With the foundation complete, framing carpenters will build out the shell of the house, including floors, walls, and the roof. Windows and exterior doors are installed, and the house is wrapped in a plastic sheathing that protects the interior from outside moisture while allowing water vapor from inside the home to escape.

7. Install Insulation, Complete Electric and Plumbing Installs

Now plumbers can install water supply lines and pipes to carry water through the floors and walls. Bathtubs and showers may be added at this time.

Electricians will wire the house for outlets, light fixtures, and major appliances. Ductwork and HVAC systems can be installed.

8. Hang Drywall and Install Interior Fixtures and Trim

With plumbing and electrical complete, the house can be insulated and drywall can be hung. A primary coat of paint goes on, and the house will start to look relatively finished.

Light fixtures and outlets can be installed, as can bathroom and kitchen fixtures, like sinks and toilets. Interior doors, baseboards, door casings, windowsills, cabinets, built-ins, and decorative trim go in. The final coat of paint is applied.

9. Install Exterior Fixtures

Crews begin exterior finishes like brick, stone, stucco or siding. Some builders pour the driveway when the foundation is completed, but many opt to do so toward home completion, along with walkways and patios.

10. Install the Flooring

Wood, ceramic tile, or vinyl floors and/or carpet can be installed at this point.

Recommended: First-Time Homebuyer Guide

Is It Cheaper to Buy or Build a New House?

There are so many variables that it’s hard to say.

The median sales price for new construction in April 2024 was $433,500, according to FRED, or Federal Reserve Economic Data. Can you beat that price with a DIY build? Maybe, if you act as the general contractor and choose cheaper materials.

Keep in mind that HomeAdvisor’s average of $313,884 to build a house does not include the land.

Ultimately, the price of your dream home hinges on location, the cost of labor and materials, and your taste.

3 Home Loan Tips

1.   Since lenders will do what’s called a hard pull on an applicant’s credit, and too many hard pulls in a short period can affect your application, it’s a good idea to know what interest rate a lender will offer you before applying for a personal loan. Viewing your rate with SoFi involves only a soft pull on your credit — and takes one minute.

2.   Before agreeing to take out a personal loan from a lender, you should know if there are origination, prepayment, or other kinds of fees.

3.   Traditionally, mortgage lenders like to see a 20% down payment. But some lenders allow home mortgage loans with as little as 3% down for qualifying first-time homebuyers.

The Takeaway

Building your own home will allow you maximum flexibility in terms of your choices of everything from floorplan to finishes. But it is a complex process and you’ll want to take it step by step, with careful consideration of your budget and how you plan to finance what you build.

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

How long can you expect to live in a self-built home?

If a home is well built and maintained properly, you can expect it to last a lifetime.

How long will it take to build a home?

The average time it takes to build a home from start to finish is 9.4 months for a contractor build and 12 for an owner build, according to data collected by the U.S. Census Bureau.

Is it dangerous to build a home yourself?

If the question means completely DIY — clearing a lot, pouring a foundation, framing, installing electrical, and so on — the answer is “it sure could be.”

Are there safe financing options for self-build projects?

DIY builders and remodelers may use a construction loan, personal loan, home equity loan, or FHA one-time close loan. If you do use a construction-only loan, shop for a mortgage that makes sense once you stand there admiring the finished product.

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Photo credit: iStock/Giselleflissak

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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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Qualifying for the reward requires using a real estate agent that participates in HomeStory’s broker to broker agreement to complete the real estate buy and/or sell transaction. You retain the right to negotiate buyer and or seller representation agreements. Upon successful close of the transaction, the Real Estate Agent pays a fee to HomeStory Real Estate Services. All Agents have been independently vetted by HomeStory to meet performance expectations required to participate in the program. If you are currently working with a REALTOR®, please disregard this notice. It is not our intention to solicit the offerings of other REALTORS®. A reward is not available where prohibited by state law, including Alaska, Iowa, Louisiana and Missouri. A reduced agent commission may be available for sellers in lieu of the reward in Mississippi, New Jersey, Oklahoma, and Oregon and should be discussed with the agent upon enrollment. No reward will be available for buyers in Mississippi, Oklahoma, and Oregon. A commission credit may be available for buyers in lieu of the reward in New Jersey and must be discussed with the agent upon enrollment and included in a Buyer Agency Agreement with Rebate Provision. Rewards in Kansas and Tennessee are required to be delivered by gift card.

HomeStory will issue the reward using the payment option you select and will be sent to the client enrolled in the program within 45 days of HomeStory Real Estate Services receipt of settlement statements and any other documentation reasonably required to calculate the applicable reward amount. Real estate agent fees and commissions still apply. Short sale transactions do not qualify for the reward. Depending on state regulations highlighted above, reward amount is based on sale price of the home purchased and/or sold and cannot exceed $9,500 per buy or sell transaction. Employer-sponsored relocations may preclude participation in the reward program offering. SoFi is not responsible for the reward.

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It’s a good idea to regularly review your credit report. Doing so can help ensure that the information used to calculate your credit scores is accurate and up to date. It can also alert you to fraud or identity theft.

Unfortunately, understanding your credit report can sometimes feel like a challenge — especially if it’s the first time you’re doing it. Below, learn how to read a credit report, as well as highlight some common credit report errors to look out for.

What Is a Credit Report?

Your credit report contains a large amount of information about your financial life and payment history. If you have credit cards or loans, for instance, those accounts and how you pay them are included in your credit report. Often, you’ll have more than one credit report, as creditors are not required to report to every credit reporting company.

Credit card issuers and lenders can pull these reports and review them in order to determine your creditworthiness. They will rely on this information to make a decision on whether to loan you money, as well as the terms they’ll offer if they do.

Who Compiles Credit Reports?

Credit reports are created by three national credit reporting agencies: Equifax®, TransUnion®, and Experian®. The information the credit bureaus compile in credit reports comes from creditors — like lenders, credit card companies, and other financial companies — that submit information on your accounts and payment history to the bureaus.

Who Can See Your Credit Report?

Your credit report is accessed whenever a lender (or an employer or landlord) conducts what’s known as a hard credit inquiry. This is when a business accesses your credit report to make decisions about your creditworthiness, likely in order to make a decision about extending a loan (or a job or housing).

Hard credit inquiries will appear on your credit report, so you should recognize any credit inquiries that appear. They may also subtly affect your credit score. Multiple inquiries in a short period of time may signify to lenders that you’re seeking multiple loans, which may bring up concerns about your financial stability.

Your credit report can also be accessed by consumers (like you). The Fair Credit Reporting Act requires each of the credit reporting companies to provide you with a free copy of your credit report, at your request, once every 12 months. As of early 2025, each of the big three credit bureaus is providing weekly free credit reports at AnnualCreditReport.com. Your credit score will not be impacted when you request a copy of your own credit report.

How to Get a Credit Report

As noted above, you have the right to ask for one free copy of your credit report from each of the credit bureaus, at least annually and possibly weekly. There are a few ways you can request it:

•   By visiting AnnualCreditReport.com

•   By calling (877) 322-8228

•   By downloading and filling out the Annual Credit Report Request form, and mailing it to the following address:

    Annual Credit Report Request Service

    P.O. Box 105281

    Atlanta, GA 30348-5281

You also can request credit reports from consumer reporting companies, though these may charge a fee. Additionally, you’re eligible to request free reports under certain circumstances, such as being denied credit or due to potential inaccuracies because of fraud.

Also know that you can only check your own credit report — checking someone else’s credit report is generally illegal.

Recommended: What is a Charge Card?

Reading Your Credit Report

When you get your credit reports, it’s a good idea to read each section closely. Here’s a rundown of the sections you’ll typically find included, so you’ll know what to expect and thus how to read a credit report.

Personally Identifiable Information (PII)

This section of the report is used to identify you. It contains basic information like your name, address, and place of employment. You may also find previous addresses and employer history listed here. Your employment history doesn’t affect your credit score. Rather, it’s included on your credit report only to verify your identity.

When scanning this area you’ll want to make sure that your name, address, and employer match up. Any incorrect or unfamiliar personally identifiable information (like company names you don’t recognize or employers you never worked for) may be a sign of identity fraud.

Personally Identifiable Information Included in Your Credit Report
•   Name(s) associated with your credit •   Social Security number variations •   Address(es) associated with your credit •   Date of birth •   Phone numbers •   Spouse or co-applicant(s) •   Current or former employers •   Personal statements, such as fraud alerts, credit locks, or power of attorney

Credit Summary

This section summarizes information about the different types of accounts you have, including credit cards and lines of credit, mortgages and other loans, and any accounts that have been sent to collections. For each account, your credit report will include the date the account was opened, its balance, its highest balance, the credit limit or loan amount, payment status, and payment history.

As you read this section, make sure that all the information looks familiar. It’s not unusual for a credit report to have slightly dated information, such as a higher balance because you just paid off a bill this month. However, all information should seem recognizable. In particular, you’re looking for:

•   Unfamiliar accounts

•   Late payments that do not align with your records

•   Balances that do not match your records

Credit Summary Information Included in Your Credit Reports

Account information •   Account name •   Account number •   Account status •   Date opened •   Account type •   Credit limit or original loan amount Payment information •   Payment status •   Payment status date •   Past-due amount •   Monthly payment •   Late payments Additional information •   Consumer’s association with the account •   Account terms •   Comments from the creditor or at the consumer’s request •   Consumer’s statements Contact information for the creditor Payment history

Recommended: What is the Average Credit Card Limit?

Public Records

The information in this section is pulled from public records and may include debt collections or bankruptcy information.

If you missed a credit card payment due date and have any debt collections and bankruptcy on your record, it’s important to remember that they won’t stay there permanently. The following statutes of limitations apply to different types of debt, restricting how long the information will remain on your credit report:

•   Chapter 13 bankruptcy: Removed seven years after the filing date

•   Chapter 7 bankruptcy: Removed 10 years after the filing date

•   Late payments: Removed seven years after they occur

•   Payment defaults: Removed seven years after they occur

If you see information that’s not familiar, you’ll want to flag it, since this could be a sign of identity theft. You may also want to flag any information that is still on your credit report after the statute of limitations has expired.

Credit Inquiries

Credit inquiries list all parties who have accessed your credit report within the past two years.
These could be from lines of credit you opened, such as applying for a credit card, or from applying for a loan.

Both hard inquiries and soft inquiries will appear, though they have different impacts on your credit — hard inquiries will affect your credit, whereas soft inquiries will not. You can distinguish the two types of inquiries based on how they appear on the report:

How a Hard Inquiry Will Appear	How a Soft Inquiry Will Appear
Business name	Company name
Business type	Inquiry date
Inquiry date	Contact information
Date inquiry will be removed
Contact information provided by the creditor for the account

It’s a good idea to make sure you recognize any recent credit inquiries, as they can be a red flag for identity theft.

Why Credit Reports Are Important

Your credit report can play a critical role in determining your financial future. That’s because creditors will refer to your credit report to decide whether to approve you for a loan or a credit card and, if so, what terms they’ll offer you, including the interest rate. In other words, your credit report will help determine whether you’ll get the auto loan you need to purchase a new car or the mortgage necessary to purchase a home. And if you’ve used a credit card responsibly, that could help open the door to additional lines of credit.

It’s not just creditors looking at your credit report either — landlords, insurers, potential employers, and even phone and cable companies may look at your credit report as part of their vetting process. This is why it’s so important to understand what information your credit report contains, so you can know what information these potential parties can learn from viewing it.

Recommended: How to Avoid Interest On a Credit Card

What Information Is Not Found on Your Credit Reports?

One surprising piece of data that you may be surprised to find out credit reports do not include is your credit score. Beyond that, your credit report will not contain the following information:

•   Salary

•   Employment status

•   Marital status

•   Spouse’s credit history, if applicable

•   Assets, such as bank account balances, investments, or retirement accounts

•   Any 401(k) loans

•   Public records outside of bankruptcy

•   Medical information

•   Expired information

•   Race or ethnicity

•   Religious beliefs or information

•   Political affiliates

•   Disabilities

What To Do If You Find Errors on Your Credit Report

None of the information on your credit report should look unfamiliar. In fact, one of the main reasons you want to read your credit report is to make sure that your credit report matches your records.

But sometimes, there can be discrepancies. If you detect an error on your report, such as a payment incorrectly reported as late, you’ll want to file a formal dispute. You’ll need to dispute credit report errors with both the credit reporting company and the entity that provided the information (such as a credit card company).

When writing a dispute letter, you’ll want to include:

•   A clear explanation of what is wrong in the credit report.

•   Supporting documentation showing the information is inaccurate (such as a copy of a paid bill).

•   A request for the information to be fixed.

By law, the credit reporting company must investigate your dispute and notify you of its findings.

If you notice an error that suggests identity theft (such as unknown accounts or unfamiliar debt), it’s a good idea to sign up with the Federal Trade Commission’s (FTC’s) IdentityTheft.gov site in addition to alerting the credit bureaus. The FTC’s tool can help users create a recovery plan and figure out next steps, which may include placing a security freeze on your accounts.

The Takeaway

It’s easy and free once a year (or more often) to gain access to your credit reports from the three major bureaus. Reviewing your credit report can give you a chance to correct any errors, and make sure your credit report is an accurate representation of your financial situation. It can also alert you to any fraudulent activity. In addition, reading your credit report can help you understand how creditors see you as a borrower and identify any potentially problematic information that may negatively impact your creditworthiness.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

When should you check your credit report?

The Consumer Financial Protection Bureau (CFPB) recommends checking your credit report at least once a year to ensure there are no errors and that all information is up-to-date. You might consider checking them even more frequently than that though to have the most accurate picture of your current financial situation.

What do the numbers mean on a credit report?

Your credit report may contain a variety of different numbers. This can include your name identification number, your Social Security number, the IDs for addresses associated with your credit, phone numbers, account numbers, and more. It can help to go through section by section if you’re unclear as to what a particular number means.

What should I look for on a credit report?

When reading your credit report, you’ll want to look out for any changes to your personal information, such as changes to account details, inquiries, or data available in public records. Keep your eye out for any errors or anything that otherwise seems amiss, as this could be a sign of fraud.

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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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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

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

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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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If you’re a qualifying veteran, active military service member, or surviving spouse, a VA loan can be an incredible boon on your homeownership journey: It unlocks the opportunity to buy a house with zero down payment required, limited closing costs, competitively low interest rates, and no private mortgage insurance (PMI). What’s more, those who are eligible can take advantage of this benefit as many times as they like. There’s no limit to how many times you can use a VA home loan.

Here’s a closer look at this special and valuable option available to U.S. veterans and their families.

What Is a VA Loan?

Before we dive into how many times can you use a VA loan, let’s start with defining what a VA loan is in the first place.

VA loans are a type of mortgage that are offered by private banks, but backed by the U.S. Department of Veterans Affairs (VA). Because this type of loan is less risky for lenders, banks are able to offer much more favorable terms, including the ability to buy a home without making a down payment.

That means VA loans lower the barrier to entry for all buyers, but especially for first-time homebuyers, who usually find that saving up enough money for a down payment is one of the biggest challenges when it comes to breaking into property ownership. Even better, the cost of your mortgage won’t be inflated by PMI, which most lenders and mortgage programs require whenever a buyer puts less than 20% down. (You will most likely pay a one-time funding fee; more on that later.) There are other special advantages of a VA loan, so if you are considering one, take the time to learn all the ins and outs of how a VA loan works.

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How Many Times Can You Take Out a VA Loan?

It almost sounds too good to be true, but it’s not: You can take out a VA loan as many times as you like — as long as you’re eligible for one and you still have remaining entitlement, which we’ll get to in a moment.

In order to apply for a VA loan, you’ll need to first acquire a Certificate of Eligibility, or COE, from the VA. Specific requirements vary depending on which branch of the military you served in, when you served, and a few other factors. (Full details are available directly from the VA.)

How Many VA Loans Can You Have?

There’s no specific limit on how many VA loans you can take out. Some veterans have taken out two, three, or even eight or more! These are typically sequential loans. You wouldn’t be able to use a VA loan to purchase a second home or vacation home, as VA loans are for primary residences (the one exception to this rule is active-duty members who have received a permanent change of service, or PCS, which we will discuss below).

There is one important factor that can, in some instances, limit an eligible veteran or service member’s ability to take out a new VA loan: entitlement.

💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.

What Is a VA Loan Entitlement?

As noted above, VA home mortgage loans are backed by the VA. Essentially, the VA promises to pay the bank a certain dollar amount if the borrower — that’s you, the veteran — defaults on the mortgage. That dollar amount is known as your entitlement.

The entitlement is the amount the VA guarantees your lender they’ll receive if you stop paying your loan. Basic entitlement is $36,000, but these days, that’s a very small fraction of most home loans — which is why the VA also offers bonus entitlement, which guarantees the lender the VA will repay 25% of a loan amount over $144,000 if you default.

Full Entitlement

If this is your first time using a VA loan, or if you paid off a previous VA loan in full and then sold the house, you have full entitlement — though the total amount of money you can borrow will still be limited by factors that typically determine whether you will qualify for a mortgage, such as your credit history, income, and assets.

Reduced Entitlement

If you already have an active VA loan, paid off a VA loan for a home you still own, refinanced the VA loan you took out on a home you still own, or had a foreclosure and didn’t pay back the VA in full, you may have reduced entitlement.

Reduced entitlement limits the amount the VA will guarantee to your lender in the event that you default. The limit is the conforming loan limit in your area, minus whatever amount of entitlement you’ve already used. If you have reduced entitlement, you may be required to make a down payment.

Calculators are available online to help you determine how much entitlement you have left, but essentially, the equation is this: your maximum entitlement (one quarter of your county’s conforming loan limit) minus the entitlement you’ve used (one quarter of the VA loan you’ve already taken out) equals your remaining entitlement. Here’s the formula:

Conforming loan limit ÷ 4 = maximum entitlement

Existing loan amount ÷ 4 = entitlement you’ve used

Maximum entitlement – entitlement you’ve used = remaining entitlement

Recommended: How Government-Backed Mortgages Work

When You Might Have More Than One VA Loan at a Time

All of this begs the question: Why would you have more than one loan at a time, anyway? One home, one loan, right?

Well, if you’re an active-duty military member, you might receive permanent change of service (PCS) orders, which would require you to move to a new duty station — and therefore find new housing. Under those circumstances, you might have two active VA loans at one time.

Pros and Cons of Taking Out a Second VA Loan

If you’re taking out a second VA loan to fund a home purchase, there are both drawbacks and benefits to consider.

Pros:

•   If your remaining entitlement is high enough, you may still be able to avoid making a down payment

•   You will still benefit from other VA benefits, including competitive low interest rates and easier qualification standards

Cons:

•   If you don’t have enough remaining entitlement, you may still be required to put a down payment on the home — though possibly less of one than you would have otherwise

How to Take Out a Second VA Loan

To take out a second VA loan, you must get approved for the loan by a qualified VA lender. The first step is to determine how much remaining entitlement you have, as this will illuminate how much house you can afford to purchase — and how large of a down payment you’ll be required to make, if any. (Remember, your new home loan must be for a primary residence, so you can’t take out a second VA loan to fund a vacation home or investment property.)

💡 Quick Tip: Backed by the Federal Housing Administration (FHA), FHA loans provide those with a fair credit score the opportunity to buy a home. They’re a great option for first-time homebuyers.

Tips on Taking Out a Second VA Loan

Your lender will give you step-by-step instructions on how to apply for a second VA loan, including which documents and identification you’ll need to supply to prove your income, credit history, and more. Keep in mind that your remaining entitlement will determine how much money you’ll need to put down at closing. If you explore the second VA loan and aren’t sure it is right for your situation, consult a home loan help center to learn about more options.

The Takeaway

How many times can you use a VA home loan? While there’s no limit to how many VA loans you can take out in one lifetime, entitlement does limit how much the VA backs those loans for lenders involved — and could limit your ability to qualify for a no-down-payment VA loan.

SoFi offers VA loans with competitive interest rates, no private mortgage insurance, and down payments as low as 0%. Eligible service members, veterans, and survivors may use the benefit multiple times.

Our Mortgage Loan Officers are ready to guide you through the process step by step.

FAQ

Is there a limit on how many times you can use a VA loan?

No — you can use your VA loan benefit as many times as you would like in your lifetime. However, your entitlement, or the amount of money that the VA pledges to back the loan for the lender, can be reduced if you’ve already taken out a VA loan.

Can a VA loan be used multiple times?

Yes — you can use your VA loan benefit multiple times. Your amount of entitlement can change the qualification process, however. If you have reduced entitlement, you may be required to make a down payment on the new loan.

How soon after using a VA loan can you use it again?

While there’s no specific time limit, VA loans can only be used for primary residences, and your entitlement will likely be reduced if you’re still living in the home you purchased with your original VA loan.

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Photo credit: iStock/LumiNola

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

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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.

^†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.
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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