Best way to protect your credit score
Recent data makes it clear that financial health can’t be overlooked. Just as medical checkups are essential for your body, regularly reviewing your financial health is key to keeping your money on track. Changes in policy, wild swings in cost of living, and shifts in what gets reported to credit agencies are all combining to put many credit scores under pressure. For millions, student‑loan payments resuming—and missed payments once again being reported—are already driving steep drops in credit. But with awareness and the right habits, you can protect your score and even reverse damage.
What Recent Trends Show
- CNN reports that millions of borrowers have already seen their credit scores drop by more than 100 points following the resumption of student loan payments, with Generation Z youth among the most affected. (CNN)
- The New York Fed’s Q2 2025 Household Debt and Credit report shows student loan debt now totals about $1.64 trillion, and 10.2% of that aggregate student debt is 90+ days delinquent, after many missed payments from pandemic‑eras finally being reported. (newyorkfed.org)
- Other debt types—credit cards, auto loans—aren’t seeing as sharp an increase in delinquency, but total household debt is rising, suggesting less buffer for many people when things go wrong. (newyorkfed.org)
- In short: many of the credit‑score headwinds people are facing in 2025 are not surprises — they come from resumed obligations, delayed reporting, economic strain (inflation, interest rates), and gaps in awareness. The good news is, most of the levers that affect credit are within reach.
Credit Score Factors (and Typical Weights)
Based on FICO’s public guidance
| Factor | Typical Weight | What to do about it |
| Payment history | ~35% | Turn on autopay for minimums; Emma pings you 5 days before due dates. Also, if you miss a payment, catch up quickly and ensure servicers report your status properly. |
| Credit utilization(revolving debt levels relative to limits) | ~30% | Use Finhabits/Emma to set alerts when any card’s utilization climbs. Plan mid‑cycle paydowns to reduce what gets reported. Shift spending to cards with lower utilization or higher limits. |
| Length of credit history | ~15% | Keep older accounts open and lightly active (e.g. small recurring charges + autopay). Don’t close old cards just because you don’t use them heavily; they help average account age. |
| New credit / inquiries | ~10% | If thinking about new loans or cards, try to bundle applications so hard inquiries cluster rather than spread out. |
| Credit mix | ~10% | Having both installment and revolving debt can help, but don’t take on debt just for mix’s sake. Focus instead on having clean, on‑time behavior and reducing revolving balances. |
Documents & Steps: Audit Your Credit Health This Week
Here are concrete tasks you can do now. Use Finhabits and Emma, Finhabits’ Virtual Financial Planner, to make them stick:
- Pull your credit reports & score.
You’re entitled to free reports from the major bureaus. Check them for errors, outdated accounts, or negative items that may be unfairly hurting you. - Map your revolving debt.
List each credit card, its limit, the current balance. Compute utilization per card and overall. Ideal: keep under 30%; best case: single digits. - Turn on autopay everywhere possible.
Especially for credit cards and student loans. Avoiding even one 30‑day late is critical. - Right‑size payments toward high APR debt.
Credit card APRs are high; paying only the minimum keeps you stuck in interest. Use avalanche (highest interest first) or snowball methods depending on what motivates you. Let Emma simulate both and help you decide. - Address student loans proactively.
If you think you might miss a payment, contact your servicer before the due date. Check whether income‑driven plans, deferment or forbearance are options. Also be aware of recertification deadlines. - Use Finhabits: check your Financial Health Score now. And if you become a Finhabits member, you can build your financial plan with Emma to keep control of your finances.
Common Mistakes (and the Fix)
| Mistake | Why it hurts | What to do (with Emma/Finhabits) |
| Letting one card’s utilization spike | Even if your overall utilization is okay, a single card maxed‑out can drag your score a lot because the credit bureaus often see per‑card utilization. | Pay that one card down first, make a mid‑cycle payment to drop its reported balance; consider requesting a credit‑limit increase. Emma will monitor that card and send you alerts if it creeps up. |
| Paying only the minimum at ~21% APR | Most of your payment goes to interest; very little chipping away at principal means the debt lingers. | Funnel extra dollars to highest APR balances first (avalanche method), or use snowball for motivational wins. Automate what you can. Emma helps schedule extra payments. |
| Closing your oldest card (or letting old credit accounts go inactive) | You lose credit history length, reduce your total available credit, and shorten average account age — all of which can lower your score. | Keep legacy cards open, use them lightly (maybe for a small subscription you actually use) and on autopay. Emma can keep a “dormancy watch” to avoid forgotten closures. |
| Ignoring student‑loan notices or deadlines | Missed recertifications, missed payments lead to delinquencies being reported. Once reported, it can cost 100+ points, take years to repair. | Track communication with your servicer; set up reminders for deadlines, document everything; consider income‑driven repayment. Emma can help you stay on top of timeline and nudges. |
FAQs
Does checking my score weekly hurt it?
No. Self‑checks are “soft inquiries” which don’t affect your credit. Using multiple bureaus over time is okay.
What matters most for my score in 2025?
Payment history and credit utilization remain the heaviest weighted factors. Given current trends (student loans being reported again, rising delinquency), keeping up with payments and keeping utilization low are especially critical.
Why did my score drop even though I paid on time?
Often because of rising reported utilization or delayed reporting of past missed payments. Sometimes old debts reappear; sometimes balances go up between cycles. Fix: look for utilization spikes, see what’s newly reported, pay down fast.
Are scores really falling this year?
Yes. Multiple sources — FICO data, the New York Fed, and news outlets ‑‑ show average scores slipping, especially for younger borrowers. But decline doesn’t mean you’re stuck; with consistent behavior and alerts/nudges, you can stabilize and improve.
Should I close cards I don’t use?
Usually not. Old cards contribute to history and boost available credit. If you do close one, better to close one with less history and lower limit rather than oldest/high‑limit one. If you have old cards you want to keep open, keep them lightly active with tiny recurring charges + autopay. Emma can track them so you don’t forget.
Bottom Line
2025 is shaping up to be a turning point: resumed student loan payment reporting, elevated delinquency, and tightened financial margins. But you can act now to protect your credit and control the narrative of your financial health.
Here’s what to do today:
Check your Financial Health Score.
Start your Finhabits membership and create your Financial Plan with Emma.
Pull your credit reports & score.
Turn on autopay everywhere possible.
Small habits, repeated over time, protect your credit — and gain you more financial peace of mind.
Glossary (Quick Definitions)
- Financial Health Score: An at‑a‑glance measure of your overall money stability—covering cash buffers, debt momentum, and payment habits. Complements—not replaces—your credit score.
- Credit utilization: The ratio of your balances on revolving credit (credit cards etc.) compared to their limits; lower is better.
- Payment history: On‑time and late payments; the biggest factor in most scoring models.
- Delinquency: When a payment is past due—30, 60, 90+ days. Serious delinquency (90+) has an especially big impact.
- Hard inquiry vs soft inquiry: Soft = you checking your own report; hard = lender checking it (when you apply for credit). Hard inquiries can lower score temporarily.
- Installment vs revolving credit: Installment = fixed loan (student, auto, mortgage), revolving = flexible (credit cards). The mix matters somewhat but behavior matters more.
Sources
- CNN, “Debt, Credit Scores, and Student Loans” (cnn.com)
- New York Fed, Household Debt and Credit Report, Q2 2025 (newyorkfed.org)
- Business Insider, “Gen Z is feeling the pain …” (businessinsider.com)
- AP News, “Student loan payments have restarted. Here’s how to manage the impact …” (apnews.com)
- Bloomberg, “FICO Scores Fall at Fastest Rate Since Financial Crisis” (bloomberg.com)
