Tag Archives: Credit Management

Ways to Boost Your Credit if You’re Looking for a Home

Posted on by
Reply

The weather isn’t the only thing heating up – the spring homebuying market will soon be, too. Whether you’re considering making your move this spring or further down the road, your credit score will have a direct impact on your ability to obtain a mortgage and what you will pay for your home over time. Keep reading to learn potential benefits to boosting your credit score and some different ways to do so, before applying for a mortgage.

What is your credit score important when applying for a home loan?

As you probably know, a credit score is the number lenders use to determine your creditworthiness. Check out our guide to understanding your credit score to see all the factors that make up your score. When looking to finance a home, lenders will use the information on your credit report to decide if you’ll qualify for a mortgage and if you do – how much you can afford to pay and the interest rate that will be offered to you.

What are the potential benefits of increasing your credit score before applying for a mortgage?

  • You’re more likely to qualify for a mortgage. Lenders want to see that you have been, and can continue making on-time payments if they were to lend to you. Additionally, they want to ensure you can comfortably take on your mortgage payment along with the other payments you are making on any outstanding debt.
  • Lower interest rates. The interest rate offered to you by a lender is again based on your credit profile. Qualifying for a lower mortgage rate can save you thousands of dollars over the life of the loan.

How can you boost your credit score?

  1. Pay Your Bills in Full and On Time

Payment history shows whether you’ve made on-time payments on your reported loans and if not, how late any previous payments were made. This has the biggest impact on your credit score – making up 35%. If a payment is late, it generally impacts your score negatively and delinquency can stay on your credit report for up to seven years. Over time, the impact of late payments on your score will decrease.

Making your loan payments on time will continue to improve your credit. Additionally, making all payments on past-due accounts can help you avoid further delinquency on your report and build positive payment history.

  1. Lower Your Credit Utilization

Your credit utilization is the amount of available credit you are using. To calculate yours, divide your total credit card balance by your total credit limit, then multiply that number by 100. As a rule of thumb, try to keep your credit utilization for each credit card to 30% or less. To lenders, higher utilization signals a higher risk of missing payments and defaulting on your debt – as it shows you are relying on borrowed money and could be struggling financially.

There are two ways to lower your credit utilization – pay down debt or request credit limit increases. Paying down debt brings the total amount down, while a credit limit increase brings your available credit up. However, try to avoid spending more to match any credit limit increase so you don’t find yourself in more debt.

  1. Slow Down on Applying for & Opening New Accounts

Opening numerous loans and credit cards in a short time can hurt your credit score. New accounts are tied to factors that make up your credit score, such as length of credit history and new credit.

Length of credit history considers factors like the average age of your accounts, and your oldest and newest accounts. Generally, a longer credit history is better for your credit and shows you’ve successfully managed your debt over time.

When you apply for new credit, an inquiry is placed on your credit report. An inquiry shows that a lender requested your credit information, likely to make a lending decision. Depending on other factors in your report, this inquiry may temporarily drop your score.

  1. Review Your Credit Report

Before applying for any type of loan, it is always best to obtain a copy of your credit report and verify that the information is accurate and up to date. This will help you catch potential errors, which you can correct by contacting the credit bureaus before applying for a loan. Federal law allows you to get a free copy of your credit report every 12 months from each credit reporting agency. You can request your free credit report at AnnualCreditReport.com.

If you’re located in Monmouth or Ocean Counties in New Jersey and considering springing into the homebuying market this season, we can help welcome you home with a First Financial Mortgage! Our mortgage loans have terms up to 30 years, personalized service, low fees, and no pre-payment penalties.* If you’re just getting started and have questions, schedule a no-commitment video chat or phone call with one of our mortgage experts. You can also register for our text alerts to see when our mortgage rates change. We’re happy to help with your homebuying journey every step of the way!

*APR = Annual Percentage Rate. Subject to credit approval. Credit worthiness determines your APR. Rates quoted assume excellent borrower credit history and are for qualified borrowers. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. Higher rates may apply depending on terms of loan and credit worthiness. Minimum mortgage loan amount is $100,000. Available on primary residence only. The Interest Rates, Annual Percentage Rate (APR), and fees are based on current market rates, are for informational purposes only. Rates and APRs listed are based on a mortgage loan amount of $250,000. Mortgage insurance may be required depending on loan guidelines. This is not a credit decision or a commitment to lend. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. See Credit Union for details. A First Financial membership is required to obtain a Mortgage and is open to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties. 

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

Posted on by
Reply

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.

Finding a Credit Card That Fits Your Lifestyle

Posted on by
Reply

Although picking a credit card isn’t as big of a decision as buying a house or car, choosing the right credit card to add to your wallet isn’t a decision that should be taken lightly. You might have an idea of the cards that are out there as a result of receiving offers in the mail, or you might just be embarking on your hunt for “the one” – your dream credit card, that is. Either way, the number of options available to you might be overwhelming. Just like the cliché saying goes, there is a credit card out there for everyone – you just have to find it. Here are some steps to help you find a credit card that fits your lifestyle.

Check Your Credit Report

Although report cards as you know them stop after high school, a credit report functions like an “adult” report card. A credit report is a snapshot of your credit situation today and your credit history over time, such as your current loans and how well you’ve done paying those loans on time. Just like your parents might have rewarded you for bringing home a satisfactory report card, credit card companies reward you for maintaining a good credit history by qualifying you for credit cards with better perks. There are various ways to check your credit score and once you do – you’re one step closer to identifying what credit cards you may qualify for. Check out our Guide to Understanding Your Credit Score to understand what factors make up your credit score and how to maintain or improve it.

Identify Which Credit Card Will Help You Meet Your Needs

Once you know your credit score, you can better assess what type of credit card will best meet your needs and what you can reasonably expect to get approved for. According to NerdWallet, there are three general types of credit cards:

  • Cards for those with limited or damaged credit history: Some credit card issuers offer credit cards for young people over age 23 who are looking to establish credit history. These credit cards are often easier to get qualified for and typically have lower credit limits. Secured credit cards may be an option if you have no credit or poor credit. To compensate for the added risk, the credit card issuer will take an initial deposit from you which sets your “credit limit.” Your deposit is not used to pay for your purchases – the deposit is there for the card issuer if you don’t pay your bill. If you exhibit good behavior, such as paying your bill on time each month – the issuer may upgrade your account to an unsecured credit card with no deposit required.
  • Cards for those who value low interest: Cards with introductory 0% APR periods or ongoing low APRs are usually better options for those who expect to carry a balance, have an unpredictable income, or who expect to make large or emergency purchases.
  • Cards for those who value rewards: Rewards credit cards are generally well-suited for those who intend to pay their balance in full every month and not incur interest. That’s because rewards credit cards generally have higher APRs, but provide benefits like sign-up bonuses and points, miles, or cash back on purchases.

It’s important to examine your values and spending habits to determine which credit card type would be the best fit for you.

It’s Time for a Vocabulary Lesson

You are setting yourself up for success when it comes to using your credit card responsibly if you understand important credit card terminology. Although there are more comprehensive lists of credit card terminology, here are a few terms to get you started.

  • Annual Percentage Rate: Usually referred to as APR, this is the interest rate you are charged if you carry a credit card balance each billing cycle – if you don’t pay your balance off in full.
  • Credit Limit: The maximum amount of money you can charge to your credit card, set by your credit card issuer. This is a ceiling, as you typically can’t spend more than your credit limit without incurring penalties.
  • Minimum Payment: The smallest amount you can pay on your credit card bill each month to keep your account in good standing. Failing to make this payment typically results in late payment penalty fees.

Apply for the Credit Card That Fits Your Lifestyle

Once you’ve done your homework and are confident in your decision, it’s time to apply for your credit card of choice. Depending on the type of credit card you decide on, ensure you understand all of the terms and benefits to make the card work for you. For example, if you applied for a credit card because you liked their introductory cash bonus offer – make sure you understand the amount you have to spend by the deadline to ensure you qualify for the cash bonus.

If your credit card research has led you to First Financial, rest assured we have a credit card to fit any lifestyle. Whether you’re looking for a no-frills credit card with a lower interest rate, a credit card that’s a stepping stone, or a credit card that rewards you – we have various options that put your needs and wants first.* You can apply online 24/7, or call our Loan Department at 732-312-1500, Option 4 if you have questions.

*APR varies up to 18% when you open your account based on your credit worthiness. These APRs are for purchases 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 $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa Credit Card and is available to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties. See firstffcu.com for current rates.

Common Reasons for Drops in Your Credit Score

Posted on by
Reply

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.

Ways to Avoid and Fix Credit Card Debt

Posted on by
Reply

At the beginning of 2023, the total of U.S. credit card debt remained at $986 billion, unchanged from the end of 2022 – according to a Federal Reserve Bank of New York report on household debt. In addition, credit card balances are up 20% from a year ago, according to a recent report from TransUnion. The average balance was found to have risen $5,733 over that same period. These figures are astonishing, however as inflation continues to rise – many consumers have turned to their credit cards to purchase items they feel they need to continue their standard of living. Continue reading to discover ways to avoid credit card debt, and if you’re currently in debt – how to fix it.

Avoiding Credit Card Debt

Know your numbers. Do you know what your Annual Percentage Rate (APR) is on the credit card you use most frequently? If you pay your balance off in full each month, this number might not make a difference to you – but if you carry a balance, you’ll want to make sure it’s on a credit card with as low of an APR as possible. This number determines the interest you’ll pay each month for carrying a balance. And the bigger the balance, the more you’re going to pay in interest. Credit unions have a maximum APR of 18% on all credit cards. Be sure to stop into your local credit union to inquire, or if you live, work, worship, volunteer or attend school in Monmouth or Ocean Counties in NJ – check out our four great consumer credit card options.* We’re sure there’s one out there for you!

You’ll also want to pay attention to if your credit card offers a grace period on payments, if there’s an annual fee associated with your card, what your monthly payment due date is, and if there are any additional fees. Note that late and annual fees can add a balance that you weren’t expecting, which can be worrisome if you’re already carrying a high balance that you’re having trouble paying.

Use your credit card as just that. Using your credit card for anything other than making occasional purchases within your budget, can cause you to rack up more debt from fees and other service charges. For example, using your credit card to make a cash advance, using your credit card at an ATM, or to make a balance transfer can end up costing you more in the long run. Taking a cash advance out of your card balance or using your credit card at an ATM for cash, typically come with higher interest rates on the cash advance and fees for using the service. While a balance transfer promotion offering a lower APR to transfer your balance from another higher rate card might seem attractive, if you don’t pay off that balance within the promotional period or make any new purchases on that card – you may be paying anything remaining after the promotion ends at an even higher interest rate (plus any initial balance transfer fees for using the service). The moral of the story here is – if you are going to use a credit card, use it for regular purchases only that you can afford to pay off within the current billing cycle (usually 30 days).

Avoid auto-saving your card online. If your credit card is saved online within a website you frequently shop, an app, or your mobile phone – delete it. If one-click impulse buying is a problem for you, manually having to get your credit card and type the numbers in for every purchase should really make you evaluate whether that purchase is worth it or not.

Don’t carry your card on you all the time. If you’re always reaching into your wallet for that certain credit card, leave it at home and only take it out when you absolutely need it. This will also stop impulse buying, and you’ll have to plan out your trip to the store you want to use the card at and can decide if you truly need and can afford the item(s).

Already in Credit Card Debt? Here are some ways to fix it:

Evaluate what and where you charge. Start with a monthly budget. You can’t pay off debt if you don’t actually know what’s coming in and going out each month. This will give you the real numbers you need to work with so you know how much you bring in on a monthly basis, and what bills you need to pay in that month with that income. Anything else that is not a necessity should be stopped until your credit card debt is paid off.

Make a plan for paying off your debt. The best approach here, especially if you have multiple credit cards to pay off – is tackling the one with the highest interest rate first. Pay this card all the way down and then move onto the card with the next highest interest rate until all are paid off. Do not charge any additional purchases to any credit cards during this payoff period.

Take out a personal loan from your credit union. Instead of continuing to rack up debt and pay more in interest on high rate credit cards, take out a lower rate personal or consolidation loan from your local credit union.** Use the loan to pay off all your credit card debt, don’t make any additional credit card purchases, and then tackle paying off that personal loan. You’ll pay off your debt at a much lower interest rate, and your credit score may even improve since you’ll be reducing your credit utilization at the same time.

Look for a long-term 0% balance transfer offer. While a short-term credit card balance transfer isn’t usually advisable, a longer term one which offers 0% on balance transfers for at least one year or longer – may work for you if you do it right. This means you will need to fully concentrate on paying off all your credit card debt within the balance transfer period. If that promotional period is 0% for 18 months, then all the debt you have transferred needs to be paid off by the end of that 18 months and no new charges – otherwise you risk adding on more interest at a higher rate for anything not paid off by the time the offer ends. This method requires strict planning and budgeting.

Open a high yield savings account. If you have any leftover funds at the end of each month in your budget, put them in a high yield savings account that will pay you some dividends for keeping your money in it. This will help you build a savings reserve and hopefully prevent you from accruing more debt while you’re trying to pay off your existing balance.

While credit cards can be a great financial tool and resource, it’s good practice to only use them as that. Always use a credit card in moderation, and avoid making tempting but unnecessary purchases on them. If you have questions about credit management or would like to make an appointment with one of our staff to help you with a game plan to pay off credit card debt – visit a local branch or call 732.312.1500.

*APR varies up to 18% for purchases, when you open your account based on your credit worthiness. The APR is 18% APR for balance transfers and cash advances. APRs 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 Fee. Other fees that apply: Cash advance fee of $10 or 3% of the total cash advance amount—whichever is greater (no maximum), Balance transfer fee of $10 or 3% of the balance—whichever is greater (no maximum), Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa® Credit Card and is available to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

**APR = Annual Percentage Rate. Actual rate will vary based on creditworthiness and loan term. Subject to credit approval. Personal Loan repayment terms range from 12 to 60 months, and APRs range from 10.24% APR to 18% APR. Minimum loan amount is $500. Loan payment example: A $2,000 Personal Loan financed at 10.24% APR for 24 months, would have a monthly payment amount of $92.51. A First Financial Federal Credit Union membership is required to obtain a Personal Loan or Line of Credit, and is open 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.

4 Hacks to Raise Your Credit Score

Posted on by
Reply

Your credit score. Chances are you either love it or hate it. It’s either the greatest thing in the world or a total hindrance. Or, maybe you don’t really know enough about your credit score for it to make an impact on your life.

As a whole, Americans’ credit scores are beginning to increase but our knowledge of credit and how it works is declining. A recent survey from credit scoring company Vantage Score and the Consumer Federation of America, found that 32% of the people surveyed didn’t know they had more than one credit score.

Let’s forget about how many credit scores we have for a second and answer a very basic question: What is your credit score? 

Your credit score is a three digit number ranging from 300 (the lowest possible score) to 850 (the highest score). Lenders use your credit score to make decisions about whether or not to offer you credit – such as a credit card, car loan or mortgage. Your credit score is also used to determine the terms of the offer – such as what your interest rate will be.

Your credit score is calculated by looking at these categories:

  • Payment history
  • Your debt-to-income ratio
  • Total debt
  • Length of credit history
  • Types of open credit
  • Public records (such as bankruptcy)
  • Number of inquiries on your credit report
  • New credit

So, what is considered a good credit score? 

The average credit score in the United States ranges between 670 and 710. According to Experian, a “good” credit score is anything that falls between 661 and 780, which is about 38% of the population. Usually, if an applicant falls in that “good” credit range, they’re likely to be approved for credit at competitive rates.

Now that we know what a credit score is and what classifies as a good one, the next question to look at is: Why does your credit score matter? 

Think of your credit score like a report card you used to get while you were in school. Your report card measured your progress during the school year, and your credit activity puts you into a scoring range. But, unlike grades – credit scores aren’t stored as part of your credit history. Instead, your score is generated each time you apply for credit. Fact: It actually negatively impacts your credit score if you have multiple inquiries in a short period of time.

What are your major financial goals? Buying a home? Buying a car? Chances are, your credit is likely going to be a factor in framing that financing picture. Your score will actually tell a lender whether or not you qualify for a loan and how good the terms of the loan will be. For instance, the lower your credit score is, the higher your interest rate on a loan will be.

If you’ve looked at your credit report and you’re surprised to see it’s lower than you thought, there are simple ways to fix that:

  • Pay your bills on time. That goes for ALL your bills – not just credit cards and loans. Fact: Payment history is the most heavily weighted factor of your credit score. It makes up 35% of your total score.
  • Keep your credit card balances low. Credit history accounts for 15% of your credit score, so keep those old accounts open even if you don’t use them.
  • Space out your credit applications. Each time you apply for a line of credit, the inquiry is noted on your credit report. One or two inquiries aren’t a huge deal, but when you have a bunch within a two year period, it can cause your score to fall.
  • Mix up your credit. Your credit mix, or the types of credit accounts you have, makes up 10% of your credit score. Basically, lenders want to see that you can use different types of credit responsibly.

Credit doesn’t have to be scary or overwhelming. There are many responsible ways to start out slowly and build worthwhile credit for the future. First Financial can help! Are you looking to build or establish credit? We have a number of ways to start you on the right path. Stop by one of our branches today or give us a call. You can also check out our credit management guidebook on our website, for some additional tips.