If you’re considering buying your first truck, you may be wondering how much the insurance is going to run. While the cost of insuring a truck varies based on a few factors, the national average is $2,160 per year. (By comparison, the national average for car insurance is $2,790.)
Keep reading for more insight into how much truck insurance costs, and how to lower your premiums.
Key Points
• Annual personal auto insurance for a truck averages $2,160.
• Insurance costs can vary based on factors like location, driving history, and truck make and model.
• Comparing quotes from different insurers can lead to potential savings.
• Increasing deductibles may lower premiums but increases out-of-pocket costs in an accident.
• Regularly reviewing and adjusting coverage can ensure rates are competitive and appropriate for your needs.
Differences Between Auto, Truck, and Commercial Truck Insurance
There are really only two types of auto insurance. The type of auto insurance you need depends on what purpose you’ll use your vehicle for.
• Personal auto insurance. If someone wants to buy or lease a truck for personal use, then they’ll need a personal auto insurance policy. This may be referred to as auto insurance or truck insurance.
• Commercial auto insurance. Companies that use cars and trucks for business purposes need this policy instead.
Both types cover property damage, bodily injury, and legal expenses related to auto accidents. Commercial auto insurance takes coverage a step further, usually featuring higher claim amounts and protection against more complex legal issues.
Keep in mind that each state has its own rules about car insurance and what it should cover. If you’re unsure what the minimum requirements are where you live, you can check your state’s DMV site.
Exactly how much is insurance for a pickup truck? The average annual cost of personal auto insurance for a truck is $2,160.
The typical cost of commercial truck insurance depends on the type of business. Transport truckers haul general freight, such as automobiles, food, and products for retail stores. Specialty truckers cover a single type of freight, like logs or garbage. The average monthly premium for commercial insurance is around $1,000 for specialty truckers, and $650 for transport truckers.
Does It Cost More to Insure a Truck or Automobile?
It isn’t necessarily more expensive to insure a truck over a car. In fact, it’s generally cheaper to insure a truck than some other types of cars, such as electric vehicles or luxury SUVs.
One exception is the age of the driver. College students may have a harder time finding affordable car insurance for their truck.
Average Cost of Car Insurance for Truck by Make and Model
How much is insurance for a new truck? Below are the average monthly rates for 10 of the least (and most) expensive trucks to insure, per Insure.com. You may figure out at a glance whether it’s worth switching car insurance companies.
Make and Model
Average Monthly Premium
Average Annual Premium
Ford Maverick
$146
$1,746
Ford Ranger
$155
$1,864
Nissan Frontier
$157
$1,885
Toyota Tacoma
$160
$1,917
Hyundai Santa Cruz
$162
$1,941
Ford F-350
$196
$2,347
Ram 3500
$203
$2,434
Nissan Titan XD
$205
$2,464
Ram 1500 TRX
$214
$2,565
Ford F-450
$251
$3,010
Make and model aren’t the only things that determine auto insurance prices. For example, first-time drivers are more likely to pay more for auto insurance.
What Is the Cheapest Pickup Truck to Insure?
Many factors can impact the cost of car insurance, such as the type of deductible you choose and the make and model of your car. Generally, the Ford Maverick is one of the more inexpensive pickup trucks to insure with an annual average full coverage rate of $1,746, according to Insure.com.
It’s important to note that even if someone chooses a model that is known to be inexpensive to insure, their personal driving history impacts the insurance rate they’re offered. A driver with a clean record typically will get a better rate, whereas the same insurance goes up after an accident.
It’s always a good idea to shop around to get several quotes. You can include traditional insurers and online insurance companies. This will give you a good idea of which companies offer the most complete coverage and affordable rates.
There are several ways to lower your car insurance, but the easiest may be to choose a higher deductible. The following companies offer the lowest annual rates for car insurance, per U.S. News:
Insurer
Annual Premium
USAA
$1,335
Erie
$1,532
Auto-Owners
$1,619
Nationwide
$1,621
GEICO
$1,778
American Family
$2,170
Farmers
$3,253
Allstate
$3,374
Before shopping for quotes, it’s helpful to brush up on car insurance terms to better understand what type of coverage each provider is offering.
Truck Features That Impact Insurance Costs
Truck features don’t directly impact the cost of insuring the vehicle — unless they increase the overall cost of the car. Generally speaking, the more expensive a truck is, the more it costs to insure.
Any features that increase the likelihood of theft or the cost of maintenance and repairs can also drive up the price of insurance for trucks.
The Takeaway
The average annual rate for personal car insurance (as opposed to commercial) for a truck is $2,160 per year. The overall cost of the truck can impact the price of insurance. In general, the more expensive a truck is, the more it costs to insure it. For this reason, special features may also increase your cost. Perhaps surprisingly, truck insurance is not more expensive than car insurance. In fact, pickups are relatively less expensive to insure than other types of vehicles.
When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.
SoFi brings you real rates, with no bait and switch.
FAQ
Do trucks cost more to insure than cars?
Generally, trucks don’t cost more to insure than other types of cars. They’re actually relatively cheaper to insure than some types of vehicles. How much it costs to insure a car is usually based more on the overall cost of the car than the type of car someone chooses to drive. So an inexpensive truck may cost much less to insure than a luxury SUV or sedan.
Is insurance high on a pickup truck?
Insurance isn’t necessarily high on a pickup truck. Trucks usually cost less to insure than other types of cars. That said, high-value pickups can cost a lot to insure. The higher a truck’s (or any car’s) price, the higher the insurance premiums tend to be.
Photo credit: iStock/JMichl
Insurance not available in all states.
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Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
The average FICO® credit score in America is 717, as of October 2023. And as of May 2024, the average VantageScore® is 702. Both scores are considered to be in the good range and could help a borrower qualify for favorable loan and line of credit terms.
As you’re comparing your own credit score to the national average, it helps to understand how scores are calculated and how these three digits could impact your financial health and long-term goals. Here, learn more about credit scores and some steps you can take to build yours.
Key Points
• The average FICO credit score in the U.S. is 717, while the VantageScore is 702, both falling in the good range.
• Average credit scores differ by state across the U.S., and there are multiple types of credit scores (for auto loans vs. mortgages, for example).
• Key factors in a credit score include payment history, amount of debt vs. credit limit, credit history length, new credit requests, and credit mix.
• Monitoring one’s credit score and report is vital for financial health and can be done for free.
• Ways to build a credit score include being an authorized user on a credit card, obtaining a secured credit card or credit-builder loan, and always paying debt on time.
How Do Average Credit Scores Compare by State?
While there’s a national average credit score, there are also state numbers that vary a bit. The chart below shows the average credit score by state as of the third quarter of 2023, according to Experian®.
State
Average Credit Score
Alabama
692
Alaska
722
Arizona
713
Arkansas
696
California
722
Colorado
731
Connecticut
726
Delaware
715
District of Columbia
715
Florida
708
Georgia
695
Hawaii
732
Idaho
729
Illinois
720
Indiana
713
Iowa
730
Kansas
723
Kentucky
705
Louisiana
690
Maine
731
Maryland
716
Massachusetts
732
Michigan
719
Minnesota
742
Mississippi
680
Missouri
714
Montana
732
Nebraska
731
Nevada
702
New Hampshire
736
New Jersey
725
New Mexico
702
New York
721
North Carolina
709
North Dakota
733
Ohio
716
Oklahoma
696
Oregon
732
Pennsylvania
723
Rhode Island
722
South Carolina
699
South Dakota
734
Tennessee
705
Texas
695
Utah
731
Vermont
737
Virginia
722
Washington
735
West Virginia
703
Wisconsin
737
Wyoming
724
Why Do I Have More Than One Credit Score?
As mentioned, the chart above shows FICO scores, which are used in 90% of lending decisions. But that’s not the only credit score you have. The other is called VantageScore. You’ll find different credit scores for two main reasons. First, they are competitors in this category, and each one calculates credit scores differently.
The other reason you might see a different credit score is due to the fact that FICO has different credit scoring models based on what the lender is looking for (mortgage, auto, credit card). In addition, FICO also releases credit score updates, or versions, of their credit-scoring model, similar to an Apple or Microsoft software update.
Here’s an example of what FICO scores you might see and the purpose they serve. (Note: You will see that the numbering does not always go sequentially; for instance, there isn’t a FICO Bankcard Score 6 or 7 in use.)
FICO credit-scoring model
Purpose
FICO Score 2
FICO Score 5
FICO Score 4
Mortgage lending
FICO Bankcard Score 9
FICO Bankcard Score 8
FICO Bankcard Score 5
FICO Bankcard Score 4
FICO Bankcard Score 3
FICO Bankcard Score 2
Credit card lending
FICO Auto Score 9
FICO Auto Score 8
FICO Auto Score 5
FICO Auto Score 4
FICO Auto Score 2
Auto lending
FICO Score 9
FICO Score 8
General
FICO Score 10
FICO Auto Score 10
FICO Bankcard Score 10
FICO Score 10T
Newly released scoring models
As you can see, there are many scoring models currently in use. But your score likely won’t vary drastically with the different versions.
What Is a Good Credit Score Range?
Technically, a good credit score range is between 670 and 739, according to FICO, the original provider of credit scores. (For VantageScore, the good range runs from 661 to 780.) But if you’re casually talking about what a “good” credit score is, anything above 670 is considered good. A score of 850 is the maximum credit score and is considered excellent or exceptional.
If you are curious about what the starting credit score is, you’ll find two different answers: the lowest credit score and the first credit score you get. The lowest credit score is 300, but that’s not where you’ll start. If you take out your first loan and make on-time payments, for instance, you’ll get your first credit score about six months later. Chances are, your consistent payment history will bump it up closer to the 500-700 credit score range. A score lower than that would likely reflect bad marks on your credit report.
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• Your bank or credit card issuer: You’ll often see a free credit score — and sometimes a full credit report — supplied by your bank or credit issuer located in your online account. Be sure to check if the credit score is supplied by VantageScore or FICO, as the numbers can be different.
• Nonprofit credit and housing counselors: You may be able to get help accessing your credit score through nonprofit agencies.
• Credit score service: You may be able to pay to monitor your credit score with various companies. Usually, there are more services they can offer in addition to monitoring your credit score to make it worth your while.
Checking your credit score can help you see where you are, if there are any errors on your report, and whether you might address areas that are dragging your score down.
What Affects Your Credit Scores?
What affects your credit score is related to how well you manage credit. Credit scoring models were developed as a way to help lenders evaluate how risky it is to lend you money based on how you have handled credit to date.
There are different ways lenders gain insight into how you manage credit with the credit scoring model, which is further broken down into categories. That said, key facets of your credit score (which are detailed below) include such aspects as whether you pay on time, how much you owe, the mix of ways in which you’ve accessed credit, and the length of time you’ve been using credit, among others.
Credit Score Factors by Percentage
The breakdown of factors contributing to FICO credit scores is 35% payment history, 30% amounts owed, 15% length of credit history, 10% new credit, and 10% credit mix. Here’s how they work.
Payment History: 35%
Payment history captures your past behavior of making payments on time or not. It also includes whether or not any of your accounts have fallen into delinquency. In other words, if you have a long history of paying on time, that can contribute positively to your credit score.
Amounts Owed: 30%
Most financial experts believe that you should only use 30% of your credit limit. Ten percent is better still. Using too much of the credit available to you is seen as a sign of risk to lenders, and it’ll pull down your score. Learning how to lower credit card utilization may help build your score.
Length of Credit History: 15%
When you have a short credit history, you are something of an unknown quantity to lenders. Those who have been accessing credit for a significant period of time have proven how well they can handle this aspect of their finances. That is why a longer credit history can positively impact your score.
If you are just starting out on your credit journey, you will likely need to manage your payments well for several months in order to start building your credit score.
New Credit: 10%
This factor reflects whether you have been seeking additional credit recently. Applying for a lot of new credit in a short period of time is typically seen as risky to lenders. They may see it as a sign that you’ll be overextended and have financial trouble ahead. For this reason, it’s best to limit the amount of credit you apply for.
Credit Mix: 10%
Credit mix refers to the different types of credit accounts you have. This includes installment accounts (such as auto loans, personal loans, and mortgages) and revolving credit accounts (such as credit cards and HELOCs). Good management of a mix of credit shows lenders you can be responsible with different types of credit.
What Information Credit Scores Do Not Consider
You might also be curious to know what doesn’t affect your credit score. FICO lists the following as factors that do not affect your FICO Score:
• Where you live
• Salary and employment
• Age and sex
• Color, ethnicity, race, or national origin
• Marital status
• Religion
• Receipt of public assistance
• Child or family support obligations
• Interest rate being charged on another card
• Any information not found on your credit report (such as your bank account details)
• Whether or not you’re participating in credit counseling of any kind
• Nonbankruptcy public records
How the VantageScore Is Calculated
Now that you know all about the FICO scoring system, consider how VantageScore is determined. The VantageScore calculation breakdown is a little different from FICO. The following breakdown is based on VantageScore 4.0, the most recent model released in 2017:
• Payment history: 41%
• Depth of credit: 20%
• Credit utilization: 20%
• Balances: 11%
• Recent credit: 6%
• Available credit: 2%
In this model, payment history is the biggest driver of your credit score, much like it is with FICO. But the weights and calculations are different from FICO’s, so it’s natural to see a different score when the credit score provided to you is a VantageScore instead of a FICO score.
The first credit score was the FICO score, launched in 1989 with the leading credit bureaus to help them evaluate a consumer’s creditworthiness. (FICO, incidentally, is an acronym for Fair Isaac Corporation.) The VantageScore was launched in 2006, a joint venture among the big three credit bureaus, Equifax®, Experian®, and TransUnion®.
Different lenders use different scoring models, and once they’ve committed to a version of the scoring model, it’s not easy to change. Each individual lender chooses when to update to new scoring models released by FICO or VantageScore.
One auto lender may use FICO® Auto Score 9 while another lender may use FICO® Auto Score 8. One credit card company may show you a VantageScore while another shows you a FICO score.
To sum up, the reason you see different credit scores is due to three main factors: different providers (VantageScore vs FICO) with different credit scoring models and different versions.
Why Having a Good Credit Score Is Important
A good credit score can benefit your financial life. Here’s how:
• Better loan rates: You may be able to secure a better interest rate on your loan.
• Easier to get a loan: A better credit score can help you qualify for a loan.
• Better insurance rates: You likely won’t pay as much for car insurance when you have a good credit score.
• Easier to get an apartment: If you apply for an apartment, your landlord may look favorably on a good credit score.
• Higher credit limits: A better score can help you be approved for a higher credit limit, which can help with your credit utilization ratio.
• Better rewards: You may be able to qualify for the premium travel cards and rewards programs with good credit.
• No security deposit for utilities: If you’re setting up utilities, your credit is typically checked. If you have a good credit score, the deposit may be waived.
How to Build Your Credit Scores
It’s not uncommon to need to build your credit score before applying for financing. Doing so can help your chances of being approved as well as possibly secure competitive terms.
• Check your credit report for errors. Any information that is incorrect, such as dates or amounts, can be disputed.
• Set up autopay. Your payment history makes up 35% of your FICO credit score, so you want to get your bills paid on time, every time. Putting your bills on autopay helps make this task a snap.
• Consolidate credit card debt. Replacing credit card balances with a personal loan can help improve your credit utilization ratios and get the debt paid off with the regularity that an installment loan brings.
• Use a money tracker app. Technology is incredible for facilitating money decisions. It can be helpful for seeing your income, spending, saving, investing, planning, credit score monitoring, and more. A good starting point: See what tools your financial institution offers.
If you don’t have a credit score yet, don’t stress: There are plenty of ways to start building your credit. Here are some strategies to consider:
• Become an authorized user. Being added to another credit card account (like a parent’s) can build credit history.
• Get a secured credit card. A secured credit card requires a deposit in exchange for a line of credit. When you pay it off on time, you’ll build a positive credit history.
• Take out an installment loan. It may be possible to build credit history with an installment loan. Auto loans are an example of an installment loan that often advertise possible loan approvals with little to no credit history. In some cases, you may need a cosigner to get the loan approved.
• Consider a credit-builder loan. You may want to look at credit-building loans, which can benefit people who don’t have a credit score (or have a low credit score). They usually require a deposit or paychecks be automatically deposited to the account to qualify.
At times, you’ll see your credit score change, and it might worry you. Here are some common reasons why your credit score may have changed.
• Too many credit inquiries. Don’t apply for too much credit in a short period of time. This can look like risky behavior on your part (say, like you are strapped for funds), and your score will likely decrease.
• Late payment. If your payment is more than 60 days past due, it may show up on your credit report, and when it does, you may see a noticeable drop in your credit score.
• Maxed out a card. When your credit utilization ratio increases (how much credit you’re using relative to how much is available to you), you’ll typically see a decrease in your credit score.
• Paid off an account. It might seem illogical, but when you pay off a loan and close the account, your credit score may go down. This is because you’re decreasing the credit available to you and shortening the length of your credit history, both of which can pull down your credit slightly. But don’t panic — your score will usually recover quickly.
• Collection account, bankruptcy, foreclosure, or other derogatory mark: Your credit score may decrease drastically if there’s negative information in your credit report. These kinds of marks can stay on your credit report for seven to 10 years.
Monitor Your Credit Report and Score
Monitoring your credit score and report can help keep you on track to reach your financial goals. This is especially true if you are focused on building your score to a certain level (say, if you plan to apply for a mortgage in the near future).
There are a lot of smart tools you can use to monitor your credit report and score, as well as budgeting and spending apps that can help you manage your money more effectively and pay down debt
The Takeaway
The average credit score in America is 717 using the FICO system, while the average VantageScore is 702. Knowing the factors that comprise a credit score, how the different scoring systems compare, and where your score stands can be helpful information. You can check your score and empower yourself with the knowledge to build it so you have access to the best lending terms possible.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
FAQ
How many Americans have an 800 credit score?
According to data collected by credit reporting agency Experian, 22% of Americans have a credit score of 800 or greater.
How common is a 750 credit score?
Approximately 25% of American have a credit score in the 750 range, according to data collected by credit reporting agency Experian.
Does anyone have a 900 credit score?
It’s impossible to have a 900 credit score, as both FICO and VantageScore models only go as high as 850.
What is the riskiest credit score?
Lenders may see a borrower with a “poor” credit score as a high risk. Poor credit scores fall between 300 and 579.
What is the most respected credit score?
While lenders use both VantageScore and FICO and consider them reliable, FICO is used in 90% of lending decisions.
What is a good credit score to buy a house?
Borrowers with higher credit scores are often in a better position to secure favorable rates on a home loan. Generally speaking, lenders require a credit score of at least 620 to buy a house with a conventional mortgage, though requirements vary based on the type of loan you’re pursuing.
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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
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 Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
The Federal Reserve, or “Fed,” can change the federal funds rate as a tool to sway the economy. For instance, when inflation is high, it can raise interest rates to attempt to curb overall demand in the economy, hopefully lowering prices. As of November 2024, the current federal funds rate is between 4.75% and 5.00%. That rate can affect other interest rates throughout the economy, such as those tied to mortgages, auto loans, and more.
There’s a connection between the Fed’s interest rate decisions, the national economy, and your personal finances. The Fed works to help balance the economy over time — and its actions and influence on monetary policy can affect household finances. Here’s what consumers should know about the Federal Reserve interest rate and how it trickles down to the level of individual wallets.
What Is the Federal Funds Rate?
The federal funds rate, or federal interest rate, is a target interest rate assessed on the bank-to-bank level. It’s the rate at which banks charge each other for loans borrowed or lent overnight.
The federal funds rate is not directly connected to consumer interest rates, like those that might be paid on a personal loan or mortgage. But it can significantly influence those interest rates and, over time, can impact how businesses and individuals access lines of credit.
How Is the Federal Funds Rate Set?
The Federal Open Market Committee (FOMC) sets the federal funds rate. The FOMC is a 12-member group made up of seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis.
The FOMC meets a minimum of eight times per year — though the committee will meet more often than that if deemed necessary. The group decides the Fed’s interest rate policy based on key economic indicators that may show signs of inflation, rising unemployment, recession, or other issues that may impact economic growth.
The FOMC often slashes rates in response to market turmoil as an attempt to boost the economy. Lower rates may make it easier for businesses and individuals to take out loans, thus stimulating the economy through more spending. The Federal Reserve enacted a zero-interest rate policy in 2008 and maintained it for seven years to boost the economy following the Great Recession, for example.
On the other hand, the FOMC may raise interest rates when the economy is strong to prevent an overheated economy and keep inflation in check. Higher interest rates make borrowing more expensive, disincentivizing businesses and households from taking out loans for consumption and investment. Because of this, higher interest rates, theoretically, can cool the economy.
Current Federal Funds Rate
As noted above, the current federal funds rate is between 4.75% and 5.00% as of early November 2024. The FOMC raised interest rates rapidly throughout 2022 in an effort to bring down inflation, which was at the country’s highest levels since the 1980s. But in the fall of 2024, it issued a rate cut for the first time since the start of the pandemic in early 2020.
The federal funds rate is a recommended target — banks can ultimately negotiate their own rate when borrowing and lending from one another. Over the years, federal fund targets have varied widely depending on the economic outlook. The federal funds rate was as high as 20% in the early 1980s due to inflation and as low as 0.0% to 0.25% in the post-pandemic environment, when the Fed used its monetary policy to stimulate the economy.
How Does the Fed Influence the Economy?
The Federal Reserve System is the U.S. central bank. The Fed is the primary regulator of the U.S. financial system and is made up of a dozen regional banks, each of which is localized to a specific geographical region in the country.
The Fed has a wide range of financial duties and powers to take measures to ensure systemic financial and economic stability. These duties include:
• Maintaining widespread financial stability, in part by setting interest rates
• Providing financial services like operating the national payments system
The Fed has authority over other U.S. banking institutions and can regulate them in order to protect consumers’ financial rights. But perhaps its most famous job is setting its interest rate, otherwise known as the federal funds rate.
How Does the Federal Funds Rate Affect Interest Rates?
Although the federal funds rate doesn’t directly influence the interest levels for loans taken out by consumers, it can change the dynamics of the economy as a whole through a kind of trickle-down effect.
The Fed’s rate changes impact a broad swath of financial areas — from credit cards to mortgages, from savings rates to life insurance policies. The Fed’s rate change can affect individual consumers in various ways. They can also affect the stock market, which may have an outsized impact on those who are online investing or otherwise have money in the markets.
The Prime Rate
A change to the federal funds rate can influence the prime interest rate (also known as the Bank Prime Loan Rate). The prime interest rate is the rate banks offer their most creditworthy customers when they’re looking to take out a line of credit or a loan.
While each bank is responsible for setting its own prime interest rate, many banks choose to set theirs mainly based on the federal funds rate.
Generally, the rate is set approximately three percentage points higher than the federal funds rate—so, for example, if the rate is at 5.00%, a bank’s prime interest rate might be 8.00%.
Even for consumers who don’t have excellent credit, the prime interest rate is important; it’s the baseline from which all of a bank’s loan tiers are calculated.
That applies to a wide range of financial products, including mortgages, credit cards, automobile loans, and personal loans. It can also affect existing lines of credit that have variable interest rates.
Savings Accounts and Certificates of Deposit
Interest rates bend both ways. Although a federal rate hike may mean a consumer sees higher interest rates when borrowing, it also means the interest rates earned through savings, certificates of deposit (CDs), and other interest-bearing accounts will increase.
In many cases, this increase in interest earnings influences consumers to save more, which can help as an incentive to build and maintain an emergency fund that one can access immediately, if necessary.
How Does the Federal Funds Rate Affect the Stock Market?
While the federal funds rate has no direct impact on the stock market, it can have the same kind of indirect, ripple effect that is felt in other areas of the U.S. financial system.
Generally, lower rates make the market more attractive to investors looking to maximize returns. Because investors cannot get an attractive rate in a savings account or with lower-risk bonds, they will put money into higher-risk assets like growth stocks to get an ideal return. Plus, cheaper or more available money can translate to more spending and higher company earnings, resulting in rising stock performance.
On the other hand, higher interest rates tend to dampen the stock market since investors usually prefer to invest in lower-risk assets like bonds that may offer an attractive yield in a high-interest rate environment.
What Other Factors Affect Consumer Interest Rates?
Although the Federal Reserve interest rate can impact personal finance basics in various ways, it may take up to 12 months to feel the full effect of a change.
On a consumer level, financial institutions use complex algorithms to calculate interest rates for credit cards and other loans. These algorithms consider everything from personal creditworthiness to loan convertibility to the prime interest rate to determine an individual’s interest rate.
The Takeaway
The federal funds rate — or federal interest rate — set by the Federal Reserve is intended to guide bank-to-bank loans but ends up impacting various parts of the national economy—down to individuals’ personal finances.
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SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
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SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
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The average credit for 30-year-olds is 690, according to the most recent analysis of FICO® scores in 2024 by Experian.
Knowing how you compare with other borrowers is an interesting way to look at your finances. Perhaps you want to improve your credit score, or maybe just you’re wondering if your credit score is good enough to secure the financing you want. Either way, a better credit profile could translate into better lending terms and, ultimately, more money back in your pocket.
Here’s what you need to know about average credit scores by age 30 and steps you can take to boost your score.
Key Points
• The average credit score for 30-year-olds is 690, which is slightly below the national average of 717.
• A credit score of 690 is considered “good,” allowing individuals to qualify for mortgages and loans.
• Credit scores range from 300 to 850, with higher scores typically providing better loan terms.
• Factors such as payment history, credit utilization, and credit history length affect credit scores.
• Understanding credit scores can improve financial health and secure better lending terms.
Average Credit Score by Age 30
As mentioned, the average credit score for Millennials is 690. This is slightly lower than the national average FICO Score of 717, but that’s to be expected. After all, it takes time to build good credit, and a borrower’s credit score tends to increase with age.
If you have an average credit score of 690 by age 30, it falls within the “good” range. This means you’ll likely be able to qualify for a mortgage, car loan, and other types of financing applications, though you may not be offered the most favorable terms. (Saving up for a big-ticket item? A spending app can help you track savings and stay on top of recurring expenses.)
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What Is a Credit Score?
Taking a step back, it’s important to understand what a credit score is and where it comes from. A credit score is a three-digit number that lenders use to assess how risky it is to loan money to a borrower. Scores range from a low of 300 to a high of 850. In general, the higher your credit score, the more likely you are to get the best interest rate and loan terms.
There’s no starting credit score for those just starting to establish their credit history. The two main players — FICO and VantageScore — each look at a variety of factors to come up with a person’s credit score.
As of October 2023, the national average credit score across all ages is 717, according to FICO. That’s one point lower than earlier in the year, which could be the result of months of high interest rates and inflation. That said, 717 falls easily within the “good” credit score range and could help you qualify for more favorable lending terms.
Average Credit Score by Age
When broken down by age, you’ll find the average credit score as follows:
Age
Credit score
Generation Z (18-26)
680
Millennials (27-42)
690
Generation X (43-58)
709
Baby boomers (59-77)
745
Silent generation (78+)
760
Source:Experian
What’s a Good Credit Score for Your Age?
It’s common to want to see how your personal, professional, or financial track record compares to your peers. But that may not be the best approach for assessing your credit score. Instead, it can be helpful to see where your score falls on the standard 300-850 scale. A credit score of 670 or higher is generally considered good, regardless of a person’s age.
How Are Credit Scores Used?
Credit scores can be used in a number of ways. Let’s look at some common scenarios when your credit score may come into play:
• You’re applying for a loan. Whether you’re applying for an auto loan, mortgage, or personal loan, a lender will use your credit score to determine the risk associated with loaning you the money.
• A lender is determining your interest rate. Generally speaking, the better your credit score, the better interest rate you’ll be offered.
• A lender is setting your credit limit. The amount of credit you qualify for is based in part on your credit score. If you manage your credit well, you might qualify for a higher credit limit.
• You’re applying for car insurance. When quoting a car insurance rate, insurers often factor in your credit score along with other factors, like your driving history.
Factors Influencing the Average Credit Score
According to Experian, the average credit score has generally trended upward over time. This can be explained by a number of factors, including:
• Education. More people are aware of their credit scores and are paying their bills.
• Age. Data shows a direct correlation between higher credit scores and older generations.
• Economics. Experian data scientists point to steadily decreasing unemployment levels as one reason for the upward trend of credit scores.
• Credit utilization. Overall credit utilization ratios have increased to 30% (up from 28% a year ago) for all borrowers, which affects the average credit score.
• Delinquencies. Mortgage delinquencies are lower than they were before the pandemic, which could be a result of the low interest rates that were offered.
If your credit score isn’t where you want it to be, take heart. There are steps you can take to help boost your numbers over time.
• Pay your bills on time, every time. Whether you use a money tracker app to manage upcoming bills or go the autopay route, find a bill paying system that works for you.
• Manage your credit utilization. Lenders look at how much of your available credit you’re using. By paying off debt, you can lower your credit utilization ratio, which in turn can help improve your score.
• Keep accounts open. A long credit history can help strengthen your credit profile. If you have an older account in good standing, consider keeping it open.
• Check your credit report regularly. Mistakes happen. If one ends up on your credit report, take steps to address it right away. It’s a good idea to keep an eye on your credit score as well. You can get your score for free through banks, credit card issuers, and Experian.
How Does My Age Affect My Credit Score?
Technically speaking, your age doesn’t affect your credit score. However, credit scores do tend to increase with age. That’s because the longer a person lives, the more opportunities they have to build up a credit history, earn a higher income, and pay off debts.
At What Age Does Credit Score Improve the Most?
According to Experian’s 2023 findings, credit scores tend to improve the most between the ages of 59 to 77, when many Americans are either starting to think about retirement or settling into their golden years. (The average credit age among this age group is 745, which is considered very good.)
One possible explanation for the jump is that older people may have older credit accounts in their credit profile and, as a result, enjoy a higher average age of accounts. Also, people 59 and older typically have a more stable income and lifestyle, both of which can make bill paying and money management easier.
What Factors Affect My Credit Score?
Understanding what factors impact your credit score can go a long way toward helping you maintain a good score. Note that FICO and VantageScore use different factors and weightings when calculating a credit score. Let’s take a look at what goes into both scores.
A FICO Score, which is used in 90% of lending decisions, considers how a consumer handles debt. It weights scores according to the following categories:
• Payment history (35%)
• Credit utilization (30%)
• Length of credit history (15%)
• New credit inquiries (10%)
• Credit mix (10%)
Though there’s some overlap with FICO, a VantageScore is based on the following categories:
• Payment history (40%)
• Depth of credit (21%)
• Credit utilization (20%)
• Balances (11%)
• Recent credit (5%)
• Available credit (3%)
As you can see, while the weighting is different, both models pay close attention to how much credit you’re using, how well you’ve been paying on it, and how long you’ve been managing credit.
How to Build Credit
No matter how old you are, there are plenty of ways to build credit. As previously mentioned, on-time bill paying and a low credit utilization rate can both go a long way toward boosting your credit profile. But here are some other strategies to consider as you establish your credit.
• Become an authorized user. If someone is willing to take you on as an authorized user (your parents, for example), their payments may be reported on your credit history.
• Apply for a beginner credit card. A couple of options to consider: a student credit card, which is an unsecured card to help college students build credit, or a secured credit card, which requires a cash deposit as collateral.
• Consider a credit builder loan. A credit builder loan takes the loan amount and deposits it into a savings account for you. You’ll repay the loan in installments, and once it’s paid off, you’ll receive the money. On-time payments are reported to the credit reporting agencies.
• Look into an installment loan. Auto loans and personal loans are examples of installment loans that can help a qualified borrower build up their credit history.
• Enroll in a program that reports rental or utility payments. Find a service that reports your monthly rent or utility payments to the credit reporting agencies. Some services are free, but others may charge a fee.
Credit Score Tips
Looking for ways to help improve your credit score? Keep these tips top of mind:
• Stay on top of bill paying.
• Pay down debt.
• Keep track of your credit score and review your credit report at least once a year.
• See an error in your credit report? Dispute it with each credit bureau that has the mistake as well as the business that reported the inaccurate information.
• Write a goodwill letter to the creditor asking for negative (but accurate) information to be removed from your credit report. They’re under no obligation to honor your request, but it’s worth a shot.
The Takeaway
The average credit score by age 30 is 690, which is slightly lower than the national average score of 717. However, a borrower’s age doesn’t directly impact their credit profile. Rather, data shows that the older someone is, the more likely they are to have a higher credit score. That’s because they’ve had more time to build up their credit profile.
Regardless of your age, there are ways to help boost your credit score and potentially qualify for better lending terms. Some strategies include paying bills on time, managing how you use your available credit, and keeping older accounts that are in good standing open.
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FAQ
What is a good credit limit for a 30-year-old?
The average credit limit for all credit cards for people in their 30s is $27,533, according to Experian.
Is 700 a good credit score for a 25-year-old?
A credit score of 700 at any age is considered good.
Is $10,000 a high credit limit?
Ten thousand dollars can be considered a good limit for people who have managed their debt and credit cards responsibly. To put that amount in perspective, the average limit for all credit cards combined is $29,855, according to Experian.
What credit limit can I get with a 750 credit score?
A 750 credit score is a good credit score, but it’s not the only piece of information lenders use to determine your credit limit. They consider a number of other factors, including your payment history, income, and credit utilization.
Can you have a $100K credit limit?
Though not common, it is possible to find a credit card with a limit of $100K. However, you’ll likely need to have good credit and demonstrate that you have the financial resources to support repayment. For example, a business that earns millions of dollars each year and has employees as authorized users on the card may be granted a higher credit limit.
What is a good credit score to buy a house?
In general, you’ll need to have a credit score of at least 620 to qualify for many types of mortgages.
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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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 .
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.
If you’re wondering whether financing a phone builds credit, the answer is that it depends. In some cases, financing a phone may help you build credit — but only if the financing company reports your payment activity to the credit bureaus.
Further, you’ll need to consistently make on-time payments if you’d like to build your credit. If your phone account ends up in collections, that will have the opposite effect on your credit. Here’s a closer look at how financing a phone can affect credit.
Key Points
• Financing a phone can build credit if the financing company reports payment activity to credit bureaus, which can help build credit scores.
• Consistently making on-time payments is essential for positively impacting credit scores through phone financing.
• Financing through major phone manufacturers or third-party companies often helps build credit, unlike most wireless carriers.
• A hard credit inquiry during phone financing may temporarily lower credit scores, but consistent payments can offset this.
• Verifying whether the financing company reports to credit bureaus is important for using phone financing to build credit.
How Does Cell Phone Financing Work?
Think of cell phone financing much like taking out a loan. But instead of getting funding, you’re getting a cell phone that you will then pay off over time.
Some people may decide to go this route if they don’t have enough money saved to buy a new phone outright. Others may even choose to lease a new phone, which entails making monthly payments that allow for an easy upgrade to a newer phone on a more regular basis.
When financing a phone, you’ll most likely sign a contract outlining the value of the phone and the payment terms, such as the monthly amount due and the term length.
Cell Phone Financing Options
You can find different cell phone financing options, including through your wireless carrier, phone manufacturer, or a third-party company. Depending on which option you choose, you may undergo a hard credit inquiry when you apply for financing. This could temporarily affect your credit score, given new credit is one of the factors considered in determining your FICO® score.
When you purchase or lease a phone through your wireless carrier, you’ll most likely be presented with different payment options. If you’re purchasing a phone, you may be able to sign up for a monthly payment plan — sometimes without incurring interest. You may even be able to negotiate a discount if you’re a repeat customer or choose certain wireless plans.
For those who want to lease, your wireless carrier may offer options like the ability to periodically upgrade your phone by trading in your existing phone for a newer model. Or, you may be offered the choice of buying the phone after a certain amount of payments.
Whichever option you choose, know that sales tax may not be included in your monthly payment — you’ll need to pay that upfront. Plus, you may need to make a down payment depending on your credit profile. Those with good credit, as opposed to a bad or fair credit score, may secure more favorable terms.
Major phone manufacturers like Apple and Samsung typically have their own installment plans to purchase their phones. With these plans, you’re approved for a certain amount that you can use to finance a phone, which you’ll then pay off over time.
Like wireless carriers, some phone manufacturers have the option to upgrade to a newer model by offering credit for trading in your existing phone. In some cases, you may be charged interest, so it’s best to review the terms before committing to a plan.
Some electronics stores offer financing for cell phones if you open a store credit card and use it to purchase a phone. You may be able to make interest-free monthly payments if you pay for the phone in full within a certain period of time.
Many retailers offer buy now, pay later options. Some don’t charge interest as long as you meet their payment terms. However, there can be fairly high late fees, so check the terms and conditions before proceeding.
Cell Phone Financing Options That Build Credit
Not all cell phone financing options help you build credit. That’s because not all companies that provide financing will report your payment activity to the major credit bureaus. As such, that information won’t get added to your credit report.
That being said, there are ways that financing a phone can help you build or establish credit. This includes the following:
• Financing through a phone manufacturer: Major phone manufacturers have their own branded credit cards or financing accounts on which they will report your activity to the credit bureaus. As long as you keep making on-time payments, this can help to build your score. To ensure your payment activity will affect your credit, it’s best to check with the manufacturer.
• Financing through a third-party company: Many stores offer branded credit cards that you can use to finance your phone. This is another way that financing a phone can build credit, since the company will generally report your payment information to the major credit bureaus.
Cell Phone Financing Options That Don’t Build Credit
In most cases, financing a phone through your wireless carrier won’t help you build your credit. That’s because these companies most likely won’t report your payment activity to the credit bureaus. If your payment activity does not appear on your credit report, it won’t have an effect on your credit.
For similar reasons, buy now, pay later plans also usually don’t help you build credit.
Should You Finance Your Phone to Build Credit?
Financing a cell phone in order to build credit is best for those who are able to consistently make on-time payments. That way, this positive payment activity will get reported to the credit bureaus and help to build your score.
However, if you’re unsure whether you’ll be able to do so, it may make sense to find an alternative way to build credit. Even one missed payment could negatively affect your credit and land you in more debt than you’d originally anticipated.
Is Financing a Cell Phone Worth It?
Financing a phone can come with some advantages, such as freeing up cash you can use to fund other financial goals. If you can get financing with zero interest and know you’ll be able to pay off your phone in full within the agreed-upon terms, then it may be worth considering if you want to have more cash available to you. If your financing plan doesn’t have a prepayment penalty, it can even give you the flexibility to pay off the phone early if you want.
However, if you need to pay interest or you believe that you won’t be able to pay off the phone within the zero-interest period, you’ll need to carefully consider the financial repercussions. Interest charges can add up, so look at your budget to see whether you can truly afford the phone you want.
If not, it may be worth holding onto your phone until you can save up for a new one or choosing to finance a phone that costs less.
Other Ways to Build Credit
Financing a phone isn’t the only way to build credit. Some of your other options include using a credit card responsibly and taking out a personal loan.
Using a Credit Card Responsibly
Using a credit card responsibly can help you build credit. Because payment history is the biggest factor in what affects your credit score, making timely payments on your credit card balance can go a long way toward building your credit score.
Plus, if you pay for your cell phone with whichever type of credit card you have, you might secure cell phone insurance coverage. See if your card offers that as a perk.
Getting a personal loan is another way to potentially build credit. How personal loans can build credit score is through on-time payments you make on the loan, since lenders will report your activity to at least one credit bureau.
Before taking out a loan, however, check the terms carefully. You’ll want to look at what interest rate you’ll be charged and what your monthly payment amount will be.
The Takeaway
Financing a phone can help you build credit, as long as the financing company reports your payment activity to credit bureaus. You will need to check with the lender to learn what their policy is. If they don’t report to the major credit bureaus, you may want to consider other ways to finance your cell phone and help build your credit.
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
Do cell phone financing options report to credit bureaus?
Some financing providers report payment activity to the credit bureaus, while others don’t. For instance, wireless carriers most likely won’t report payments on cell phone financing, whereas phone manufactures and some electronics stores do.
Does upgrading your phone affect your credit score?
Upgrading your phone may affect your credit score if the financing company needs to conduct a hard credit inquiry before approving you for a phone. A hard credit inquiry typically lowers your credit score slightly for a brief period of time.
How long does a phone bill stay on your credit report?
Active accounts can stay on your credit report for as long as the account is open and being reported to the credit bureaus. If you have a charged-off account — meaning your creditor has tried to collect payment from you and failed — that information may remain on your credit report for seven years.
Photo credit: iStock/Delmaine Donson
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 Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
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.
