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.

Money Moves to Make This November

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November, often signifying the year’s closing – brings with it the start of the holiday season. While the excitement of festivity and preparations for family gatherings are at the forefront, it’s important not to lose sight of our financial commitments and goals. As you prepare for Thanksgiving and the upcoming holidays, also prioritize your financial health to ensure a smart start to 2024.

November’s Financial Focus

November isn’t just about preparing for the holidays. Some experts note this time of year as the most apt to evaluate and strengthen your financial status. As we near the end of 2023, consider where your money is going and how you can optimize its growth and security.

Budget Evaluation

Reflect on your journey and the goals you set for the past year. Did you reach any finish lines? Even if unexpected life events nudged you off course, understand that it’s a natural part of life’s rhythm. Making changes to a set plan isn’t indicative of failure, but instead of adaptability. Life is ever-evolving, and your financial strategies should be as well.

Boosting Your Emergency Fund

Now is an opportune moment to replenish or boost your emergency stash. A sound financial cushion, covering at least three months of essentials – can be a lifesaver in unpredictable times. Not only does this help you wrap up the year on a positive note, it also prepares you for whatever 2024 has in store.

Holiday Spending Strategy

The allure of the holiday season often leads to impromptu expenses. By preparing a precise budget for gatherings and gifts, you’re safeguarding yourself against impulse purchases. Prioritize staying on budget, and keep in mind that your overarching goal is to step into the new year debt-free.

Smart Shopping in November

Retail sales can sometimes be deceptive. To guarantee you’re scoring genuine deals, lean on digital tools. Price alert tools and comparison apps or browser extensions can be indispensable for smart shopping. Though Black Friday and Cyber Monday steal the limelight, November is sprinkled with numerous other discount opportunities.

Charitable Contributions

The holiday season often goes hand-in-hand with charitable giving. If you’re considering making donations, now’s the time. Not only does it embody the spirit of giving, but it also paves the way for potential tax write-offs. Examine potential charities with tools like Charity Navigator, ensuring your contribution makes a genuine impact.

Medical Considerations

November is often less hectic for medical professionals, making it a strategic month for appointments. If you have funds tucked away in a medical flexible-spending account (FSA), consider using them before they lapse. For those with Health Spending Accounts (HSAs), there’s less urgency – as these funds should seamlessly roll over into 2024.

Benefits Checks and Balances

As we wind down the year, it’s pivotal to review your 401(k) and other benefits contributions. If you haven’t maxed out, consider upping your contributions. For those over 70½ with funds in traditional 401(k)s or IRAs, be mindful of the Required Minimum Distributions (RMD). The financial advisors located at First Financial are here for our members, and can help you answer these types of questions as the year starts to wind down.*

November is a pivotal month to be financially diligent. With a balanced approach, you can celebrate the holidays while ensuring a financially sound new year. As the holidays unfold, the First Financial team is here to assist you in your financial management. Reach out to us at 732.312.1500 or visit any of our branches.

Want to see more articles like this? Subscribe to the First Financial monthly e-newsletter for valuable financial tips and guidance.

*Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

First Financial Member Spotlight: Lorna Cooper-Piver

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“All through the years I’ve been coming, all 47 years – First Financial has been a solid place to bank.”

Since March of 1976, First Financial has had the privilege of being part of Lorna Cooper-Piver’s financial journey. Lorna’s story is not just one of long-standing membership, but also a testament to the unwavering trust and support she has found in banking with us.

Lorna’s connection with First Financial began while she was still a high school senior. Encouraged by her father, she opened a savings account. It was a step toward building a secure financial future, and little did she know – it would mark the beginning of a decades-long relationship.

Toward the beginning of her membership, Lorna applied for a car loan that was quick and simple to attain. This showcased our commitment to providing opportunities for our members, even those just starting out in their financial journey.

Lorna’s story is a reminder of the enduring relationships we build with our members. We’re not just a financial institution – we’re a partner in your financial well-being, offering reliability and support through every stage of life.

Check out our video interview with Lorna and learn more about her remarkable journey as a long-time First Financial member.

How to join First Financial

If you live, work, worship, volunteer, or attend school in Monmouth or Ocean Counties in NJ, you’re eligible to become a member. Businesses in Monmouth or Ocean Counties and our community partners are also eligible for membership. To join, all you have to do is open a savings account with $5. It’s that easy! Once you’re a member, your immediate family can also sign up. To get started, call us at 732.312.1500, email info@firstffcu.com, or stop by any of our local branches.

How to Determine if a Donation Appeal is for Real or a Scam

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Charitable donations are a great way to make an impact on the causes you care about. But when tragedy strikes, scammers may prey on the generosity of those trying to support the victims. Scammers often request donations on social media or crowdfunding websites – or may contact you by phone, text, or email.

Common Characteristics

Charity scams occur when a scammer tricks someone into sending them money for what they believe is a worthy cause. Be on the lookout for these common characteristics of a scam.

  • Emotional appeals. Scammers may try to tug at your heartstrings by highlighting victims of natural disasters, such as wildfires or hurricanes – with an urgent appeal for donations that purportedly go toward food or shelter. Scammers commonly try to get people to act on emotion rather than logic.
  • Unusual language and names. Pay close attention to the details in any request you receive – especially poor grammar and spelling errors. Scammers may try to slightly alter a real charity’s name or website by changing a single letter and hoping you won’t notice the difference.
  • Specific payment method. Be wary if a “charity” requires you to donate through a digital payment platform or other non-refundable payment method.

Even if a charity seems real, it’s important to research the organization and look for reviews before you decide to donate. You can also do an online search for the name of the charity with the word “scam” or “complaints” to see if others have reported any issues. If you’re unable to verify a charity’s authenticity, you may want to donate elsewhere. When it comes to sending money, always remember to slow down and ask yourself questions. If something doesn’t feel right, trust your instincts.

At First Financial, our goal is to help protect our members from scams and identity theft. If you have any concerns or questions about any of your First Financial accounts, please call member services at 732.312.1500 or visit one of our branches.

To learn more about scams and ways to protect yourself, visit zellepay.com/pay-it-safe.

Zelle and the Zelle related marks are wholly owned by Early Warning Services, LLC and are used herein under license.

Accounts All Small Businesses Should Have

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As a small business owner, you’ve got a lot on your plate – and managing your finances is a big part of it. To help you navigate these financial waters with ease, we’ve put together a guide on the must have bank accounts for your business. These accounts are essential for maintaining financial organization, protecting personal assets, and supporting your business’s growth.

Benefits of Each Business Account

1. Checking Account

Let’s start with the basics – a business checking account. Here’s why this will be your go-to account:

Keeping it Separate. A business checking account keeps your personal and business finances neatly separated. No more mixing the two, making tax time a breeze.

Daily Operations. Use it for everyday transactions like paying bills, buying supplies, or receiving payments. It’s the work horse of your business finances.

Checks and Cards. You’ll get checks and a debit card, making payments and expense tracking a cinch.

2. Savings Account

In addition to a checking account, consider opening a business savings account for the below reasons:

Emergency Funds. Think of it as your financial safety net. Stash away funds for those unexpected expenses or rainy days. It’s like having a financial superhero on standby.

Grow Your Money. Unlike regular checking accounts, savings accounts often offer better interest rates, helping your money grow over time.

Future Goals. Use it to save for those big-ticket items, like equipment upgrades or expansion plans. Having a dedicated savings fund makes reaching your business goals much easier.

3. Merchant Account

If your business deals with customer transactions, a merchant account is a must have – and here’s why:

Go Digital. It enables you to accept electronic payments, including credit and debit cards. Your customers will love the convenience, and so will you.

Streamlined Processing. Your merchant account creates a seamless link between your business, your financial institution, and the credit processor. This ensures that funds from customer transactions land safely in your business account.

4. Business Credit Card

Last but not least, here’s why a business credit card can be your financial best friend:

Expense Separation. Keep personal and business expenses in separate lanes. This is a game changer for your financial records.

Track Your Spending. Monitor your business expenses more efficiently. Many business credit cards also offer detailed statements, simplifying expense management.

Rewards and Perks. Some business credit cards (like our Visa Business Cash Plus Card!) come with fantastic perks like rewards points, cash back, or airline miles – adding a little extra to your business expenditures.*

Your small business’ financial journey is an exciting one, and we’re here to help you every step of the way. At First Financial, we have a range of business banking solutions that are convenient and offer personalized service for your small business. These accounts will not only keep your financial house in order, but also lay the foundation for your business’ growth and success.

Ready to take the next step? Our business development team is here to guide you through the process. With the right accounts in place, your small business can thrive and achieve its financial goals. Reach out today by emailing business@firstffcu.com or stop by any of our local branches for more information on how to get started with a First Financial business account.

 

*This APR of 18% is for purchases, balance transfers, and cash advances and will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fees. Other fees that apply: Balance Transfer and Cash Advance Fees of 3% or $10, whichever is greater; Late Payment Fee of $35, $10 Card Replacement Fee, and Returned Payment Fee of $35. A First Financial membership is required to obtain a Visa® Business Cash Plus Credit Card and is available to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan. Your First Financial Visa® Business Cash Plus Card will earn cash back based on your eligible purchase transactions. The cash back will be applied to your current credit card balance on a quarterly basis and be shown cumulatively on your billing statement. Unless you are participating in a limited time promotional offer, you will earn 1% cash back based on eligible purchases each quarter.