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A statement credit is money that gets credited to your credit card account, reducing the amount you owe. It can be earned through various means, including returns, price adjustments, reward redemptions, or sign-up bonuses. Put simply, it’s the opposite of a charge to your account. It lowers your balance instead of increasing it.

Knowing how you earned that reduction in your debt can help you take advantage of your credit card’s rewards system in the future.

What Is a Statement Credit?

Credit card companies use a statement credit to issue a credit to your accounts, such as cash back or other rewards you have earned. Essentially, you receive money from your card issuer for a specific reason.

Finding documentation of your statement credit varies among credit card companies. Generally, though, you will see it on your monthly statement under transactions or account activity.

If you check your statements online, you’ll probably see the credit appear in green text and contribute to the statement balance.

Regardless of the format, a statement credit has a minus sign in front of the cash amount, thus decreasing your revolving balance.

How to Receive Statement Credits

There are a few ways a statement credit might apply to your account. A common reason is through a return.

If you have ever returned an item you bought using your credit card, the retailer will probably refund the money borrowed from your card issuer. You’ll receive a statement credit that matches the price of the returned item.

Other than returns, ways you may receive a statement credit include:

•   Shopping benefits. Some card providers offer discounts or statement credits for shopping with specific merchants.

•   Travel credits. Card providers may offer annual statement credits to pay for eligible travel expenses like a luggage fee or plane tickets.

•   Rewards. Among the different types of credit cards are rewards options. Card providers that offer cash back, points, or miles may let you redeem them in the form of a statement credit.

Statement Credits vs. Cash Back

Your credit card company gives you options when you sign up for a rewards credit card. One choice may be cash back or statement credits.

Cash back sounds simple enough, but it doesn’t always mean you’ll get direct money. Instead, your issuer may offer a cash reward in the form of a credit put on your account. Occasionally, they may send you a physical check or deposit the money in your checking account.

You earn cash back as a reward for using the credit card. It is a percentage of the money spent on purchases using the card.

In comparison, a statement credit reduces your credit card balance. Carrying a high balance between periods could lead to a high credit utilization ratio, which shows the amount of available credit a person has. That can result in a lower credit score over time.

Are Statement Credits Taxable?

The type of credit or reward you receive determines whether it’s taxable. If the credit card holder spent money to earn the reward, they usually don’t have to pay taxes on it. If they receive the credit without any spending, the reward may be taxable.

For example, an individual receives money back on her account after returning a chair she purchased online. That credited amount would not be taxable.

Cashback earners who engage in programs for points, like travel rewards, also generally avoid taxation.

The primary instance where cardholders face a taxable reward is with sign-up bonuses.

If they did not have to purchase anything to earn the bonus, it’s probably taxable. The taxation may apply regardless of how the credit card company issues the bonus, whether it’s in cash or airline miles.

Using Your Rewards Wisely

Credit cards have their perks, but it’s smart to use the credit card responsibly and the rewards wisely.

Consider using statement credits put on your account to lessen your balance (but keep in mind that statement credits aren’t usually considered the same as making a payment to your account, even though both lower the amount owed). Or look into the various rewards your card issuer offers.

When shopping for a new card, you may want to look closely at the points, cash back, or miles involved. For instance, how are the rewards offered, how are they redeemed, is it better for you to get a card with consistent points across all purchases or increased rewards in certain areas?

Think through which rewards best fit your lifestyle and interests. If you want to see the world, you may want to get a card that optimizes travel benefits. Trying to pay down your debt? Cash back applied to your balance could be the way to go.

Recommended: Understanding Purchase Interest Charges on Credit Cards

The Takeaway

A statement credit is a reduction in a credit card balance. It could result from an item you returned or from the redemption of travel points, cash back, or other rewards. It’s important to note that some kinds of statement credits, such as a sign-up bonus, could be taxable.

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

FAQ

How do credit card statement credits work?

Statement credits are a way that you get money credited back to your account. They can lower your balance and may reflect an item that was returned, cash back or other credit card rewards, or the application of a sign-up bonus.

What does an offer for a $400 statement credit mean?

Typically, once you spend the amount required to qualify for a statement credit, the amount is tallied against your balance. So if your balance was was $1,000 and you had a $400 credit, that means you’d now have a balance of $600. Note, though, that this usually doesn’t count as a payment to your account. You should still go ahead and pay at least the minimum owed.

Is a statement balance what you owe?

Your credit card statement balance shows what you owe at the end of a given billing cycle, which is typically between 28 and 31 days long. The balance reflects purchases, fees, interest, and any unpaid balances, with payments or credits deducted, too.

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

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

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

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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

Large trees, even landmark ones, sometimes have to be removed when they’re dead, dying, or growing too close to other structures. How much it costs to cut down a tree varies depending on where you live, the tree’s height and diameter, how accessible it is, and other factors. On average, you can expect to pay $750 to remove a tree.

While tree removal is costly, it’s often better to spend the money up front rather than risk a tree falling and causing injury or damage to nearby property. Keep reading to find out what tree removal costs and the complications that may drive up your price.

Average Tree Removal Cost

Removing a tree can range anywhere from $150 to $2,000, with the average landing at $750, according to Angi. Shorter trees will come in on the low end of the range, while larger trees can run between $800 to $2,000. A tall, hard-to-access tree can cost even more — as much as $10,000.

If you have multiple trees to remove, the costs can really add up. While many people throw it on a credit card, that can be an expensive solution. If you need financing, you might consider getting a home equity line of credit (HELOC), which allows you to borrow against the equity in your home as you need it.

Another option is to take out a personal loan for home improvement. These loans don’t require equity in your home or collateral, and many lenders offer same- or next-day funding. However, rates can be higher than home equity options.

Cost of Tree Removal by Type

A tree’s size generally impacts cost more than type. However, some species of trees are not as dense or as compact as others, making them easier (and less expensive) to remove. Determining the type of tree you need to have removed can also give you an idea of its height at maturity and provide insight into potential costs. Here’s a look at costs based on tree type.

Recommended: Typical Landscaping Costs

Factors That Affect Tree Removal Cost

The cost of tree removal typically includes cutting down the tree, cutting it into pieces, and removing the debris. How complicated and time-consuming this process will be determines the price.

To find the right contractor, you may want to call multiple tree removal services and compare quotes on the project. Make sure to ask what exactly their price includes and what extra services or fees may come up.

Here’s a look at some key factors that can affect your tree removal quote.

Size of the Tree

Generally the larger the tree, the higher the cost. Price can make a particularly big jump when a tree exceeds 80 feet tall. At this point, the removal company will need a crane to access the highest branches, along with additional staff to work the machine. This can add as much as $500 to the job.

Here’s a look at tree removal price by tree size:

A Tree That Has Already Fallen

Generally, a fallen tree will cost considerably less to remove than one that’s still standing, since the team doesn’t need to do any climbing or careful cutting. It’s just a matter of cutting it up, then removing the debris. You can expect to pay just $75 to $150 to remove a fallen tree.

That said, you generally don’t want to let a dying tree get to the point of falling, as it can do damage to nearby property and/or harm someone standing nearby.

Accessibility

If the tree you need to have removed is in a hard-to-reach or unsafe area, it can make the job harder for the team. This can add 25% to 50% to the total cost of removal. For example, a tree that has heavy branches near your home or is close to the local power lines takes more time and care to remove. A tree that is hard to get to due to obstacles can also be more costly. If possible, consider taking down fences or other structures in the way to reduce costs.

Number of Trees Needing Removal

The more trees you need to have removed, generally the higher the cost. However, you’ll typically save on the cost per tree, since the workers and equipment are already on your property. When multiple trees need to come down, some companies will charge by the acre instead of by specific tree count. Depending on how many trees cover the area, this can cost anywhere from $500 to $6,000 per acre.

Emergency Tree Removal

If a storm has caused a tree to lean perilously close to your home, you’ll want to bring in a tree removal company as soon as possible. Emergency tree removal generally costs more than standard tree removal, particularly after a storm, when these services are in high demand. A particularly urgent tree situation could run as high as $5,000.

Your homeowners insurance may cover the cost of tree removal relating to storm damage, so it’s worth checking your policy or calling them to find out. If a tree has already landed on your home or car, you may want to reach out to your insurer before getting it removed, since they may need to send an agent to assess the situation.

Cleanup and Debris Removal

Another factor that can impact the cost of tree removal is how you choose to handle the debris and stump. Options for debris removal typically include hauling away the tree (which runs around $70), putting it through a chipper so you can use it as mulch (on average, $95), or splitting it into firewood for your home (around $70).

If you don’t want to be left with a stump, the company will typically grind it up using a specialized stump grinder. The cost is around $100 to $150 for the first stump, and $50 for each additional stump.

Recommended: Five Curb Appeal Ideas for Your House

How to Determine If a Tree Should Be Removed

The biggest danger unhealthy trees pose is falling — onto people, homes, cars, or power lines. But even a healthy tree may need to be removed if it’s growing too close to a house or electrical wires. If you’re considering putting your home on the market, removing a threatening tree can give potential buyers one less thing to worry about.

Here are some telltale signs you might have to remove a tree:

•   It’s no longer growing leaves

•   Branches drop randomly (not related to high winds or storms)

•   It’s been significantly damaged by a storm

•   It has dead or dying branches

•   It’s growing too close to your home or other structures

•   The trunk is rotten and hollow

Generally, the first step is to hire a professional arborist to give you an opinion on your tree’s health. Some conditions may look concerning but not necessarily be damaging to the tree. Also, many cities require an arborist’s evaluation before you’re allowed to remove a tree.

Recommended: Top Home Improvements That Increase Your Home’s Value

How Much Does DIY Tree Removal Cost?

Tree removal can be dangerous and is generally best left to the professionals. If you have the experience and skills to do a DIY tree removal, however, you may be able to save some money. You’ll need several items for safety, including gloves, protective goggles, steel-toed boots, a hard hat, chainsaw chaps, and earplugs, which can run $200 to $300. In addition, you’ll need a chainsaw (which can run $50 to $150) and felling wedges (around $20 for six).

If you don’t have the necessary gear, you can expect to invest anywhere from $260 to $470 for a DIY tree removal. However, the risk involved may not be worth the cost savings. Tree removal professionals have access to tools and equipment that make the job significantly safer, including tree-rigging ropes, blocks and pulleys, hooks, ladders, lowering devices, and specialized saws.

The Takeaway

On average, homeowners pay $750 for a single tree removal. Your price will vary depending on the size of the tree, its accessibility, how many trees you’re getting removed, and what you want to do with the debris and stump.

A good first step is to hire an arborist to evaluate your trees and make an informed recommendation about how to manage any risk. If you learn that one or more of your trees needs to come down, it’s a good idea to get quotes from at least three tree removal companies. Generally, attempting DIY tree removal is not a good idea.

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.

About the author

Julia Califano

Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.

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

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While saving $10,000 in a year may sound like an ambitious goal, it’s often feasible through careful planning and disciplined spending — even if you’re not a high earner.

Whether you’re saving for an emergency fund, a down payment on a home, or just building financial security, these practical tips can help you put aside $10,000 in 12 months (and possibly even sooner).

Is Saving $10,000 a Year Possible?

Saving $10,000 in a year is generally possible if you have steady earnings. How challenging it will be, however, will depend on your income and monthly expenses. To reach this goal, you need to save approximately $833 per month or about $192 per week. While that may still seem like a lot, there are numerous ways to adjust your spending, increase your income, and build savings over time without drastically affecting your lifestyle.

8 Ways to Save $10k in a Year

There are many practical ways to start saving money, but to reach the $10,000 mark, you’ll likely need to adopt several strategies simultaneously. Here are eight effective methods to help you reach your goal.

1. Assess Your Cash Flow

To come up with a plan to save $10,000 in a year, you’ll need to assess how much money is currently flowing in and out of your bank account each month. To do this, you’ll need to gather the last several months of bank statements, then tally up your average monthly income and average monthly spending. Simply subtract the second number from the first.

If you discover that your monthly earnings exceed your monthly spending by at least $833.33, you’re in great shape. Simply transfer that amount to savings each month and you’ll accumulate $10,000 a year.

If you find that there is less — or very little — wiggle room between what’s coming and going out of your account on a monthly basis, you’ll need to make some tweaks in your spending and, if possible, your earnings (in other words, keep reading).

2. Reduce Unnecessary Expenses

One of the quickest ways to boost your savings is by eliminating or reducing unnecessary expenses. These are often small, daily costs that add up over time without you realizing it. Some areas to target:

•  Eating out: If you regularly buy lunch or dine out for dinner, consider preparing more meals at home. You can save hundreds of dollars monthly by cutting down on restaurant visits and takeout.

•  Subscriptions: Review your monthly subscriptions, such as streaming services, magazines, or gym memberships, and cancel those you rarely or never use.

•  Coffee and snacks: A daily coffee shop visit may seem harmless, but it can cost over $100 a month. Consider brewing coffee at home and keeping grab-and-go breakfast items on hand to reduce the temptation to spend.

Any funds you free up can then be redirected towards your $10,000 savings goal.

Recommended: 5 Easy Ways to Save Money

3. Trim Fixed Expenses

While fixed expenses seem like just that — fixed — that’s not always the case. While you may not be able to lower your rent, you may be able to whittle down some of your other recurring monthly bills. Some ideas:

•  Shop around for a better deal on your home and auto insurance.

•  Look for a cheaper cell phone plan.

•  Eliminate your landline.

•  Downgrade your television package to a less expensive streaming option.

•  Make small tweaks to your home temperature to reduce utility bills.

•  Prioritize paying down high-interest credit card debt.

•  Consider refinancing your mortgage, auto loan, or student loans if you can qualify for a lower rate.

4. Boost Income

Cutting costs is important, but increasing your income can supercharge your ability to save. By boosting your income, you’ll have more cash flow to funnel into your savings. Here are a few ways to bring in extra cash:

•  Start a side hustle: Consider taking on a part-time gig, freelancing, or using a skill like photography, writing, or tutoring to earn extra money.

•  Sell items you no longer need. If you have items sitting around your home that you don’t need, you may be able to turn them into cash by posting them online (consider sites like eBay and Facebook Marketplace) or hosting a garage sale.

•  Ask for a raise: If you’ve been at your job for a while and have demonstrated value, consider negotiating for a raise. Even a small pay bump can add up over the course of a year.

5. Switch to a High-Yield Account

As you divert more money to savings, you’ll want to send it to an account that helps your money grow. As of September 2024, the national average savings account yield was 0.46% annual percentage yield (APY), according to the FDIC. Fortunately, high-yield savings accounts (particularly those offered by online banks) tend to offer far higher APYs, so it’s worth shopping around. While interest alone won’t get you to $10,000, it can give your savings a nice boost over the year.

6. Automate Saving

Having a portion of your paycheck automatically go into savings (a tactic known as “paying yourself first”) is one of the simplest and most effective ways to build savings consistently. One way to do this is by setting up a recurring transfer from your checking account to your savings account for a set amount on the same day each month (ideally right after you get paid). If you get paid via direct deposit, another option is to ask your employer to make a split deposit — with some of each paycheck going directly into savings, and the rest into checking.

Either method ensures that you’re regularly contributing to your savings without having to think about it, making it easier to stay on track.

7. Try a No-Spend Challenge

Once you get going, you might want to challenge yourself to save even more with a no-spend challenge. To do this, you simply commit to not spend money on anything other than essential needs (e.g., groceries, bills) for a set period — typically a week or a month. This can bump up your savings in a short period of time. It can also serve as a spending reset — you may discover you can live on a lot less than you previously thought.

8. Take Advantage of Windfalls

If you receive a lump sum of cash — such as tax refund, work bonus, or cash gift — consider putting all (or some) of it directly into your savings account. By directing windfalls toward savings, you can make substantial progress toward your $10,000 goal.

Benefits of Saving $10,000 a Year

Saving $10,000 in a year comes with numerous benefits. Here are some to keep in mind as you work towards your $10k savings goal.

•  Financial security: Having a robust savings cushion protects you from unexpected expenses, such as medical bills or car repairs, reducing the need for credit card debt or loans.

•  Peace of mind: Knowing you have a significant amount set aside can reduce stress and anxiety related to money and offer more financial freedom.

•  Achieving short-term financial goals: Whether you’re saving for a vacation, new car, or down payment on a home, having $10,000 gives you the flexibility to reach these milestones.

•  Opportunities for investment: Once you’ve saved $10,000, you might consider investing a portion of it to grow your wealth further through stocks, real estate, or retirement accounts.

The Takeaway

Saving $10,000 in a year is an ambitious yet, often, attainable goal. Depending on your situation, you may be able to achieve it just by making small, strategic changes to your everyday spending and saving habits. These might include cutting unnecessary expenses, automating your savings, boosting income, earning more interest on your money, and leveraging windfalls.

However you do it, saving $10k in a year can give you a sense of accomplishment and put you in a better position to handle life’s financial challenges and opportunities.

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

Is saving $10,000 a year good?

Yes, saving $10,000 a year is a solid financial goal. It provides a significant cushion for unexpected expenses and can also help you work towards financial goals, like paying off credit card debt, buying a home, and saving for retirement. Saving $10,000 also offers peace of mind by improving your financial stability and security.

Is $10,000 a lot to save in a year?

For many people, saving $10,000 in a year is a substantial amount. It equates to roughly $833 per month or about $192 per week. For some, that’s a modest target, while for others, it may require budgeting, cutting unnecessary expenses, and potentially increasing income. Regardless of the circumstances, saving this amount can help you meet your short- and long-term financial goals.

How much do you need to earn to be able to save $10K a year?

How much you have to earn to save $10K a year will depend on your expenses. A common rule of thumb is to save at least 10% to 20% of your income. Based on this formula, you’d need to earn $50,000 to $100,000 to comfortably save $10,000. That said, people earning less may still be able to save this amount with disciplined budgeting, cutting unnecessary expenses, and/or finding ways to supplement their regular income.

About the author

Julia Califano

Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.

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College is a great place to make lifelong friends. In college, students bond over shared interests, have fun times together, and help each other through some challenging times, cementing bonds that can last for years after graduation.

When you first arrive on campus, however, making friends in college can seem intimidating. Exactly where and how do you meet people? It can feel especially challenging if you go to a large school or you’re in unfamiliar territory, like a college that’s far away from home.

Don’t stress. Making friends in college can be easy, and you don’t necessarily need a lot of them or to make them the very first week. The key is to get involved early on, put yourself out there, and always try to be your true self. Here are some ways you can go about making friends in college.

Hang Out With Your Roommates

Whether you chose your roommate or went with a random pairing, you may or may not have a lot in common with this individual, at least from the outside. Nevertheless, it can be a good idea to try to forge a connection with your roommate. This will not only make your living situation more enjoyable, but you’ll be able to turn to your roommate when you need support.

You can bond with your roommate by cooking meals, watching favorite shows, and studying together. It can also help to be considerate and respectful of your roommate by not making too much noise late at night or early in the morning, cleaning up after yourself, and chipping in for shared supplies. By respecting your roommate’s boundaries and establishing ground rules for the room, you’ll be more likely to have a good relationship, and perhaps even become good friends, with your roommate.


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Join a Fraternity or Sorority

You might consider whether to join a fraternity or a sorority. This could provide the opportunity to make a lot of new friends. While some fraternities and sororities may have bad reputations because of their hazing practices and emphasis on parties, many focus on philanthropy and building friendships instead.

Just keep in mind that joining Greek life can cost $200 to $1,000 per semester, since you are generally required to pay fees or dues. The cost will vary depending on the school and chapter you join, and there may also be additional fees for membership.

You’ll also need to apply to get into a sorority or fraternity and go through a recruitment process to ensure it’s going to be a good fit. Then, if you’re accepted, you will typically live with your fraternity or sorority in a house on campus and socialize and volunteer with them on a regular basis.

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Get Involved in Clubs

Another easy way to make friends in college is to join a club and get involved on campus. At the beginning of the school year, colleges will typically have club fairs, where club leaders set up booths and give information about their clubs to incoming freshmen and transfer students. This is where you can learn more and sign up for an initial meeting.

Some of the various types of clubs you can join include religious, political, academic, cultural, media, and community service clubs. For instance, students can join the school paper, radio or TV station, participate in math and science groups, join an on-campus religious group, find the school’s Republican and Democrat clubs, and volunteer at local animal rescue organizations or homeless shelters.

If you can’t find clubs you’re interested in, you may be able to start one of your own. You’ll likely have to go to the proper office on campus and follow the guidelines for establishing a new club.

Find Study Buddies in Your Classes

Another avenue for making friends in college is through your classes. You might start or sign up for a study group, which allows students in the same class to do homework and study for tests together. If you make a connection with another student in a college study group, you might suggest hanging out after the group is over or meeting up for a coffee or meal on campus another time.

Sign Up for Sports

One of the ways that many students go about making friends in college is by joining a sports team or an intramural sports club on campus. The sports teams are for athletes who are interested in playing on schools’ official teams, while intramural sports clubs are just for fun. Schools offer a variety of different sports like basketball, football, soccer, golf, tennis, and swimming. You can check out the campus life and sports section of your school’s website and look into the options.

Also, if you see a couple of students tossing a Frisbee around on the grass, there’s no harm in asking to join. Those kinds of casual meet-ups can be a good way to get to know new people.

Audition for the School Play

Theater clubs or the theater department on campus may hold auditions for school plays. You might consider auditioning for a part and making friends with the cast and crew members during rehearsal. Putting on a play can be a strong bonding experience, allowing you to cultivate lasting friendships.

Recommended: 10 Ways to Prepare for College

Go to Campus Events

Schools are always putting on events. This might include concerts, talent shows, guest speaker series, music festivals, stand-up comedy, and more. You might ask acquaintances to go to an event and/or meet new friends there. If the event is crowded, you might need to be a little more outgoing and start up conversations with the people nearby in order to (hopefully) make friends.

Connect With Other Student Workers

If you have a work-study job, internship, or other gig on campus, you might try to strike up conversations with your colleagues, as long as it doesn’t interfere with your work. Some places students may work on campus include the college’s admissions office, the endowment office, the dining hall, the coffee shop, the art museum, and the library.

Go to Social Gatherings

If your roommates or friends are holding a social gathering or going off campus to check out a local movie theater or restaurant, consider tagging along. This can be a great way to strengthen the bonds you already have, as well as meet new people. Just keep in mind that while parties can be fun, they can also distract from schoolwork and you could end up with lower grades if you are partying too often.

Ask People to Hang Out One-on-One

Whenever you meet potential new friends in classes or through clubs, consider inviting them to hang out one-on-one to get to know them better. For example, you might ask them out for coffee or a meal, to an on-campus concert or show, to work out at the gym, or to a sports game. While this involves putting yourself out there, the rewards of making a new friend can be well worth the risk that they’ll say “no.”

The Importance of Being Yourself When Making Friends in College

Although you may be worried about making new friends in college, you generally don’t want to change your personality or hide who you really are in order to fit in. It may be a little tough at first, but by joining clubs you’re interested in and finding people who accept you for who you are, you could make lifelong friends. It can take some time and might not always happen within the first semester. However, you’ll want to keep trying to meet and connect with new people throughout your four years at college.


💡 Quick Tip: Even if you don’t think you qualify for financial aid, you should fill out the FAFSA form. Many schools require it for merit-based scholarships, too.

Affording College

College is where you can set yourself up for professional success as well as make wonderful new friends. However, if you don’t know how you’ll pay for it, you might feel even more anxiety before embarking on this exciting next step in your life.

Fortunately, there are a number of ways to cover the cost of attending college, including grants, scholarships, work-study programs (which are also great for making friends), and subsidized and unsubsidized federal loans. If you get your financial aid letter and still have gaps in funding, you might also consider a private student loan.

Private loans are available through banks, credit unions, and online lenders. Unlike federal student loans, they require a credit check. However, if you have solid credit (or can recruit a cosigner who does), you may be able to qualify for a competitive interest rate. Just keep in mind that private loans may not offer the same protections that come with federal loans, such as income-driven repayment plans and forgiveness programs.

The Takeaway

Making friends and finding your social group can be a key part of the college experience. For many people, it yields lifelong connections. To get started making friends, you might look for a study group, join a sports team, get involved in campus activities, like the drama club, and attend campus events. It can be a valuable part of your time at college.

Affording your education can take some energy, too, with options like federal and private student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

Is it normal to be a loner in college?

Being a loner in college can be more common than you may think, despite the media images of everyone on campus having a pack of friends. Some students prefer to have just a few contacts and focus on their studies, and others find it hard to discover their network. Joining campus activities and study groups can help break the ice.

How to make friends in college when shy?

To make friends in college when you’re shy can be done by finding low-pressure situations. Examples are joining study groups and finding clubs that build on your interests whether that’s gaming, painting, running, cooking, or speaking a foreign language.

How can you make friends quickly in college?

Some ways to make friends quickly in college include introducing yourself around the dorm, joining a club or organization that interests you, studying in a social space vs. at your desk, and eating meals with your fellow students. You might also attend campus events, whether that means a football game, performance, or other gathering.

About the author

Julia Califano

Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.

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.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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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Taking out a personal loan can both help and hurt your credit. In the short term, applying for a new loan can have a small, negative impact on your scores, due to the hard inquiry by the lender. If managed well, however, having a personal loan can boost your credit profile over time by adding to your positive payment history and broadening your credit mix. This could make it easier to get approved for loans and credit cards with attractive rates and terms in the future.

Here’s a closer look at how personal loans affect your credit score, both positively and negatively, plus guidelines on when it makes sense to take one out.

How Is Your Credit Score Calculated?

Understanding how personal loans impact your credit starts with knowing how your credit score is calculated. The most common credit scoring model, FICO®, uses five components to calculate your score. Here’s a look at each factor and how much weight it’s given in FICO’s calculation.

•   Payment History (35%): Your record of making on-time payments to lenders is the most important component of your score. This helps creditors determine how much risk they are taking on by extending credit.

•   Amounts Owed (30%): This includes the total amount of debt you currently have and your credit utilization ratio, which measures the percentage of available credit you’re using. If you’re tapping a lot of your available credit on your credit cards, it suggests you may be overextended and, thus, at higher risk of defaulting on a loan.

•   Length of Credit History (15%): This factor takes into account the average age of your accounts, the age of your oldest account, and how long it has been since you used certain accounts. Generally, having a longer credit history can positively affect your score.

•   New Credit (10%): A small but still important part of your score is how much new credit you’ve recently taken out. Opening new accounts or having too many credit inquiries can temporarily lower your score.

•   Credit Mix (10%): Your credit mix looks at how many different types of credit you hold. Having a variety of credit types — like credit cards, retail accounts, and installment loans — can positively affect your score.

A personal loan can influence several of these factors, for better or worse, depending on how you manage it.

How Do Personal Loans Work?

A personal loan is a lump sum of money borrowed from a lender, such as a bank, credit union, or online lender. Personal loans are typically unsecured, meaning you don’t need to provide collateral (like your car or home), and can be used for various purposes like consolidating debt, covering medical bills, or funding a wedding.

When you take out a personal loan, you agree to repay it in fixed monthly installments over a predetermined period, usually ranging from two to seven years. The interest rate, determined by your creditworthiness, and any lender fees affect how much you’ll pay in total.

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

Ways Personal Loans Can Hurt Your Credit

While personal loans can be beneficial, they also have the potential to harm your credit. Here’s how:

Requires a Hard Credit Inquiry

When you apply for a personal loan, the lender typically performs a hard credit inquiry to evaluate your creditworthiness, which can adversely impact your credit score. Hard inquiries remain on your credit report for two years. However, their negative effect on your score is minor (typically 5 points or less) and lasts only about a year.

Note that prequalifying for a personal loan, which involves a soft inquiry, won’t have any impact on your score. This can give you an estimate of the interest rate and loan amount you can expect in a loan offer.

Can Increase Overall Debt

Taking out a personal loan can increase your overall debt, which can negatively affect the “amounts owed” component of your credit score. This may cause you to see a slight drop in your score. However, if you’re consolidating credit card debt, you will reduce that debt by paying it down with the personal loan, and your amounts owed won’t be impacted.

Can Negatively Impact Payment History If You Miss a Payment

Since payment history is the largest factor in credit scoring, missing just one payment on your personal loan can result in a substantial drop in your score. While being just a few days late may not affect your credit, lenders can report payments that are more than 30 days overdue to the credit bureaus. Late payments remain on your credit reports for seven years.

Setting up autopay or reminders can help ensure you make your payments on time and avoid this credit score setback.

Can Shorten Your Credit History

Taking on a new loan can shorten the average age of your credit accounts, which could have a small negative impact on your score. Generally, a longer credit history is considered better than a shorter one.

How Personal Loans Can Help Your Credit

Despite the risks, personal loans can also positively influence your credit when managed wisely. Here’s how:

Can Add to Your Credit Mix

Your credit mix accounts for 10% of your score. Adding a personal loan to your portfolio — especially if you primarily have revolving credit, like credit cards — can enhance your credit profile by showing that you can manage different types of credit responsibly.

Can Improve Your On-Time Payment History

Consistently making on-time payments on your personal loan demonstrates financial responsibility, which can strengthen your payment history — the most significant component of your score. It may take a few months for the benefits to show up but over time, this can positively impact your credit.

May Help Lower Your Credit Utilization Ratio

If you take out a personal loan to pay off high-interest credit card debt (also known as a credit card consolidation loan), you can lower your credit utilization ratio, which is the percentage of your available credit you’re using. A lower ratio — ideally under 30% — is generally beneficial for your credit. However, this strategy only works if you keep your credit card spending low after paying off your balances with the loan.

When to Consider Taking Out a Personal Loan

Even though applying for a personal loan may result in a small, temporary drop in your credit score, there are times when taking on this type of debt can be a smart financial move. Here are some scenarios where you might consider getting a personal loan.

•  You want to consolidate high-interest debt: Personal loans typically have lower interest rates than credit cards, making them an attractive choice for paying off expensive credit card debt. An online personal loan calculator can help you determine how much you could potentially save. If you’re juggling several credit cards, a debt consolidation loan can also simplify repayment.

•  You’re facing unexpected expenses: Medical bills, home and car repairs, or other emergencies can sometimes justify taking out a loan. Using a personal loan may be more cost effective than putting these expenses on your credit card.

•  You have good or excellent credit: The best personal loan interest rates are generally reserved for borrowers who have strong credit. While there are personal loans for bad credit, they typically come with higher interest rates and other less-than-ideal terms.

•  You earn a steady paycheck: Getting a personal loan generally only makes sense if you have a regular income and earn enough to comfortably cover the monthly payments for the term you select.

The Takeaway

Personal loans can have a positive or negative impact on your credit depending on how you manage them. Initially, applying for a personal loan can slightly downgrade your score. This is due to the hard inquiry, as well as the loan’s impact on the average age of your accounts and (potentially) your overall debt load. However, if you repay the loan responsibly, having a personal loan can ultimately help your credit by adding positive payment history, diversifying your credit mix, and — if you use it pay off credit card debt — reducing your credit utilization rate.

Before taking out a personal loan, you’ll want to assess your financial situation, shop around for the best rates and terms, and make sure the monthly payments work with your budget.

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

Is a personal loan bad for your credit?

A personal loan isn’t inherently bad for your credit, but its impact depends on how you manage it. Initially, applying for a loan may lower your score slightly due to the hard credit inquiry. In addition, taking on more debt can increase your amounts owed, which might affect your score. However, consistently making on-time payments can boost your payment history, a major factor in credit scores. And if you use a personal loan to consolidate credit card debt, you’ll lower your credit utilization ratio (how much of your credit limit you are using), which can positively impact your credit.

Will a personal loan affect my credit card application?

It can. If you applied for the loan recently, the hard credit inquiry may have slightly lowered your credit scores. Having a personal loan can also lower the average age of your accounts and, potentially, increase your debt load, which can negatively impact your credit. Over time, however, having a personal loan can improve your credit profile by adding to your positive payment history and, if you use it to consolidate credit card debt, lowering your credit utilization, making it easier to get approved for a credit card.

Will a personal loan affect my car loan application?

It can. When assessing your eligibility for a car loan, lenders typically consider your credit score, debt-to-income ratio, and overall financial profile. The hard credit inquiry for the personal loan might lower your credit score temporarily. In addition, the added debt from the loan could increase your debt-to-income ratio, making you appear higher risk to a lender. On the other hand, responsible repayment of the personal loan shows financial discipline, which can improve your credit profile over time. Ultimately, this could make it easier to get a car loan with attractive rates and terms.

About the author

Julia Califano

Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.

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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