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When you buy a home, you’re likely paying more than just the down payment and closing costs. You’ill probably also need to purchase homeowner’s insurance. While this coverage is not mandated by law, many mortgage lenders require it before they agree to finance the purchase of your home.

Here’s what first-time homebuyers need to know before shopping for homeowners insurance.

What Does Homeowners Insurance Cover?

Homeowners insurance coverage provides protection for both a home and its contents against damage, theft, and up to 16 named perils, including fire, hail, windstorms, smoke, vandalism, and theft. It also typically includes personal liability coverage for accidents that may happen on the property (think of people slipping and falling down your stairs, or your dog biting a neighbor on the property).

On the flip side, basic homeowners insurance likely won’t cover damage from disasters such as floods and earthquakes, and even war (seriously). Homebuyers who live in an area prone to certain events or natural disasters may want to consider supplemental coverage. In some cases, their lender may even require it.

It’s a good idea to learn what’s generally covered by each homeowners insurance policy type — and what isn’t — to ensure you have the right protection in place.

When You Need to Buy Homeowners Insurance

If buyers plan to get a mortgage to purchase their home, their lender will likely require they obtain homeowners insurance coverage before signing off at closing.

In reality, this is a sound business tactic, as the lender will want to protect its investment, which is the property, not the person it’s lending to (harsh, we know). Let’s say the home is damaged in a windstorm or burns to the ground. Insurance will cover the cost, after a deductible, without burdening the homeowner. The homeowner can then continue to pay their mortgage on time, much to the delight of the lender.

Again, if you live in an area prone to certain disasters like floods or earthquakes, your lender may require additional coverage. Check with your lender on what’s necessary before signing.

If a person’s first home happens to be a condo or co-op, the board may also require specific coverage, thanks to a shared responsibility for the entire complex.

Recommended: House or Condo: Which Is Right For You? Take the Quiz

Can You Forgo Homeowners Insurance?

Technically, there are no laws requiring a person to obtain homeowners insurance, but it’s a rule put in place by many lenders.

If you’re paying cash for a new home, you can forgo purchasing homeowners insurance, though that may be a risky proposition.

Think you can somehow snake the system? Think again. If a lender doesn’t feel that the homebuyer is working hard or fast enough to find homeowners insurance before closing, the lender may go ahead and purchase insurance in that person’s name with what’s called “lender-placed insurance.”

This isn’t as cool as it sounds. Not only will it increase the mortgage payment, lender-placed insurance is typically more expensive than traditional homeowners insurance. And it may not even provide all the protection a homeowner needs or wants.

To give yourself enough time to find the right policy for you, aim to start shopping around a good 30 days before closing.

How Much Coverage a Person Needs

How much homeowners insurance a new homeowner needs will depend on the value of their home and the possessions in it. As a first step, would-be homeowners can ask their agent for a recommended amount of coverage.

After determining that number, it’s also a good idea to take stock of belongings and see if any items may require additional coverage (think expensive antiques, paintings, or other irreplaceable items). It could also be smart to photograph and digitally catalog major items in a home for proof needed on any claims.

Replacement Cost vs. Actual Cash Value

When shopping for homeowners insurance, there’s replacement cost coverage and actual cash value coverage.

Replacement cost coverage pays the amount needed to replace items with the same or similar item, while actual cash value coverage only covers the current, depreciated value of a home or possessions.

This means that if you have actual cash value coverage and disaster hits, you’ll only be able to get enough cash for the depreciated value of the home and items, not the cost of what it may take to replace them.

Most standard homeowners insurance policies cover the replacement cost of a physical home and the actual cash value of the insured’s personal property, but some policies and endorsements also cover the replacement cost of personal property.

The upshot: It’s best to go for replacement cost coverage whenever possible.

Recommended: How Much Is Homeowners Insurance?

The Takeaway

Is homeowners insurance required to buy a home? If you’re taking out a mortgage, that’s almost always a “yes.” It’s worth looking at your options — and understanding what will and will not be covered — so you can feel at ease in your new home for years to come.

Of course, shopping for homeowners insurance often requires considering several options, from the amount of coverage to the kind of policy to the cost of the premium. To help simplify the process, SoFi has partnered with Experian to bring customizable and affordable homeowners insurance to our members.

Experian allows you to match your current coverage to new policy offers with little to no data entry. And you can easily bundle your home and auto insurance to save money. All with no fees and no paperwork.

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

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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Most states require licensed drivers to carry auto liability insurance — and for good reason. Liability coverage helps pay for the damages to other people involved in a car accident if it’s determined you were responsible.

State law may leave it up to the individual to decide if they want to carry the kind of insurance that will help pay to repair their own wrecked car or injured body. But in most cases, drivers won’t have an option when it comes to liability coverage.

Since your automobile could cause physical or material harm to others, you’ll generally be expected to carry enough insurance to cover those potential costs or, in some states, provide proof of financial responsibility.

What Is Liability Car Insurance?

If you’re found at fault — or “liable” — for an accident, liability insurance helps pay the other driver’s expenses.

There are several other types of car insurance coverage available to drivers, so it’s easy to get them confused. Collision coverage, for example, pays to repair damage to your own car after an accident. And comprehensive coverage helps pay for damage to your car that’s caused by other factors, such as hail, a fire, or theft.

Auto liability insurance is all about the other guy. It’s not there to cover your costs or the costs of anyone who was riding in your car when the accident occurred.

Recommended: How Much Auto Insurance Do I Really Need?

What Costs Does Liability Insurance Cover?

In general, there are two types of liability insurance offered on most standard policies:

Bodily Injury

This type of liability coverage protects the at-fault driver by paying for the other person’s emergency and continuing medical expenses related to the accident. It also might cover loss of income or funeral costs, or legal fees if there’s a lawsuit.

Property Damage

Property damage liability coverage helps pay for repairs to the other person’s car or other property (their home, a business, a fence, a bicycle, etc.) when the policyholder causes an accident.

Are There Limits on What an Insurer Will Pay?

Yes. The amount an insurer will pay for a claim depends on the coverage limits a policyholder chooses. Note that the amount of coverage you’re required to carry varies from state to state, and you might choose to purchase a higher level of coverage than your state mandates.

Coverage caps are usually broken down into three categories:

Bodily Injury Liability Limit Per Person

This is the maximum amount an insurer will pay out for each individual who is injured in a car accident (other than the at-fault driver who is the policyholder).

Bodily Injury Liability Limit Per Accident

This is the maximum amount an insurer will pay overall for medical expenses if multiple people are hurt in an accident. Again, it does not include medical costs for the at-fault policyholder.

Property Damage Liability Limit

This is the maximum amount an insurer will pay to repair any damage a policyholder caused to another person’s property. Any amount over that limit will likely be the responsibility of the policyholder.

How Much Liability Insurance Should a Driver Have?

You cannot buy less than the minimum amount of liability insurance your state legally requires. But some states require significantly less coverage than others.

For example, the minimum liability insurance requirements in California are $15,000 for injury/death to one person, $30,000 for injury/death to more than one person, and $5,000 for damage to property.

But the minimum requirements in Maine are more than twice those amounts: $50,000 per person for bodily injury, $100,000 per accident for bodily injury, and $25,000 for property damage. (A combined single limit of $125,000 will also satisfy the minimum limit requirement in Maine.)

General recommendations from the insurance industry suggest consumers purchase at least $100,000 of bodily injury liability per person and $300,000 per accident.

Keep in mind that when you’re shopping, you may not be able to choose standalone limits for each category of liability coverage. Most insurers set their coverage limits as part of a package, and you may have to make your purchase from those pre-established plans.

For example, a 25/50/10 policy would set the bodily injury limit per person at $25,000, the bodily injury limit per accident at $50,000, and the property damage limit at $10,000. Any costs that exceed those set amounts would be the responsibility of the policyholder.

Some people also consider purchasing an “umbrella” policy that would cover any excess costs if liability limits are exhausted. This type of policy can help protect you from large liability claims or judgments if you’re sued. And your umbrella policy may cover you as well as other members of your family or household.

According to the Insurance Information Institute, the average cost of a claim after a private passenger car accident in 2020 was $20,235 for bodily injury and $4,711 in property damage. But a claim could go much higher, if there are multiple victims, for example, or if there are serious injuries or someone is killed.

Recommended: What Is the Average Monthly Cost of Car Insurance by Age in the U.S.?

What’s the Difference Between Full Coverage and Liability Only?

An auto insurance policy that includes liability, collision, and comprehensive coverage is sometimes called “full coverage,” because it covers both your costs and the costs of others involved in an accident.

Most states require liability coverage. But if your car is paid off, your state may not require collision (which helps to repair or replace a car that’s damaged in an accident) or comprehensive (which pays if the car is stolen or damaged by fire, vandalism or some other non-collision scenario).

And if your car isn’t worth much, you might decide to forgo one or both when purchasing car insurance. If your car is financed, however, the lender could require full coverage even if the state doesn’t.

Some states also may require other types of coverage:

•   Uninsured motorist and underinsured motorist coverage can help cover your medical expenses if you’re in an accident with a driver who has little or no insurance.
•   Uninsured motorist property damage coverage can help repair damage to your car if you are hit by an uninsured motorist.
•   Personal Injury Protection (PIP) and/or Medical Payments (MedPay) can offer protection if you or your passengers are hurt or killed in an accident.

Do You Need Liability Coverage If You Live in a No-Fault State?

A dozen states have instituted “no-fault” laws for drivers. Coverage rules and limits may vary from state to state, so you should be clear on the specifics of what your state requires.

Generally, when you live in a no-fault state and you’re in a car accident, everyone involved files a bodily injury claim with their own insurance company, regardless of who was at fault. Still, every no-fault state requires some level of liability coverage.

Drivers in no-fault states also typically must have Personal Injury Protection (PIP) insurance included in their car insurance policy to cover their own potential medical bills and expenses. PIP plans cover medical expenses for the car’s driver and passengers, which can include hospital bills, medication, rehabilitation, and other injury-related costs.

PIP insurance doesn’t replace bodily liability coverage in every state, and it doesn’t cover property damages. Your insurance company pays for repairs to your car if you have collision coverage. Or you may have to make a property damage claim against the at-fault driver’s insurance.

What If You Have an Accident in Another State?

Ready for a road trip? If you have an accident, your liability insurance may increase to match the minimum limits in whatever state you’re in, and in Canada. But you may want to check with your insurance company if you like to travel, especially if you have a bare-bones policy.

What’s Covered If Someone Else Is Driving Your Car?

The short answer is that the auto insurance covering the vehicle, not the person driving, is usually considered the primary insurance. So if you let someone else drive your car and that person causes an accident, your insurance company probably would be responsible for paying the claim.

Your liability coverage wouldn’t pay the medical bills of the person driving your car or the repairs to your car, although those costs may be covered by other parts of your policy. But it likely would be your liability insurance that pays for the driver of the other car’s medical bills and property damage.

Again, state laws may affect who is responsible in this situation, so it can help to know the rules before letting someone else drive your car.

How Much Does Liability Coverage Cost?

The price you’ll pay for liability coverage could be based on several factors, including how much you buy and where you live. Your age may also play a factor — younger drivers may pay more for coverage, for instance. You can do a little online shopping to search the best rates for your area.

But a better question might be “How much will it cost to bump up my liability insurance beyond the state-mandated minimums?” Getting twice as much coverage won’t necessarily cost twice as much. If the price fits your budget, you may want to consider carrying more coverage than the law requires.

Upping coverage might increase your comfort level, considering the expenses that might be involved in a major accident, even if you have insurance. The extra coverage may cost more, but if you’re a safe driver you may qualify for better rates. You can research car insurance online and compare quotes to find one that fits your budget.

The extra coverage may cost more, but if you’re a safe driver you may qualify for better rates.

The Takeaway

If you’re held responsible for a car accident, liability insurance will help pay the expenses of the others involved. Most states mandate this coverage, including “no-fault” states. But the amount of coverage you must carry may vary from state to state, so when you’re researching automobile insurance, it can be useful to know your state’s rules.

Shopping around for insurance in your area can help you figure out how much coverage you really need and what your premium might be. SoFi’s online auto insurance comparison tool lets you see quotes from a network of insurance providers within minutes, saving you time and hassle.

Insurance not available in all states.
Gabi is a registered service mark of Gabi Personal Insurance Agency, Inc.
SoFi is compensated by Gabi for each customer who completes an application through the SoFi-Gabi partnership.

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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The question of whether it’s worthwhile to obtain a Master’s in Business Administration—an advanced and versatile degree that can help people ascend into management analysis and/or strategy roles—is a highly personal one without a real single objective answer. As usual with financial and personal decisions, the answer tends to be “it depends.”

The last decade has seen the MBA go from becoming the most popular master’s degree in the U.S. to “being in crisis,” with overall applications declining. The COVID-19 pandemic resulted in many schools expanding their policies and modalities for distance learning, so it’s still anyone’s guess what impact that will have on the MBA’s popularity and employer demand. Either way, it’s never a bad idea to consider betting on your future—and an MBA is still a big commitment. Here are some things to consider when deciding to pursue an MBA.

The Pros and Cons of Getting an MBA

Getting an MBA won’t be right for everyone, but it could be one way to advance your career. Here are some things to consider as you weigh the pros and cons of getting an MBA.

Pros to Consider

Improved earning potential. The average anticipated salary for MBA graduates entering the workforce is $79,043 according to the National Association of Colleges and Employers. A recent grad’s expected salary may be even higher depending on where a student gets their MBA. According to US News & World Report, the average salary for 2019 MBA graduates at the top 129 full-time MBA programs was $106,757. For top 10 programs, the average salary and bonus was $173,960.

But if you’re wondering if it’s worth getting an MBA from a lower tier school, consider that the average MBA salary for graduates with a degree from the 10 schools where compensation was lowest was just $52,720 .

Expanded Network. Business school can be a great opportunity to make friends and network with like-minded individuals. In addition to your peers in the program, you’ll engage with faculty and be introduced to a (hopefully robust) alumni network.

Career Acceleration or Transition. Successful completion of an MBA program can improve an individual’s career mobility. Coursework is often designed to encourage management skills, critical thinking, and other specialized skills, which can help prepare people for the workforce.

Cons to Consider

The cost. According to US News & World Report , in 2020 the average cost of the top 10 business schools in the United States was over $140,000 for tuition in a two-year MBA program. The most recent data available from the National Center of Education Statistics indicates that during the 2015-16 school year, the average MBA student loan debt was $66,300 at the time of graduation.

There are ways to mitigate the cost or to at least lower sticker shock out of the gate by pursuing part-time programs or staggering your course load over a longer period of time so you can still be drawing a salary to offset the costs while you’re studying.

Time commitment. Getting an MBA in a full-time program can take two years. There are some accelerated programs that may allow students to complete their coursework in 12 to 16 months. Beyond the length of the program, MBA classes are no joke. The coursework requires commitment and diligence, so be sure you have the time to dedicate to classes.

Consider factoring in the application process when evaluating both time and cost. To apply, schools may require GMAT™ scores, letters of recommendation, and more. Meeting the application requirements may take both time and money if you still need to take the required standardized tests.

How to Decide If an MBA Is Worth It for You

While an MBA can offer great potential for career growth, it’s definitely not the right choice for everyone. Be honest with yourself about why you want to pursue an MBA. It can be an excellent opportunity for students who are interested in career growth but it can be a huge time and monetary commitment.

Take the time to really evaluate whether getting an MBA is in line with your career and personal goals. Also understand the types of schools you may be able to get into, as the earning potential for someone who attended a top-tier school isn’t the same as someone who is enrolled in a lower-tier program.

When sitting down to crunch the numbers and assess your goals, pay particular attention to long-term salary projections among graduates from the program you have in mind—assuming future earning potential is a primary motivator for getting an MBA. Debt may be offset by future salary. But because signing on for grad school is a big and expensive decision overall, it’s worth considering all angles.

How to Pay for an MBA

One approach to college programs is to first seek fellowships, scholarships, and grants—and to then pay for costs out of pocket or to seek a loan as a last resort. Unlike undergraduate scholarships, which may be based on financial needs, MBA fellowships and grants are often awarded on merit. That means rather than taking financial need into account, oftentimes programs will be looking at a student’s achievements, talents, abilities, and performance in spite of hardship.

Generally speaking, when trying for a merit-based award, it helps to apply early, really ponder how you’re distinct from your competition, and push yourself to craft your application specifically for the program. Admissions folks and fellowship committees spend a lot of time reading a ton of applications and can tell instantly when an essay has been rubber-stamped—spell check, read your application over repeatedly, and don’t rush any aspect of it.

When in doubt, consider calling the admissions office for guidance or for information on programs and awards that may not be fully described online. But many MBA programs, including, for example NYU Stern, clearly indicates that “about 20-25% of admitted full-time two-year MBA students receive a merit-based scholarship.” NYU Stern’s website runs down many of the possible scholarships and fellowships prospective students can try for and what’s required.

Review fellowship opportunities available at the college or university you are interested in attending. Fellowships can be highly competitive and rare but offer a chance to attend a program, earn a degree, and avoid incurring the full cost of tuition. Not all schools offer them, but the University of Florida’s Warrington College of Business and Arizona State University’s W.P. Carey School of Business are just two examples of ones that do.

It might sound like an incredible long shot to earn a full free ride or even a considerably discounted one via aid—but it’s always worth pursuing because you may be closer than you think.

Recommended: How To Pay For Grad School

Student Loans for Graduate School

Student loans are another option students can use to pay for graduate school. To apply for federal aid, students will need to fill out the Free Application for Federal Aid. It’s important to note that the federal loans available for graduate students vs undergraduate students are different. Importantly, graduate students are not eligible for subsidized loans.

While your search for aid often starts with the university’s website and making contact with real humans there—not just going off what’s online—it’s also worth getting on the phone to lenders and finance companies to shop around and get the lay of the land. SoFi offers options to help students refinance existing student loans or to take out a new one. According to The Fed, there is currently over $1.7T in student loan debt . Chances are anyone thinking about school would like to avoid personally contributing to that statistic. Note that refinancing eliminates federal loans from borrower protections like deferment or forbearance.

Recommended: The Lifetime Cost of an MBA Degree

Employer Tuition Reimbursement Programs

In addition to getting on the horn with the schools you’re considering, it’s worth talking to your employer. Some employers have programs where they will pay for all or part of your MBA if you commit to returning and staying with the company for a set number of years after you earn the degree.

A 2019 survey from the Graduate Management Admission Council found that 40% of companies offer education sponsorship . If you’re among the current majority of the 60% other companies, there may still be tuition reimbursement programs—it’s worth at least asking about.

You can also explore business school assistantship programs as a way to offset the cost of tuition. These are jobs that may require you to help school faculty with tasks like conducting research or grading papers, and can also help provide you with a stipend as well to help with personal expenses outside of the debt owed to the school you’re working to erode. Contact your school’s employment office for details—but know that like with every other option to minimize the bill for a degree, the competition is likely to be fierce.

Recommended: How Does Tuition Reimbursement Work?

The Takeaway

Even if you don’t have a few dream graduate schools in mind yet, it’s a good bet you know it’s a pricey proposition and not one to be pursued on a whim. In addition to this article, it would be worth reading our content on how today people are taking on a larger amount of debt for master’s, MBA, law, and medical programs than ever before.

Compared to undergrads, grad students are taking on more debt, taking out loans that come with higher interest rates, and there’s the additional opportunity cost of just time invested in your own life—later in life—that comes with pursuing another degree.

That doesn’t mean it isn’t worth getting an MBA necessarily, it just means before making the final decision about pursuing it, it’s helpful—necessary even—to sit down, do your homework, and really think it through to develop a strategy and identify where compromises might also be called for.

Like a Bachelor’s, an MBA is not a guarantee of anything in your future. Obtaining an MBA will not magically earn you a better salary, grant you access to a better network, or help you figure out your path in life. Like any degree, an MBA is a tool that might help you quickly pivot your career or “check a box” for earning a promotion with your current employer. Whether that’s worth it depends on your own specific situation and set of goals.

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Most businesses report information to the credit bureaus every 30 to 45 days. Each on-time payment you make may barely affect your score, while a missed payment can have a significant effect.

But how often does your credit score update? Let’s find that answer, and learn how to keep an eye on your credit history and credit score.

Recommended: How to Build Credit Over Time

When Do Credit Reports Update?

Whenever consumers take some sort of action relating to their credit, their score, usually a number between 300 and 850, will fluctuate.

For instance, if they apply for a loan or miss a credit card payment, their score could change.

There is no set date for a credit score update because a lender or creditor may send information to the three main credit bureaus at different times: Experian one day, Equifax five days after that, and TransUnion a week later.

An update, though, will occur at least every 45 days.

Rather than constantly checking for updates, you might want to focus on long-term goals like paying off debt, always sending payments on time, and ensuring that your scores are going in an upward direction.

Recommended: Which Credit Bureau Is Used Most?

What Is a Good Credit Score?

Lenders most often use FICO® Score, but the credit bureaus introduced the VantageScore® in 2006 to provide a score that was more consistent among the three credit agencies.

This is how the FICO Score 8 and the latest VantageScore models break down:

People with high scores typically have access to higher lines of credit and lower interest rates. Those with low credit scores may not be approved for certain credit cards and loans. And if approved for, say, a mortgage, they will usually pay a much higher mortgage interest rate.

(That said, a conventional mortgage lender is free to set its own requirements when it comes to credit scores. Government-backed loans still have credit score requirements, even if they’re lower.)

How to Check a Credit Report

Under federal law, consumers are entitled to one free copy of their credit report every 12 months from each of the main credit reporting agencies, TransUnion, Experian, and Equifax.

AnnualCreditReport.com is the only authorized website for free credit reports, according to the Federal Trade Commission.

Consumers can also call 1-877-322-8228 and provide their name, address, Social Security number, and date of birth to verify their identity.

If you want to check your credit history more than once a year, you can ask one or all three credit reporting bureaus, for a small charge, for another copy.

Why check your credit report periodically? Mainly:

•   To make sure the information is accurate and up to date before you apply for a car or home loan, buy insurance, or apply for a job.
•   To help guard against identity theft.

Recommended: How To Read A Credit Report

How to Check a Credit Score

The free annual credit reports do not include your credit score — or more accurately, scores. Your credit score from each of the credit bureaus will vary based on the information each has. Lenders also use slightly different credit scores for different kinds of loans.

How to get your credit scores then? Here are a few ways:

•   Buy a score directly from the credit reporting companies or from myfico.com.
•   Look at a loan statement or a credit card statement. Some financial companies provide credit scores for customers as a perk.
•   Use a credit score checker. Some services give consumers access to their credit scores but charge for premium services like checking a score daily. Other sites may require that you sign up for a credit monitoring service with a monthly subscription fee in order to get your “free” score.
•   Sign up for an app like SoFi, which provides free weekly updates on your credit score and tracks all of your money in one place.

When signing up for credit score checking websites, it’s important for consumers to look at the terms of service and ensure they’re not being charged for premium services they do not want.

Also, it’s best to avoid an “educational” credit score vs. a score that a lender would use. For some, there will be a meaningful difference, the Consumer Financial Protection Bureau says.

What Makes Up a Credit Score?

Learning about what factors make up a credit score can help consumers raise their scores. Main factors that contribute to the score, in order:

•  Payment history (35-40%)
•  Credit utilization
•  Length of credit history
•  New credit
•  Credit mix

In terms of payment history, the most important factor when calculating a score, it’s critical to always repay debts on time.

The credit utilization ratio is the amount that is owed in relation to how much credit a person has overall. Keeping your credit utilization ratio below 30% is commonly recommended.

For the length of the credit history, consumers can increase their score by not closing cards. The longer someone’s credit history is, the better.

Applying for new credit cards and loans that require a hard inquiry into a credit report could bring down a score, even if the result is approval. However, if a score does go down, it shouldn’t take long for it to go back up. It’s multiple hard inquiries on a credit report in a short period that can cause damage. Then again, if someone is shopping for a mortgage or auto loan, both FICO and VantageScore account for multiple hard inquiries in a grace period of 14 to 45 days.

Credit mix refers to credit cards, student loans, auto loans, personal loans, and mortgages. By having a mix, consumers show that they can manage all kinds of debt.

Recommended: What Credit Score is Needed to Buy a Car

Why Credit Scores Matter

Having a high score can help consumers in a number of scenarios.

They will save money, and potentially a great deal of money if they gain access to lower interest rates.

The higher a score is, the more credit someone will be able to access as well.

Consumers can reach their financial goals quicker and utilize better products. For example, they may get approved for a credit card that offers perks like bonus travel rewards or a high cash-back rewards rate. They might also be able to use a card with a 0% introductory APR or 0% balance transfer rate for a certain period.

People with a high score may be able to rent a better apartment or home since landlords will check prospective tenants’ credit.

They may gain access to better car insurance rates and be able to avoid paying deposits to utility companies and cellphone providers.

Improving a credit score could take time, but it’s worth it because in the long run, consumers will save money and potentially reach their financial goals that much faster.

Recommended: Should I Sell My House Now or Wait

The Takeaway

How often does your credit score update? All the time, really, but once a month is a good barometer. You can order a free credit report every year, or you can see updates in your credit score for free or for a fee.

SoFi’s money-tracking tool offers a host of benefits at no charge:

•  Get weekly updates on your credit score.
•  See changes to key factors contributing to your credit score.
•  Link your checking, savings, investment, and retirement accounts as well as credit cards, student loans, and mortgages. Manually add an account or asset to see your entire net worth.

*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.

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.

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 .

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

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.

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

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

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Every consumer has multiple credit scores. Why on earth is that? Because the major credit bureaus — Experian, Equifax, and TransUnion — may have slightly different credit information on any one person, and credit scoring models vary.

Credit scores are an important financial metric to keep track of throughout the year. The three-digit number can help people qualify for everything from mortgages to student loans and apartment rentals.

Here’s why credit scores vary and how to keep track of each.

What Is a Credit Score?

A credit score is a three-digit number assigned to each consumer that businesses use to measure the risk of lending to that person. It’s not the only thing lenders consider, but it is one of the most important metrics, if not the most important.

Your credit score is based on a bunch of factors, including if you typically pay your bills on time, what your debt is relative to your income, how long you’ve carried credit, how many loans or lines of credit you have at once, and if you have ever had a negative financial event, including bankruptcy.

Recommended: What Is Considered a Bad Credit Score?

Credit Scoring Models Vary

Though there are a number of credit scoring models out there, the majority of lenders use either FICO® or VantageScore.® Both determine a person’s credit score using the factors above, including history of borrowing, repayment history, and how much of the consumer’s credit they are currently using (known as a utilization rate).

Though both use the same factors, each one uses its own formula to weigh the worth of each factor. For example, a person’s credit history may be more important in one model than the other.

Based on the information gathered, the scoring models assign each consumer a three-digit number, which denotes that person’s lending risk compared to others.

To complicate matters, there are often multiple versions of each scoring model available from its developer at any given time. And adoption rates for updated versions can be low, meaning some lenders may be using older models that calculate a person’s score differently than an updated version. But for now, the FICO scoring model (known as FICO 8) breaks down as follows:

•   Payment history: 35%

•   Amounts owed: 30%

•   Length of credit history: 15%

•   Credit mix: 10%

•   New credit: 10%

Scoring Ranges Vary, Too

Both FICO and VantageScore calculate credit scores in a range between 300 to 850.

VantageScore 3.0 and FICO 8 are the most used scoring models and frequently mirror each other, so if your FICO number is high then your VantageScore will likely be high as well.

However, it’s important to note that the two pull the same data but weigh that individual data differently, putting greater importance on some aspects of a person’s credit history and usage than others.

While all creditors and lenders have their own standards, here are the FICO and VantageScore credit score categories:

FICO:

•   Exceptional: 800 to 850

•   Very good: 740 to 799

•   Good: 670 to 739

•   Fair: 580 to 669

•   Very poor: 300 to 579

VantageScore:

•   Excellent: 781 to 850

•   Good: 661 to 780

•   Fair: 601 to 660

•   Poor: 500 to 600

•   Very poor: 300 to 499

To put it all into perspective, in 2022, the average FICO credit score hit 714. Minnesotans reigned supreme for the 11th straight year with an average of 742.

Report Data Can Differ From Bureau to Bureau

Each of the credit bureaus collects its own data independently, and some lenders may only report data to one or two of the credit bureaus rather than all three.

To add to the complexity, the bureaus usually do not share information with one another, so none can really promise to show a consumer’s total financial picture.

Say Joanna goes into collection for her car loan, but the lender only reports this information to Experian. That means it will likely only appear on and affect her Experian credit report and may not affect her TransUnion or Equifax report. Thus her Experian report could be lower than her other two credit reports.

Scores Can Change Depending on the Lender

Lenders typically build their own relationships over time with at least one of the credit bureaus. This means they may only report information to the credit agencies they have relationships with.

Before applying for a line of credit, a car, home or student loan, or any other credit, it may be prudent to ask the lender which agencies they share information with and check in with those to see where you stand.

How Often Should You Check Your Credit?

Here’s the good news: Checking your credit won’t hurt your credit score, so go ahead and keep an eye on it. The bad news? The number a person sees when checking their score for free likely won’t match the one any lenders do.

The report a consumer has access to is a simple free report, lacking detail. But again, that’s OK, because it will show any errors or possible identity theft, which can be corrected if caught early enough.

Anyone can order a copy of their credit report from all three reporting agencies once a year for free at AnnualCreditReport.com . The report breaks down a person’s credit history but does not give a score.

However, again, this is the time to look for any mistakes and amend them ASAP. Consumers who do see an error can dispute it with the credit reporting agency and the company that holds the account.

It’s also a good idea for people to periodically check their credit to ensure it’s on the up and up.

Those interested in improving their credit scores to potentially get a better rate on loans should pay all their bills on time, limit their credit utilization ratio, and pay down existing debt.

The Takeaway

An individual’s credit scores differ for a variety of reasons. It might be a good idea to ask lenders which agencies they share information with. It’s always a good idea to periodically check your credit report to make sure everything’s kosher, to pay bills on time, and to keep credit utilization low.

Know what’s cooler than keeping track of your credit score? Keeping track of your credit score and finances at once. If you’re on the market for a money tracker tool that will let you do both, SoFi may be just the thing.

SoFi tracks all of your money in one app — at no cost. And SoFi members can work one-on-one with a financial advisor at no charge.

*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.

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.

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 .

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

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, LLC and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
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.

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.

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