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Money affirmations are phrases you repeat aloud or write down to help promote positive thinking and good financial habits. Some people find these mantras to be a helpful tool in reducing money stress. That can be a good thing: In one 2024 survey, 88% of respondents said they were experiencing financial stress, with 65% noting that money was their single biggest source of worry.

Here, learn about what money affirmations are and how you might find them useful.

What Are Money Affirmations?

Affirmations about money are positive statements about personal finances, from the dollars that pass through your hands (or are growing in your savings account) daily to long-term goals. Some people value these as being a step towards visualizing and achieving financial success. Some points to know:

•   An affirmation can be as simple as “My finances will get better.” That can be a motivating and calming message if, say, you are a recent graduate who is struggling to find a job. Looking on the bright side in this way can encourage a positive attitude as you learn how to become financially independent.

•   Fans of finance affirmations say that repeating them can help you believe in and actualize (or manifest) them. By keeping such thoughts top of mind, you might avoid impulsive or unwise money decisions, such as splurging on a vacation when it isn’t in your budget. 

That said, others may not believe in money affirmations and question if there’s proof that this kind of positive thinking works. It’s a very personal decision whether to implement these affirmations or not.

Recommended: Personal Finance Basics for Beginners

What Is the Law of Attraction?

When exploring money affirmations (or any kind of affirmation, for that matter), you may hear the phrase “law of attraction” used. This principle says that by focusing on what you want to attract into your life, you can help yourself actually attain those goals. To put it another way, by envisioning what you want, you can guide your thoughts and behaviors to achieve that vs. dwelling on what you don’t have. 

For instance, if you want to retire by age 50, you would push away negative thoughts of “I’ll never have enough money to do that.” Instead, you might regularly conjure up the image of leaving your job to pursue your passions at age 50 and say, “I am on a path to save enough money to retire early.” That could perhaps help you pass up impulse buys and instead save money to help you realize your dream. That can be a valuable step on the path to financial freedom.

25 Money Affirmations

If you want to give affirmations about money a try, here are 25 examples you can try out (whether you say them aloud, internally, or write them down) to hopefully build a more positive approach to your finances.

1.      I control money; money doesn’t control me.

2.      I can become financially free.

3.      I have the power to be financially successful.

4.      My income will exceed my expenses.

5.      My hard work will bring in more money.

6.      I am worthy of making more money.

7.      I am a magnet for prosperity, and it flows toward me effortlessly.

8.      I deserve the money coming to me.

9.      I have more than enough money.

10.      My finances will get better.

11.      I accept financial success.

12.      I will achieve my financial goals.

13.      I deserve financial success and happiness.

14.      I will use the money I earn for good.

15.      I am wise with my money.

16.      I can make smart financial decisions.

17.      I have the ability to overcome reckless spending.

18.      I can make my dreams a reality.

19.      My future self will thank me for being wise with money.

20.      Having wealth is integral for life.

21.      I can achieve my financial goals and more.

22.      Debt will not stop me from reaching my financial goals.

23.      Saving money is a challenge I can accomplish.

24.      My investments will pay off.

Do Money Affirmations Actually Work?

There’s no guarantee that if you repeat money affirmations, your financial well-being will improve. No matter what you see online, read in books, or watch on YouTube, no one knows 100% whether money affirmations, even if repeated 100 times, will truly improve finances and build wealth. 

That said, proponents believe in them, so whether to use money affirmations is your call. One note in favor of money affirmations: They might help you focus on the positive and alleviate some money stress, which can be a good thing. 

One recent survey found that almost half of respondents (47%) said money negatively impacted their mental health, and that included causing stress. Reinforcing positive self-talk with money mantras might relieve worry and result in a calmer, steadier, more productive financial mindset. 

Money Affirmations vs Money Mantras

The phrases “money affirmations” and “money mantras” are typically used interchangeably. They are also sometimes called “abundance affirmations” or “wealth affirmations.” Occasionally, a money affirmation may be distinguished as being a sentence vs. a money mantra being just a phrase (like “less spending, more success”). 

Whatever you call them, money affirmations for financial abundance may be a way to boost your positivity when it comes to managing your cash. The words are meant to help you stay the course in reaching your financial goals.

Recommended: Tips for Overcoming Bad Financial Decisions

How to Choose and Write Your Money Affirmations

To choose and write your money affirmations, first identify negative beliefs about money that may be holding you back. Perhaps you see yourself as an impulse shopper, incapable of resisting sales or making frugal decisions. Maybe you’ll decide that “I am wise with my money” would be a good affirmation to try because it could counteract negative money self-talk.

You can also write a money mantra based on your personal challenges to state your goals as if it is already true. For example:

•   If your checking account is often lower than you’d like and you’re tightening your budget, the negative statement, “I will not order food delivery ever this year” may be discouraging and hard to live up to. 

•   A better affirmation might be a positive phrase, like, “I will budget well and spend my grocery money mindfully.” That way, when you do order the occasional pizza, you will likely have planned for it and can feel good. 

Your money mantra can help you focus on the positive.

How Do You Use Money Affirmations?

Those who believe in affirmations suggest using them in whichever way feels comfortable and meaningful. 

•   You might say them aloud or to yourself. 

•   You could jot them on a sticky note to post on your computer, mirror, fridge, and/or car dashboard. 

•   Some people like to put the words on their phone lock screen.

•   Others may prefer to write their phases (whether that’s “I am working to increase my bank account” or “Abundance is flowing my way”) in a notebook or journal.

Saying or writing your money affirmation daily can be a good practice, but it’s up to you to set the cadence that works best for you. The goal is to repeat the affirmations often enough to impact your outlook, enabling you to visualize financial security and move towards it.

Recommended: 7 Tips for Improving Your Financial Health

The Takeaway

Money affirmations, aka money mantras or abundance affirmations, are sayings that people can repeat to replace a negative money mindset with a positive one. They can express a financial goal or good habit. Some believe that saying or writing these words can help banish negative self-talk and instead create an optimistic outlook that can encourage good money management and financial wellness.

Another aspect of financial health is choosing the right banking partner. 

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

How do I choose the best money affirmation for me?

Choosing the right money affirmation is a very personal decision. You may want to opt for (or write) a money affirmation that counteracts negative thoughts. So if you often tell yourself, “I will always be in debt,” a good money affirmation might be, “Every day, I am moving towards eliminating debt.” 

What is the affirmation number for money?

Each person can decide if they believe in affirmation numbers (or “lucky numbers”) for money and, if so, what it might be. Some think the number eight is associated with building wealth (say, in numerology), though it’s unlikely to find scientific proof of such a connection.

How often do I need to say my money affirmations?

Money (or wealth) affirmation fans say you should repeat the phrases as often as you need to so that you believe in them and they can help guide your financial habits. That could mean saying your money mantra daily perhaps. If you choose to write down your money mantras, the general advice is to post your affirmations where you will see and read them often. A couple of good spots might be on the refrigerator or mirror. 

When is a good time to repeat money affirmations?

An ideal time to repeat money affirmations can be when you’re feeling overwhelmed or stressed about your finances. For instance, if your credit card payment is late, rather than sinking back into negative self-talk, you could repeat your money mantra. Doing so might help you accept your current burden and refocus on your goals. Other people may find they like to repeat money mantras in the morning, to encourage a positive money mindset all day.

Photo credit: iStock/s-cphoto

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

SOBNK-Q324-090

Marriage is a wonderful but challenging institution. It is supposed to be built on trust and honesty, but infidelity does occur — and it can be devastating. That holds true for financial infidelity, too: Maybe one partner racks up a major amount of debt without disclosing it, or each spouse is keeping a secret account “just in case.” When this kind of behavior takes root and is then exposed, it can do serious harm to a union.

But if financial infidelity in marriage occurs, it doesn’t necessarily mean the partnership is on the rocks. In fact, with the right approach, a marriage can emerge even stronger. Read on to find out:

•   What is financial infidelity?

•   What are the warning signs of financial infidelity?

•   How can you prevent financial infidelity?

•   How can you recover from financial infidelity?

What Is Financial Infidelity?

Financial infidelity occurs when one person in a relationship hides, manipulates, or falsifies information about their financial position, bank accounts, or transactions. The problem can be unintentional to start with but then grow into a significant problem with severe detriment to the relationship.

For example, one spouse may offer to take care of the bills and the finances, and the other spouse trusts them to be responsible. However, the spouse who pays the bills may begin to spend excessively unbeknownst to their partner. They might spend on clothing, stocks, expensive meals out, or any other expense. The result of these splurges could do harm to both partners’ finances, even though only one is aware of it and responsible for it.

What Are Some Common Examples of Financial Infidelity?

Financial infidelity can occur in a variety of situations; whether both spouses work or one doesn’t, or whether they have joint vs. separate bank accounts. There’s no one main type.

Here’s a closer look at the different forms of financial infidelity that can occur in a marriage.

Spending Money in Secret

As mentioned above, if one partner splurges and keeps that secret, it can be a form of financial infidelity. This can impact a couple’s shared goals, such as saving for a down payment on a house. Some couples may establish how much they can each spend without having to consult the other. This can help keep the finances fair and avoid this kind of secret spending.

Hiding Debt From One Another

Not disclosing debt to a partner is dishonest and can negatively impact both spouses. For joint bank accounts and credit cards, both partners are equally liable for any debt. For this reason, it’s wise if couples discuss their financial situation early in their relationship, before they enter into a financial partnership to avoid any surprises later on.

Hiding Accounts From One Another

Some people may hide bank accounts from their partners, perhaps considering it their secret “mad money” on the side. While spouses don’t need to know everything about each other’s lives, being transparent about finances helps ensure you’re on the same page, working toward the same goals.

Lying About Income

A spouse might disclose that their income is lower than it really is. They may then use the difference for their own purposes, rather than for shared goals.

Why Do People Commit Financial Infidelity?

There is no one reason why people lie about finances in a marriage, but many do. According to a December 2023 Bankrate survey, 42 percent of adults who are married or living with a partner have kept a financial secret from their mate. Here are three possible explanations.

•   Embarrassment. An individual who has financial difficulties might be ashamed to disclose their financial circumstances when they marry or live with another person. So rather than confess, they hide their debt, say, or a salary that’s lower than they said it was.

•   Revenge. In an unhappy relationship, one partner may tap into shared wealth to exact revenge or punish the other. This behavior, known as “revenge spending,” can increase debt (particularly credit card debt) and put a couple’s finances in a precarious situation.

•   Emotional issues. One spouse may have an addiction or psychological problem that causes them to act irresponsibly with money. For example, they might have compulsive buying behavior (CBB; which some people refer to as a shopping addiction), bipolar disorder, substance abuse, or a gambling addiction.

Recommended: Common Money Fights 

What Are the Effects of Financial Infidelity?

The most immediate effect of discovering financial infidelity is probably loss of trust. The longer-term consequences can be financial difficulties and, ultimately, divorce. Here’s a closer look:

•   Loss of Trust. When one person in a relationship or marriage withholds, hides, or misconstrues information, they abuse the trust that the person places in them.

•   Financial Difficulties. If one partner has hidden their debt or another financial minefield from the other, it can cause problems for their shared finances. They may both experience cash flow issues and have trouble paying bills and saving for the future.

•   Lower Credit Score. Acting irresponsibly with money, failing to pay bills, or falling deeper into debt will likely cause a lower credit score for the parties involved.

•   Divorce. The problems that result from financial infidelity can lead to separation and divorce.

Tips for How to Deal with Financial Infidelity

Can a marriage survive these kinds of money problems? In all likelihood, yes, provided both partners are committed to moving ahead together. Learning how to work together, and spotting early signs of trouble can help.

Watch for Signs

Look out for signs that your spouse’s financial management is suspect. For example, are they unwilling to discuss financial issues? Have you noticed a sudden change in your spouse’s spending? Do you suspect your spouse is hiding information about their finances or lying about money?

If you cannot ask questions and get an honest answer about your marital finances, there is a problem to address.

Keep Tabs on Your Finances

Keeping an eye on your finances will help you recognize problems and tackle them immediately. Do you notice that your spouse isn’t contributing to your retirement account anymore? Are you falling behind on bills and struggling to catch up? These are signals that something has changed.

Get Involved

If one spouse has been holding the purse strings, it’s probably time for that to change. A marriage is an equal partnership, and both partners should play a role in managing the finances. It’s not fair for one partner to bear all the financial responsibility and decision-making. Getting involved is also a good way to stay informed about your shared finances.

If financial infidelity has occurred, you and your partner have options. You might work it out between the two of you, or you might consult a couples counselor, try financial planning, or see a financial therapist (which combines interpersonal and money advice).

Tips for Preventing Financial Infidelity

There are steps you can take to help avoid financial infidelity in a marriage and repair missteps. A good place to start is for both partners to have a clear picture of each other’s financial position and their spending habits from the outset. But it’s never too late to sit down (with or without a financial advisor) and develop a plan for managing finances and building wealth. Here, some tactics to try:

Have Frequent Meetings

Agree to meet with your spouse regularly to discuss finances. It could be weekly at first as you get into a rhythm, sort out bank accounts and bills, develop a plan and commit to money goals, and create a budget. But once you are on sound footing with a system, the meetings could be less frequent, perhaps monthly.

Share Responsibilities of Finances

Use the meetings to hold each other accountable. Discuss how decisions should be made on purchases. How are you going to save toward retirement? Decide who will be responsible for what when it comes to the finances, but ensure that both of you are involved.

Communicate All Financials

Review everything — mortgage or rent payments, joint bank accounts, individual bank accounts, credit card payments, car loans, insurance, savings and investments, liens, and credit scores. If both of you have a clear picture of your financial situation, it’s easier to come up with ideas for cutting costs or making financial decisions.

Create a Joint Budget

Try budgeting as a couple rather than having two separate budgets. Once you have a basic spending and saving plan in place, do your best to stick to it — and be honest when you don’t. A household budget is unlikely to do its job if members of the household overspend or hide information. If spouses can start working together toward a common goal, trust can be established or, after an instance of financial infidelity, rebuilt.

Recommended: Is a Joint Account Right for You?

Address Any Issues

As the two of you go over the finances, issues are bound to arise. And money can be a very charged topic. Do your best to discuss things calmly. If one person gets defensive, consider taking a break and resuming the meeting at a later time. If you are guilty of financial infidelity, admit it, apologize, and use this as an opportunity to get back on track.

Can a marriage survive financial infidelity? Yes, it can. But each spouse must be open to working through the problem, repairing the damage, adopting a forgiving attitude, and moving forward with transparency and trust.

The Takeaway

Financial matters can be a leading cause of divorce. While partners do have the right and the need for some privacy, financial infidelity is a serious issue. If one partner is hiding money, debt, or income information from the other, it can feel like betrayal and can negatively impact both spouse’s financial futures.

Financial infidelity does not, however, have to mark the end of a marriage. It can be the start of a stronger commitment to work together toward achieving your shared financial goals.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Can marriages survive financial infidelity?

A marriage can survive financial infidelity if both partners are committed to rebuilding the trust that has been lost. This requires accepting responsibility. Going forward, both partners need to develop a plan to communicate openly and regularly about finances and to work toward mutual goals. Lastly, both should play a part in managing finances.

Is financial infidelity a leading cause of divorce?

Money is often cited as one of the leading causes of stress in a marriage and one that can lead to divorce. Money touches every aspect of our lives and dictates how we live, so it is an extremely sensitive and personal topic, which can trigger major issues in a relationship.

Is financial infidelity the same as cheating?

Financial infidelity can have the same impact as an affair; both destroy trust in a relationship. Whether one or the other is worse depends on your point of view. Both can be overcome, and trust can be rebuilt with commitment and the right approach.

Photo credit: iStock/Stadtratte

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

SOBNK-Q324-054

Although Experian is the largest credit bureau in the U.S., TransUnion and Equifax are widely considered to be just as accurate and important. When it comes to credit scoring models, however, there is a clear winner: FICO® Score is used in roughly 90% of lending decisions.

It’s crucial that consumers understand at least the basics of how credit reports work and credit scores are calculated. After all, a high credit score can get borrowers the best deals on loans and credit cards, potentially saving them many thousands of dollars over a lifetime. Read on to learn how you can build a credit history that lenders will swoon over.

Will My Credit Score Be the Same Across the Board?

In a word, no. Credit scores vary depending on the company providing the score, the data on which the score is based, and the method used to calculate the score.

In an ideal world, all credit bureaus would have the same information. But lenders don’t always report information to every bureau, so there will be variations in your credit file — usually minor — from bureau to bureau.

How Are Credit Scores Calculated?

Regardless of the scoring model used, most credit scores are calculated with a similar set of information. This includes information like how many and what types of accounts you have, the length of your credit history, your payment history, and your credit utilization ratio.

Lenders like to see evidence that you have successfully managed a variety of accounts in the past. This can include credit cards, student loans, personal loans, and mortgages, in addition to other types of debts. As a result, scoring models sometimes include the number of accounts you have and will also note the different types of accounts.

The length of your credit history shows lenders that you have a record of repaying your debts responsibly over time. Scoring models will factor in how recently your accounts have been opened.

Your payment history allows lenders to see how you’ve repaid your debts in the past. It will show details on late or missed payments and any bankruptcies. Scoring models typically look at how late your payments were, the amount you owed, and how often you missed payments.

Each scoring model will place a different weight of importance on each factor. As an example, here are the weighting figures for your base FICO Score:

Recommended: Can You Get a First-Time Personal Loan With No Credit History?

Which Credit Score Matters the Most?

As noted earlier, the credit score that matters the most is generally your FICO Score, since it’s used in the vast majority of lending decisions. There’s really no way to determine which credit score is most accurate, though, because they all use slightly different scoring models to calculate those precious three digits.

Even within your FICO Score, there’s variation. The most widely used FICO Score is FICO 8 (though the company has released a FICO 9 and FICO 10). This differs from previous versions in key ways:

•   Credit utilization is given greater weight.

•   Isolated late payments are given less weight than multiple late payments.

•   Accounts gone to collections for amounts less than $100 are ignored.

In addition, FICO can tweak their algorithm depending on the type of loan you’re applying for. If you’re looking to get an auto loan, your industry-specific FICO Score may emphasize your payment history with auto loans and deemphasize your credit card history.

As you can see, slight differences in method can result in different credit scores even given the same source data.

What Are the Largest Three Credit Bureaus?

The three major credit bureaus are Experian, Equifax, and TransUnion. These bureaus collect and maintain consumer credit information and then resell it to other businesses in the form of a credit report. While the credit bureaus operate outside of the federal government, the Fair Credit Reporting Act allows the government to oversee and regulate the industry.

It’s worth noting that not all lenders report to the credit bureaus. You may have seen advertisements for loans with no credit check. Lenders that offer this type of loan won’t check your credit, and typically don’t report your new loan or your loan payments to the credit bureaus. Because these loans are riskier for the lender, they can justify high interest rates (possibly as much as 1000%) and faster repayment schedules. Consumers should beware of predatory lenders, especially risky payday loans and other fast-cash loans.

How To Find Your Credit Score

Your credit history and score play a large role in your personal finances. They can impact everything from taking out a mortgage or renting an apartment to buying a car and refinancing your student loans. Having an idea of what your credit score is can help you determine what your loan may look like and how much you can afford to borrow.

You can request a free copy of your credit report from each of the major credit bureaus at AnnualCreditReport.com. Typically, your credit reports will not contain your credit scores. However, you may be able to access your FICO Score for free through your bank or credit card company (it may be on your statement or you may be able to see it by logging into your account online). You can also purchase credit scores from one of the three major credit bureaus or FICO. Some credit score services offer free scores to any user, while others only offer sores to customers who pay for credit monitoring services.

Be careful when you pull your free credit reports not to accidentally opt in to an add-on service that will charge you for special tools or credit monitoring.

Building Strong Credit

Credit scores aren’t set in stone. They evolve constantly as new financial information comes in, both positive and negative. Here are some strategic steps to consider for those trying to build a positive credit history:

Make Payments on Time

This includes credit card payments, rent, loans, utilities, and any other monthly bills or payments. Lenders often consider past behavior to be a predictor of future behavior and want to avoid lending money to individuals with a history of missed payments.

Pay Down Revolving Credit

Revolving credit refers to credit cards and credit lines, such as home equity lines of credit (HELOCs). Lenders generally like to see that you use no more than 30% of the total revolving credit available to you. It’s an indicator that you are able to effectively manage your credit.

One popular way to pay down high-interest revolving debt, is to use a debt consolidation loan. These are unsecured personal loans that typically offer lower fixed interest rates compared to credit cards. Getting approved for a personal loan is fairly straightforward, and you can usually shop around for the best personal loan interest rates without it affecting your credit score.

Be Selective About New Accounts

Opening a new credit card or applying for a loan generally involves a hard credit inquiry. Too many hard credit inquiries can have a negative impact on the applicant’s score. So while having a diverse mix of credit is a good thing in the eyes of lenders, opening a number of new accounts at once may be counter-productive.

The Takeaway

All three major credit bureaus — Experian, Equifax, and TransUnion — are more alike than they are different, and any variations in their data are usually minor. Equifax is the largest credit bureau in the U.S., but TransUnion and Equifax are thought to be just as important. When it comes to credit scores, however, lenders prefer FICO Score by a wide margin.

SoFi Personal Loans

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

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SOPL-Q324-024

A “secured” personal loan is backed by an asset, called collateral, such as a home or car. An unsecured loan, on the other hand, is not collateralized, which means that no underlying asset is necessary to qualify for financing. Whether someone should pursue a secured or unsecured loan depends on a number of factors, such as their credit score and whether they have assets to put up as collateral.

If you’re planning to take out a loan, it’s important to do your research and find one that best fits your needs and financial situation. Learn more about when someone can and should take out a collateral loan.

Why Secured Loans Require Collateral

With a secured personal loan, a lender is typically able to offer a larger amount, lower interest rate, and better terms. That’s because if the loan isn’t repaid as agreed, the lender can take possession of the collateral. This is not the case with an unsecured personal loan.

Collateral allows secured personal loans to be offered to a wider range of consumers, including those who are considered higher risk. The reason is that the lender’s risk is offset by the borrower’s assets.

Fixed Rate vs Variable Rate Loans

There are other types of personal loans beyond secured versus unsecured. One important distinction is whether a loan has a fixed or variable interest rate. A fixed rate is just as it sounds: The interest rate stays fixed throughout the duration of the loan’s payback period, which means that each payment will be the same.

The interest on a variable-rate loan, on the other hand, fluctuates over time. These loans are tied to a benchmark interest rate — often the prime rate — that changes periodically. Usually, variable rates start lower than fixed rates because they come with the long-term risk that rates could increase over time.

Installment Loans vs Revolving Credit

A personal loan is a type of installment loan. These loans are issued for a specific amount, to be repaid in equal installments over the duration of the loan. Installment loans are generally good for borrowers who need a one-time lump sum.

An installment loan can be either secured or unsecured. A mortgage — another type of installment loan — is typically a secured loan that uses your house as collateral.

Revolving credit, on the other hand, allows a borrower to spend up to a designated amount on an as-needed basis. Credit cards and lines of credit are both forms of revolving credit. If you have a $10,000 home equity line of credit (HELOC), for example, you can spend up to that limit using what is similar to a credit card.

Lines of credit are generally recommended for recurring expenses, such as medical bills or home improvements, and also come in secured and unsecured varieties. A HELOC is often secured, using your house as collateral.

What Can Be Used as Collateral on Personal Loans?

Lenders may accept a variety of assets as collateral on a secured personal loan. Some examples include:

House or Other Real Estate

For many people, their largest source of equity (or value) is the home they live in. Even if someone doesn’t own their home outright, it is possible to use their partial equity to obtain a collateral loan.

When a home is used as collateral on a personal loan, the lender can seize the home if the loan is not repaid. Another downside is that the homeowner must supply a lot of paperwork so that the bank can verify the asset. As a result, your approval can be delayed.

Bank or Investment Accounts

Sometimes, borrowers can obtain a secured personal loan by using investment accounts, CDs, or cash accounts as collateral. Every lender will have different collateral requirements for their loans. Using your personal bank account as collateral can be very risky, because it ties the money you use every day directly to your loan.

Recommended: Secured vs Unsecured Personal Loans — What’s the Difference?

Vehicle

A vehicle is typically used as collateral for an auto title loan, though some lenders may consider using a vehicle as backing for other types of secured personal loans. A loan backed by a vehicle can be a better option than a short-term loan, such as a payday loan. However, you run the risk of losing your vehicle if you can’t make your monthly loan payments.

Pros and Cons of Using Collateral on a Personal Loans

Using collateral to secure a personal loan has pros and cons. While it can make it easier to get your personal loan approved by a lender, it’s important to review the loan terms in full before making a borrowing decision. Here are some things to consider:

Pros of Using Collateral

•   It can help your chance of being approved for a personal loan.

•   It can help you get approved for a larger sum, because the lender’s risk is mitigated.

•   It can help you secure a lower interest rate than for an unsecured loan.

Cons of Using Collateral

•   The application process can be more complex and time-consuming, because the lender must verify the asset used as collateral.

•   If the borrower defaults on the loan, the asset being used as collateral can be seized by the lender.

•   Some lenders restrict how borrowers can use the money from a secured personal loan.

Qualifying for a Personal Loan

Common uses for personal loans include paying medical bills, unexpected home or car repairs, and consolidating high-interest credit card debt. With secured and unsecured personal loans, you’ll have to provide the lender with information on your financial standing, including your income, bank statements, and credit score. With most loans, the better your credit history, the better the rates and terms you’ll qualify for.

If you’re considering taking out a loan — any kind of loan — in the near future, it can be helpful to work on building your credit while making sure that your credit history is free from any errors.

Shop around for loans, checking out the offerings at multiple banks, credit unions, and online lenders. Each lender will offer different loan products that have different requirements and terms.

With each prospective loan and lender, make sure you understand all of the terms. This includes the interest rate, whether the rate is fixed or variable, and all additional fees (sometimes called “points”). Ask if there is any prepayment fee that will discourage you from paying back your loan faster than on the established timeline.

The loan that’s right for you will depend on how quickly you need the loan, what it’s for, and your desired payback terms. If you opt for an unsecured loan, it might allow you to expedite this process — and you have the added benefit of not putting your personal assets on the line.

Recommended: Is There a Minimum Credit Score for Getting a Personal Loan?

The Takeaway

Using collateral to secure a personal loan can help borrowers qualify for a lower interest rate, a larger sum of money, or a longer borrowing term. However, if there are any issues with repayment, the asset used as collateral can be seized by the lender.

The right choice for you will depend on your financial situation, including factors like your credit score and history, how much you want to borrow, and what assets you can use as collateral.

Looking for a personal loan that doesn’t require collateral? Check out SoFi Personal Loans, which have competitive rates and no-fee options. Apply for loans from $5K to $100K.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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Labels like prime and subprime help denote loans that are designed for people with different credit scores. Prime loans are built for borrowers with good credit, while subprime loans are designed for those with less-than-perfect credit. While subprime loans can help this group finance big purchases like a home or a car, they also come with potentially significant downsides.

Here are key things to know about prime and subprime loans to help you make better borrowing decisions.

Prime Loan vs Subprime Loan

When you’re shopping for a loan, lenders will consider your credit history to help them determine how much default risk they’d be taking on were they to loan you money.

Your credit score is a three-digit representation of your credit history that lenders use to understand your creditworthiness. While there are different credit scoring models, the FICO® score is one of the most commonly used. Lenders and other institutions may have different rules for which credit scores determine prime vs subprime loans.

For example, Experian, one of the three major credit reporting bureaus, defines a prime loan as requiring a FICO score of 670 to 739. With a score of 740 or above, you’re in super prime territory. Borrowers with a FICO score of 580 to 669 will likely only qualify for subprime loans.

Here are some key differences between the two that borrowers should be aware of.

Interest Rates

Borrowers with lower credit scores are seen as a greater lending risk. To offset some of that risk, lenders may charge higher interest rates on subprime loans than on prime loans.

What’s more, many subprime loans have adjustable interest rates, which may be locked in for a short period of time after which they may readjust on a regular basis, such as every month, quarter, or year. If interest rates are on the rise, this can mean your subprime loan becomes increasingly more expensive.

Down Payments

Again, because subprime borrowers may be at a higher risk of default, lenders may protect themselves by requiring a higher down payment. That way, the borrower has more skin in the game, and their bank doesn’t need to lend as much money.

Loan Amounts

Subprime borrowers may not be able to borrow as much as their prime counterparts.

Higher Fees

Fees, such as late-payment penalties or origination fees, may be higher for subprime borrowers.


💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. One question can save you many dollars.

Repayment Periods

Subprime loans typically carry longer terms than prime loans. That means they take longer to pay back. While a longer term can mean a smaller monthly payment, it also means that you may end up paying more in interest over the life of the loan.

Prime Loan vs Subprime Loan: What Type of Loans Are They?

Prime and subprime options are available for a variety of loan types. For example, different types of personal loans come as prime personal loans or subprime personal loans. When you’re comparing personal loan interest rates, you’ll see that prime loans offer lower rates than subprime. Common uses for personal loans include consolidating debt, paying off medical bills, and home repairs.

You can also apply for prime and subprime mortgages and auto loans. What is considered a prime or subprime score varies depending on the type of loan and the lender.

Recommend: How to Get Approved for a Personal Loan

Prime Loan vs Subprime Loan: How to Get One

By checking your credit score, you can get a pretty good idea of whether you’ll qualify for a prime or subprime loan. That said, as mentioned above, the categories will vary by lender.

The process for applying for a prime or subprime loan is similar.

Get Prepared

Lenders may ask for all sorts of documentation when you apply for a loan, such as recent paystubs, employer contact information, and bank statements. Gather this information ahead of time, so you can move swiftly when researching and applying for loans.

Research Lenders

Banks, credit unions, and online lenders all offer prime and subprime loans. You may want to start with the bank you already have a relationship with, but it’s important to explore other options too. You may even want to approach lenders who specialize in subprime loans.

To shop around for the best possible rate, you may be able to prequalify with several different lenders. This only requires a soft credit inquiry, which won’t impact your credit. That way you can see which lender can offer you the best terms and interest rates. Applying for credit will trigger a hard inquiry on your credit report, which will temporarily lower your credit score.

Consider a Cosigner

If you’re having trouble getting a subprime loan, you may consider a cosigner with better credit, such as a close family member. They will be on the hook for paying off your loan if you miss any payments, so be sure you are both aware of the risk.

Subprime Loan Alternatives

There are alternatives to subprime loans that also carry a fair amount of risk. Some, like credit cards, are legitimate options when used responsibly. Others, like payday loans, should be avoided whenever possible.

Credit Cards

Credit cards allow you to borrow relatively small amounts of money on a revolving basis. If you pay off your credit card bill each month, you will owe no interest. However, if you carry a balance from month to month, you will owe interest, which can compound and send you deeper into debt.


💡 Quick Tip: Swap high-interest debt for a lower-interest loan, and save money on your monthly payments. Find out why SoFi credit card consolidation loans are so popular.

Predatory Loans

Payday loans are a type of predatory loan that usually must be paid off when you receive your next paycheck. These lenders often charge high fees and extremely high interest rates — as high as 400%, or more. If you cannot pay off the loan within the designated period, you may be allowed to roll it over. However, you will be charged a fee again, potentially trapping you in a cycle of debt.

The Takeaway

Subprime loans can be a relatively expensive way to take on debt, especially compared to their prime counterparts. If you can, you may want to wait to improve your credit profile before taking on a subprime loan. You can do this by always paying your bills on time and by paying down debt. That said, in some cases, taking on a subprime loan is unavoidable — you may need a new car now to get you to work, for example — so shop around for the best rates you can get.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Why are subprime loans bad?

Subprime loans are not necessarily bad. However, these loans typically charge higher interest rates and fees than their prime counterparts. Borrowers may also be asked to put down a higher down payment, and they may be able to borrow less.

What is the difference between subprime and nonprime?

Nonprime borrowers have credit scores that are higher than subprime but lower than prime.

What type of loan is a subprime loan?

A variety of loan types may include a subprime category, including mortgages, auto loans, and personal loans. All loans in the subprime category likely have higher interest rates and fees.

Photo credit: iStock/Nikola Stojadinovic

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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