Tag Archives: Improving your credit score

How’s Your Credit? Mid-Year Credit Score Check-In

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As the year hits its halfway point, it’s also the perfect time to hit pause and check in on your financial health – especially your credit. Your credit score plays a big role in determining your eligibility for loans, credit cards, rental applications, and more. While most people wait until they need credit to check on it, a mid-year review can help you stay ahead of any surprises. Not sure where to begin? Here are some things to consider that may help improve your credit score.

 Pull Your Credit Report and Review it Carefully

You can access your credit report at no-cost on AnnualCreditReport.com. Look for:

  • Any accounts you don’t recognize (this could be a sign of identity theft).
  • Inquiries you didn’t authorize.
  • Payment history and status of accounts.

Review Credit Card Balances, Utilization, and Rates

One of the biggest factors affecting your credit score is credit utilization, or how much available credit you’re using. The general rule is to keep this below 30%, but the lower the better. For example, if you have a $5,000 credit limit – aim to carry no more than a $1,500 balance. Make a list of all your credit cards, their current balances, and limits. Create a payoff plan to reduce any high balances if they’re creeping up toward that 30%.

Some credit card companies will change interest rates based the market (prime rate), or your credit profile. Review your most recent statements or contact your card issuer directly, if you are unsure of your current APR. If your rate has increased and your credit is still in good standing, consider transferring your balance to a lower-rate card (First Financial has some great options!).

Monitor Progress Toward Paying Off Debt

If paying off debt was one of your 2025 goals, now is the time to assess your progress. Look at:

  • How much you’ve paid off so far this year.
  • What your current payoff timeline looks like.
  • Whether you can increase your monthly payments, even slightly.

Consider using debt payoff methods like the avalanche method (tackling the highest interest debt first) or snowball method (paying off the smallest balance first for motivation), to cut down on debt and increase your credit score.

First Financial is Here to Help

Whether you’re looking to pay off high-interest debt, consolidate balances, or build credit from scratch – First Financial offers tools to support your journey:

Visit firstffcu.com, call 732-312-1500, or stop by your local branch to take the next step in your credit health journey.

*A First Financial membership is required to obtain any loan and is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. See credit union for details. A $5 deposit in a Base Savings Account is required to establish membership prior to opening any account/loan.

Common Reasons for Drops in Your Credit Score

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When it comes to personal finance, one of the most pivotal benchmarks is your credit score. This three-digit number is the barometer lenders use to gauge your creditworthiness. It’s a quantified assessment of your ability to repay debts, and it can fluctuate for a variety of reasons. Understanding these fluctuations, especially what causes a drop in credit score – is essential for financial stability and agility.

Late or Missed Payments

One of the most significant contributors to a drop in credit score is late or missed payments on your credit card. Your payment history carries considerable weight in credit score calculations, and even a single missed payment can negatively affect your score. It’s imperative to stay on top of your payments. If you’ve missed a payment, don’t panic. Instead, set up automatic payments to prevent future lapses and regularly review your credit report to ensure all payment information is accurate and up to date.

High Credit Utilization

Another reason for a drop in your credit score can be high credit utilization. Experts recommend keeping your credit utilization—the percentage of your credit limit that you use, below 30%. High utilization can signal to creditors that you’re over-reliant on credit, and reducing your balances can help mitigate the impact on your score. Remember, the goal is to demonstrate that you can manage credit responsibly.

Decreased Credit Limits

Sometimes, a drop in credit score is due to a lower credit limit. This can unexpectedly increase your credit utilization ratio. If you find your limit reduced, contact your credit issuer to discuss why it happened and whether it can be restored – especially if you haven’t changed your spending habits.

New Credit Applications

Applying for new credit can also result in a drop in your credit score due to inquiries from lenders. While one application might not cause a significant change, multiple applications within a short timeframe can be problematic. Be strategic about when and how often you apply for new credit to minimize the impact on your score.

Closing Credit Accounts

Closing credit accounts might seem like a positive step, but it can actually lead to a drop in your credit score. This can shorten your average credit history and potentially increase your credit utilization ratio. Sometimes the long-term benefits of closing an account outweigh the short-term impact on your score. Ultimately, you’ll need to decide which is right for your particular financial scenario. It’s often best to pay off these credit accounts, and just stop using them – rather than closing them out completely.

Major Financial Events

Major negative financial events such as bankruptcy or foreclosure, have profound effects on your credit score. These incidents can stay on your credit report for years, so it’s important to manage debt wisely and seek assistance before such events occur.

Inaccurate Information

At times, a drop in credit score could be due to errors on your credit report. Regular checks of your credit report can help you spot and address inaccuracies quickly. Whether it’s a misreported payment or incorrect personal information, it’s within your rights to dispute these errors and have them corrected.

Identity Theft

Lastly, identity theft can cause a significant and unexpected drop in your credit score. Monitoring your credit can alert you to potential fraud, and if you suspect identity theft – immediately placing a fraud alert or credit freeze can prevent further damage to your score. Brush up on what to do in this situation ahead of time so you’re prepared if this ever happens to you.

Maintaining a robust credit score is an ongoing process. By understanding the common causes that can trigger a drop in credit score, you’ll be better prepared to protect and improve your credit standing. Always remember that each aspect of your credit history is a piece of a larger financial puzzle.

For more information on managing your credit and to set-up an appointment at one of our branches, contact us at 732-312-1500. Stay on top of your financial health by subscribing to First Financial’s monthly newsletter or check out our handy guide on credit management.

Steps to Improving Your Credit Score

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Maintaining a good credit score is an important part of building your financial future. Not only does your credit score help lenders determine your credit risk, but it also affects the interest rates and fees you pay. Without a good credit score, you’ll have difficulty securing a loan or mortgage down the line. But don’t stress! If you take action to improve your credit score now, it will start increasing in no time.

What makes up your credit score?

Understanding your credit score is a crucial piece of planning your financial success. The bulk of your credit score is made up of your payment history (such as on time or late payments) and the amount owed. Additional factors include the length of credit, new credit (or the accumulation of debt in the last 12-18 months), and the type of credit.

What will hurt your credit score?

Maintaining a good credit score means being cautious with how your handle your money. Your credit score can be negatively impacted by:

  • Missing or late payments
  • Maxing out credit cards and shopping for credit excessively
  • Opening up numerous loans and credit cards in a short time frame
  • Closing credit cards out (as this could lower your available capacity)
  • Borrowing from finance companies

How to improve your credit score

Poor credit won’t haunt you forever, and it’s still completely possible to turn your credit score around! While there is no quick fix, there are long-term improvements you can make to help boost your score over time.

Here’s what you can do to better your credit:

  • Pay your bills on time – You may have to set a reminder on your phone so you don’t forget, but this is very important!
  • Pay off or pay down your credit cards. Come up with a payment plan that focuses on paying down the highest interest cards first, even if that means maintaining minimum payments on your other accounts in the meantime. The goal is to keep credit card balances low and pay them off when possible.
  • Don’t close credit cards – This may decrease your capacity, thus negatively impacting your score.
  • Slow down on opening new accounts as this approach could backfire and actually lower your credit score.
  • Contact a financial advisor or creditor if you’re having trouble making ends meet. They will help you better manage your credit and pay on time.

Don’t let your credit score stop you from bettering your financial future! Use our guide to managing your credit and getting out of debt for additional tips and resources, or stop into your local branch to speak with a representative!