Investing

The national average credit score fell to 717, according to a new report from FICO.
Credit scores had steadily improved for a decade, but increases in missed borrower payments and rising consumer debt levels are starting to take a toll.
As of October, the average credit card utilization was 35%, up from 33% a year earlier, and the share of borrowers with a 30-day past-due missed payment against their credit accounts was also higher.

Consumers have been increasingly relying on credit cards to make ends meet, and it may be finally catching up with them.
The national average credit score, which has steadily increased over the last decade, fell to 717 from a high of 718 in the beginning of 2023, according to a report from FICO, developer of one of the scores most widely used by lenders. FICO scores range between 300 and 850.

“It’s a notable milestone,” said Ethan Dornhelm, FICO’s vice president of scores and predictive analytics. “This is the first time in well over a decade that the score went down.”

Average nationwide credit scores bottomed out at 686 during the housing crisis more than a decade ago, when there was a sharp increase in foreclosures. They steadily ticked higher until the Covid-19 pandemic, when government stimulus programs and a spike in household saving helped scores jump to a historic high in April 2023.

Consumers are falling deeper in debt

High interest rates and higher prices have weighed on most Americans’ financial standing. Consumers as a whole are falling deeper into debt, causing an increase in credit card balances and an uptick in missed payments, FICO found.
As of October, the average credit card utilization was 35%, up from 33% a year earlier, and just over 18% of borrowers had a more than 30-day past-due missed payment against their credit accounts, up from 16.5% the year before.
“Another likely driver is that savings rates have trended back down to zero and those savings cushions that many consumers had have disappeared,” Dornhelm said.

More from Personal Finance:Average credit card balances jump 10% to a record $6,360Credit card debt hits a ‘staggering’ $1.13 trillionAmericans can’t pay an unexpected $1,000 expense
During the pandemic, most Americans benefited from a few government-supplied safety nets, including the large injection of stimulus money. That left many households sitting on a stockpile of cash that enabled some cardholders to keep their credit card balances in check.
But that cash reserve is largely gone after consumers gradually spent down their excess savings.
“We are pretty far removed from pandemic-level mitigation programs, so consumers are very much confronted with making good on their credit obligations with little in the way of stimulus checks or government defined accommodation programs,” Dornhelm said.

What is a ‘good’ credit score?

Generally speaking, the higher your credit score, the better off you are when it comes to getting a loan. You’re more likely to be approved, and if you’re approved, you can qualify for a lower interest rate.
Alternatively, “the lower the credit score the less likely you could get approved for financing and the higher your interest rate is going to be,” said Ann Kaplan, founder of iFinance, based in Toronto, Canada.
Already, the average credit card charges over 20%, a record high, but borrowers with lower credit scores pay even more. “It’s difficult in this current economy not to have a good credit score,” Kaplan said.

A good score generally is above 670, a very good score is over 740 and anything above 800 is considered exceptional.
An average score of 717 by FICO measurements means most lenders will consider your creditworthiness “good” and are more likely to extend lower rates.
Some of the best ways to improve your credit score come down to paying your bills on time every month and keeping your utilization rate, or the ratio of debt to total credit, below 30% to limit the effect that high balances can have, Kaplan said.
Don’t miss these stories from CNBC PRO:

Subscribe to CNBC on YouTube. More

The Consumer Financial Protection Bureau finalized a rule that would cap the late fees that banks charge customers after finding that cardholders paid a record $130 billion in interest and fees, as of their latest tally.
But that’s not the only cost, the CFPB found.
Late fees are often layered on top of other punitive measures credit card companies impose on consumers who miss payments, including negative credit reporting, which can hurt their credit score.

The consequences of missed credit card payments

The CFPB found that late fees are often layered on top of other punitive measures credit card companies impose on consumers who miss payments, including negative credit reporting, which can hurt their credit rating.

“When consumers don’t make required payments, they can face a long list of consequences. They pay extra interest, their credit report gets hit, their credit line can get cut, and, of course, they can face a late fee,” Rohit Chopra, director of the Consumer Financial Protection Bureau, said in a statement Tuesday.

More consumers are falling behind

Collectively, consumers are having a harder time managing debt amid high interest rates and higher prices. Americans now collectively owe $1.13 trillion on their cards, and the average balance per consumer is up to $6,360, both historic highs.
Not only are more cardholders carrying debt from month to month but more are also falling behind on payments, recent reports also show.
Credit card delinquency rates surged in 2023, the Federal Reserve Bank of New York found.
“Serious” card delinquencies — payments that are 90 days or more overdue — jumped more than 50%, which “signals increased financial stress,” the New York Fed reported.

Why credit scores are so important

Generally, the higher your credit score, the better off you are when it comes to getting a loan. You’re more likely to be approved, and if you’re approved, you can qualify for a lower interest rate.
Alternatively, “the lower the credit score the less likely you could get approved for financing and the higher your interest rate is going to be,” said Ann Kaplan, founder of iFinance, based in Toronto.
Already, the average credit card charges over 20%, a record high, but borrowers with lower credit scores pay even more. “It’s difficult in this current economy not to have a good credit score,” Kaplan said.

For the most part, consumers are still faring well. The national average credit score now stands at 717, according to FICO, developer of one of the scores most widely used by lenders. FICO scores range between 300 and 850.
However, that national average is down 1 point from where it stood in the beginning of 2023, marking the first decrease in credit scores in more than a decade.
“We are starting to see the increases in missed payments and debt levels weigh down on that overall aggregate measure,” said Ethan Dornhelm, FICO’s vice president of scores and predictive analytics.
Don’t miss these stories from CNBC PRO:

Subscribe to CNBC on YouTube. More

According to College Data, the average annual cost of private college tuition is $41,540 in 2024.
More parents are going to work for schools to tap tuition benefits that have existed for years but now have growing appeal amid the skyrocketing cost of a college degree.
One Ohio family with multiple children estimates they are in line to receive as much as $500,000 worth of private college tuition for a fraction of the cost.

Ariel Skelley | Digitalvision | Getty Images

Meghan Heater, 46, heads to the commissary at the University of Dayton in Ohio most weekday mornings to start assembling sandwiches and tossing salads for hundreds of hungry college kids.
“It’s a lot of time on your feet and hard work,” Heater said.

But that effort yields more than a paycheck. As a college staff member, Heater gets deeply discounted tuition at the private Marianist Catholic college with approximately 8,000 undergraduate students.
Tuition at the university is around $47,000 a year, plus board, although 96% of the students receive some financial aid.
Heater has now been working at the school for four years, enough to qualify for the highest tuition benefit — 95% off — by the time her eldest daughter, now 15, graduates from high school. Her two youngest daughters, 13 and 10, are waiting in the wings.

Employee tuition perks draw parents

The price tag of college can be daunting, but less so at some schools if parents work there — and that is what appeals to Heater and a growing number of parents.
“I had been a stay-at-home mom for several years, so I didn’t have a professional career. I was trying to think of a way to have a job that I could still be with my kids a lot of the time, like during the summer, and work the same hours as they are in school and still make good money,” Heater said.

That’s when Heater, whose husband works at a local steel mill, thought about working at a college. She compared universities in her area and their benefits and decided on University of Dayton, which offers tuition benefits for staff workers and their dependents.

More from Your Money:

Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.

Troy Washington, the University of Dayton’s vice president for human resources, said that about 616 of the school’s nearly 2,900 full-time employees take advantage of its tuition remission for themselves or their dependents.
Washington said that workers and their dependents can also use a tuition exchange program, which allows them to transfer their tuition benefits within a pool of participating schools.

How college employee tuition benefits work

Jacob Channel, senior economist at LendingTree and a student aid expert, says that while these employee benefits have existed for years, with the spiraling cost of higher education, working for a college has growing appeal.
“With how expensive college has gotten, it is something that probably a lot of people are trying to take advantage of,” Channel said.
In fact, 90% of colleges and universities offer tuition benefit to children of full-time employees, according to the College and University Professional Association for Human Resources.
Half of those institutions have a waiting period to get that benefit, with the median waiting period being one year of service for the employee. Most institutions, 73%, don’t limit the number of credit hours children can apply the benefit to, so there is no ceiling on the number of classes they can take.

Still, as attractive as the programs are, Channel said, they have drawbacks. For instance, once the tuition benefit exceeds the IRS’ guidelines of $5,250 annually, the rest is generally considered taxable income. The University of Dayton’s Washington recommends checking with a tax preparer, because there can be exceptions and case-by-case variations.
“While the tax won’t offset the benefit of the waiver, it is still something to keep in mind so you aren’t blindsided by a tax bill,” Channel said.
Channel says that students also usually have to make the grade. The tuition waiver often isn’t granted if the student doesn’t meet the school’s admission requirements. With University of Dayton, for instance, students have to satisfy admission requirements.

‘A lot of people don’t know about these programs’

Sherry Kirkland, 71, is retired after a 17-year career as a financial aid and academic advisor at Wilmington University in Delaware. While her husband worked full time, Kirkland started at the school in a secretarial role and leveraged the tuition benefit for herself first.
The mother of four sons only became aware the benefit could be used for her dependents once she got deeper into her time at the college.
By the time Kirkland’s youngest son was old enough for college she was aware of the tuition benefit, so he was able to take full advantage of it, she said.

“Had I known that I would have done that for my other sons,” Kirkland said, adding that the family took out loans for their older children’s education. “If you can get your education free or at a big savings, that is the way to go,” Kirkland said.
She said she thinks a lack of awareness about tuition benefits programs keeps them from being more popular.
While it is a lot of hard work for parents, in the end, she said, it was worth it for her to see her youngest son graduate from college without a pile of bills.
“I can’t tell you the wonderful feeling I had when he graduated, how good it felt,” Kirkland said.

How to make the most of employee tuition perks

Tuition benefit packages for employees’ children vary greatly from school to school, with some offering no benefits, while others, such as Wilmington University, offer 100% tuition benefits.
The amount of time before the benefits kick in also varies. While Heater had to work four years at the University of Dayton to get the maximum tuition break, new hires at Southern New Hampshire University can take full advantage of the tuition benefit for dependents only six months after starting.
“Higher education is extremely expensive and not affordable; as a parent, how do you look to help your children through that?” said Danielle Stanton, SNHU’s chief administrative officer.
Stanton’s daughter is currently using the free tuition benefit at SNHU, but Stanton said there are a lot of factors to consider before taking a job at a college just for the tuition break.
“There are a lot of ‘ifs’ to work out, like trying to find out where your child wants to go, what benefit does the college offer, and are they eligible?” Stanton said.
Meanwhile, Heater will continue to head to the mess hall at University of Dayton each morning, an endeavor she considers very worthwhile. She figures if all three of her daughters attend the college, she and her husband will have snagged $500,000 in education for their daughters at a fraction of the cost.
And if the daughters don’t want to go to University of Dayton? They can look into the tuition exchange program, but Heater said she doesn’t think that will be an issue.
“It’s been drilled into them that they are going to UD,” Heater said. More

Women and Wealth Events
Your Money

Building wealth and saving for retirement can be more difficult for women facing challenges such as lower wages.    
But an early career mentor sparked a mindset shift for Vivian Tu, a self-made millionaire by age 27 and the founder of Your Rich BFF.  

Vivian Tu.
Photo: Heidi Gutman

Building wealth and saving for retirement can be more difficult for women facing challenges such as lower wages despite their increasing levels of education.
An early-career mentor sparked a mindset shift for Vivian Tu, the founder of Your Rich BFF, who became a self-made millionaire by age 27.

“I learned very early on how to budget and how to save,” said Tu, speaking at CNBC’s Women & Wealth event on Tuesday. Before the mindset shift, however, she focused on “scrimping and saving versus creating more wealth” with investing.

More from Women and Wealth:

Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

While Tu was working on Wall Street, a mentor helped her develop “healthy money habits” that paid off once she was earning a higher paycheck in the tech industry.
“I was still living below my means and then investing that larger proportional difference,” she said. “Over the years, I continued to ask for more and more money every single year.”
Those raises helped Tu invest and grow her wealth more quickly.

Why both saving and investing are critical

Tu’s mindset shift is one other women can learn from. Lifelong saving and investing are both critical for women, according to Boston-based certified financial planner Catherine Valega, founder of Green Bee Advisory.

“We miss so much time in the market,” she said, noting that women are more likely than men to leave the workforce to care for children or family members.
Indeed, some 14% of women ages 25 to 54 were full-time caregivers in 2022, compared to 1.5% of men, according to the Federal Reserve Bank of Minneapolis.
Leaving the workforce reduces earnings and the chance to save and invest for retirement, Valega said. “That caregiving penalty is a double whammy,” she said.
That’s why she urges women to boost 401(k) savings — aiming to max out contributions every year, if possible — and consider higher stock market fund allocations, depending on risk tolerance. More

Women and Wealth Events
Your Money

Women may be reluctant to make big bets when it comes to their money.
When it comes to investing, women tend to have positive returns and outperform men by 40 basis points, research from Fidelity Investments has found.

Eric Raptosh Photography | Tetra Images | Getty Images

It is often said that without risk, there is no reward.
It’s a maxim that poker and chess pro Jennifer Shahade, author of “Play Like a Champion,” knows well.

“In poker, risk and calibrating risk is the name of the game,” Shahade said during the CNBC Women & Wealth event on Tuesday.
If you risk too much, you will lose your money quickly, Shahade said. If, instead, you don’t risk enough, you will also lose all your money, but very slowly, she said.
“It’s certainly about finding that balance,” Shahade said. “I like to tell women who aren’t as comfortable with risk that not taking any risks, that is a risk as well.”

More from Women and Wealth:

Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

When you play poker, you will learn that lesson, and hopefully be able to apply it to your life and finances as well, she said.
The most important takeaway is to know yourself, said Shahade, who relies on a combination of intuition and data to time her moves right.

“You’ve got to find those right moments,” Shahade said. “And that’s a combination of the data and your instincts.”

The biggest risk to women’s portfolios

When it comes to investing, women tend to have positive returns and outperform men by 40 basis points, research from Fidelity Investments has found.
Yet, women also tend to hold too much cash, and often they feel they need to know more before they invest.
“The biggest risk to women’s portfolios is they don’t take enough risk,” said Nancy Tengler, CEO and chief investment officer of Laffer Tengler Investments in Scottsdale, Arizona.

By sitting on the sidelines, women run the risk of missing out on the market’s best days, or not adding more to an investment that might be just temporarily faring poorly, said Tengler, who is the author of the book, “The Women’s Guide to Successful Investing.”
“If you buy great companies, stocks you can own for a lifetime, almost always it makes sense to add to them,” Tengler said. “And it may take a couple of years, but that’s why you own a portfolio.” More

Women and Wealth Events
Your Money

When it comes to managing money, women commonly use the word “fear” to describe what stands between them and the life they want.
“We can’t ditch our fears, but we can be intentional about managing our fear,” says Bola Sokunbi, founder of Clever Girl Finance and author of “Choosing to Prosper.”
Achieving financial success requires adhering to the basic principles of saving and investing and paying down debt, she advises. Equally important is stepping out of our comfort zone.

The author, Bola Sokunbi
Credit: Bola Sokunbi

When it comes to managing money, women commonly use the word “fear” to describe what stands between them and the life they want.
But achieving financial success means stepping out of our comfort zone, said Bola Sokunbi, founder of Clever Girl Finance and author of “Choosing to Prosper” — and that requires practice and intention.

“We can’t ditch our fears, but we can be intentional about managing our fear,” Sokunbi said during CNBC’s Women & Wealth event Tuesday.

More from Women and Wealth:

Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

Often, it’s women who feel financially insecure, according to Northwestern Mutual’s 2023 Planning and Progress Study.
Regardless of their household income, 93% of women feel stress when it comes to money, a recent report by Fidelity Investments found.
Women are also more likely to live paycheck to paycheck and consider themselves financially fragile, other reports show.

Most women are worried about money

For women, “financial stress is pretty consistent across all age groups and income,” said Lorna Kapusta, head of women and engagement at Fidelity.

However, financial stress levels drastically decrease with each additional month of emergency savings set aside, according to Fidelity. Roughly 81% of women with no emergency savings felt a fair amount or a lot of stress. Once women have three months’ worth of emergency savings, only 26% report high stress levels, Fidelity found.

Most financial experts recommend having at least three to six months’ worth of expenses as a cushion, or more if you are the sole breadwinner in your family or in business for yourself.
The right amount for you comes down to peace of mind. “Emergency savings is your ‘sleep at night’ number,” Kapusta said.

‘Financial freedom means living life on your own terms’

“Having that financial freedom means living life on your own terms,” Clever Girl Finance’s Sokunbi said. “You can walk away from circumstances or jobs that no longer serve you.”
“It gives you options. It allows to you achieve the life you want,” she said.

To feel financially secure, regardless of your starting point, “consistency is key,” Sokunbi said.
“If you are unable to manage your money when you have a little bit, it will be difficult to be consistent and manage your money when you have a lot,” she said.
Start with the basic principles of saving and investing and paying down debt, she advised. Those simple steps are “going to help you move forward and make that progress over time to achieving your financial goals.”
Subscribe to CNBC on YouTube. More

Women and Wealth Events
Your Money

Many women today are looking for “financial peace,” said Jean Chatzky, founder and CEO of HerMoney.
What that means: “It looks like being able to meet my obligations today, while being able to save for tomorrow,” said Chatzky, speaking at CNBC’s Women & Wealth event on Tuesday.

Gorodenkoff | Istock | Getty Images

Many women today are looking for “financial peace,” said Jean Chatzky, founder and CEO of HerMoney.
What that means: “It looks like being able to meet my obligations today, while being able to save for tomorrow,” said Chatzky, speaking at CNBC’s Women & Wealth event on Tuesday.

“And having some degree of confidence that … my money is going to last as long as I do.”
Here’s how you can achieve that, Chatzky and other experts say.

Debt and savings: ‘Work it from both ends’

Establishing financial security requires tackling debt and saving at the same time, Chatzky said.
“You have to work it from both ends, this problem,” she said.
“There is no doubt that debt is a huge financial stressor,” she said. “When we look at the things that make us most unhappy when it comes to our money, debt rises to the top of the list.”

More from Women and Wealth:

Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

However, women need to juggle paying down their debt with preparing for their future, Chatzky said.
It’s essential not to miss out on the important time you still have in “forging ahead, grabbing those 401(k) matching dollars, building emergency cushions and doing the things that allow us to stay afloat once we get there,” she said.
Even if saving thousands of dollars a year isn’t currently feasible, it’s best to start early with what you can salt away, said Winnie Sun, the co-founder and managing director of Irvine, California-based Sun Group Wealth Partners. Sun is also a member of the CNBC Financial Advisor Council.
“This is a great year to get started,” Sun said. “Understand how much you’re saving for your future and whether it’s enough, or if the portfolios you’ve invested in still align with your financial situation.”

Don’t shy away from all risk

‘Get some advice there’

Women who are looking for help getting started, or who have already achieved a certain level of financial stability or success may want to look for a qualified financial planner for help, Chatzky said.
She shared her tips for finding a trustworthy advisor.
“You want to make sure that they’ve been doing it for a good five years, if not more,” she said. “You want to make sure that they’ve got the [certified financial planner] designation, and you want to make sure that they are somebody that you feel you are able to talk to comfortably.”
If you’re not ready for a financial advisor, Chatzky recommends speaking to someone in your company’s benefits department about your retirement savings.
“Get some advice there,” she said. “Start digging in and asking the questions that you need.”

Due to long-standing societal and institutional biases, there’s a financial literacy gap between men and women, said Cathy Curtis, founder and CEO of Curtis Financial Planning in Oakland, California. When polled, men are more likely than women to correctly answer questions on topics such as borrowing and saving, research finds.
In 2024, women should take the time to boost their financial knowledge, said Curtis, who is also a member of the CNBC FA Council.
It could be a year of major changes.
“The upcoming presidential election and the rapid integration of artificial intelligence into the workplace stand out as developments that could unsettle markets and workplaces,” Curtis said.
“Without a solid understanding of financial principles — for example, that volatility is a normal characteristic of investing in the stock market, women could inadvertently make changes that could hurt their long-term financial health,” she said.Don’t miss these stories from CNBC PRO: More

After suffering a blow to its brand, Harvard is back on top as this year’s No. 1 “dream” school, according to a new survey of college-bound students.
The Ivy League university beat out previous years’ favorites, including Massachusetts Institute of Technology and Stanford.

People walk through the gate on Harvard Yard at the Harvard University campus in Cambridge, Massachusetts, on June 29, 2023.
Scott Eisen | Getty Images

And just like that, Harvard University has regained its position as the ultimate “dream” school among college applicants.
“It’s been a tough year for the brand,” said Hafeez Lakhani, founder and president of Lakhani Coaching in New York.

Yet, the Ivy League university bested last year’s dream college, Massachusetts Institute of Technology, to secure the top spot, according to a new survey of college-bound students.
The Princeton Review’s 2024 College Hopes and Worries Survey polled nearly 8,000 college applicants between Jan. 15 and Feb. 20, just weeks after Harvard President Claudine Gay resigned amid allegations of plagiarism and controversy over her congressional testimony about antisemitism on campus.

Despite the reshuffling, there remains a consensus at the top of the rankings, according to Robert Franek, The Princeton Review’s editor-in-chief.
“Students are focused on what is the value of their degree going to earn for them and Harvard is still top of mind,” he said.

Harvard saw fewer early applicants

This year’s early admissions cycle, in the immediate aftermath of the Oct. 7 attack on Israel by Palestinian militant group Hamas, reflected some of the recent turmoil.

Early applications ahead of the Nov. 1 deadline — amid multiple incidents of antisemitism on campus — sank 17%. There were 7,921 early applicants to the Class of 2028, down from 9,553 last year, the Harvard Crimson reported.
“That was an absolute shock,” Lakhani said.

Harvard admitted 8.74% of the total pool, an increase of more than 1 percentage point from the previous year’s 7.56%, notching the highest early action acceptance rate since 2019.
Indeed, a slightly more favorable acceptance rate could have already prompted more students to apply by the regular decision deadline on Jan. 1, according to Christopher Rim, president and CEO of college consulting firm Command Education.
“I’m seeing clients who were so against Harvard just four months ago, easing back into it already,” Rim said.
Rim predicts the acceptance rate for regular decision applicants, which will also mark the first full cycle after the Supreme Court declared affirmative action unconstitutional, could be closer to the record lows of earlier years. That acceptance data will likely be released at the end of March.

The new FAFSA could complicate college decisions

By late March, students will have just a few weeks to figure out their next move ahead of National College Decision Day on May 1, which is the deadline many schools set for admitted students to decide on a college. 
At that point, they must pay a nonrefundable deposit to secure their seat at the school of their choice. 
But the biggest problem for many remains how they will pay for their degree.
Financial aid award letters are typically sent around the same time as admission letters, so students have time to compare offers, but issues with the new Free Application for Federal Student Aid could potentially delay this year’s award letters until April or May, the U.S. Department of Education has said. 
More from Personal Finance:More of the nation’s top colleges roll out no-loan policiesIssues with new FAFSA may cause ‘shocking’ decline in aidIs an Ivy League degree worth it?
For most students and their families, which college they will choose hinges on the amount of financial aid offered and the breakdown between grants, scholarships, work-study opportunities and student loans.
Although some colleges have announced Decision Day extensions due to the FAFSA delays, “it does put a burden on students and their parents,” Franek said. “With the continued difficulties around the FAFSA, how could financial aid not be top of mind?”
A whopping 98% of families said financial aid would be necessary to pay for college and 82% said it was “extremely” or “very” necessary, The Princeton Review found.

To that end, “Harvard has one of the best financial aid policies in the country,” Lakhani noted. Families with incomes below $85,000 pay nothing to attend and more than half of all students receive need-based scholarships. “Suddenly, your cost of attendance is much, much lower,” he said.
“Not every private university has those luxuries and that will always support Harvard’s application numbers.”
Subscribe to CNBC on YouTube.Don’t miss these stories from CNBC PRO: More