Money Management

Your credit score is an important measure of your creditworthiness. Learn about the perks of raising your credit score that many people don’t know about. [[{“value”:”

Credit scores range from as low as 300 to as high as 850. Since your credit score is based on how you borrow money, no one starts out with a high score. But if you make credit card and loan payments on time and don’t borrow too much, your score will steadily go up.

You might already know some of the benefits of raising your credit score. You’ll qualify for lower interest rates on mortgages and other loans, and you’ll be able to open better credit cards with more valuable features.

Those are both important, but there are many other ways raising your credit score affects your life. Here are three more perks that could make life easier and save you money.

1. It’s easier and more affordable to rent a home

Landlords and property management companies usually run a credit check on every applicant. And whenever a credit check is involved, having a high credit score is a big advantage.

If there are multiple prospective tenants, the landlord may pick the one with the best credit score. After all, a higher score generally indicates that a person manages their money well and is more likely to pay rent on time. If you don’t have a high score, you may have trouble finding a place to live, or landlords could require a cosigner on your lease.

Some landlords also use your credit score to decide how much you need to pay for the security deposit. For example, the deposit may be equal to one month’s rent if your credit score is high enough. If your score is lower, the deposit could be one-and-a-half month’s rent or two month’s rent.

2. You could save on home and auto insurance

In most states, insurers can and do use your credit history when setting your premiums. People with lower credit scores are statistically more likely to file claims. Because that makes them a higher risk, insurers charge them more.

It’s frustrating to pay more for auto and homeowners insurance because of your credit. On the bright side, raising your credit score could make those bills much cheaper.

It’s not a small amount, either. Drivers with poor credit paid an average of $4,145 in 2023 for auto insurance, according to insurance research by The Motley Fool Ascent. Drivers with excellent credit paid less than half that for auto insurance: $1,947.

3. It’s cheaper to set up utility services

When you set up an account with a local utilities company or a wireless company, you’re applying for credit, in a way. You’re going to use that service, and then pay the company back later.

For that reason, these companies normally run credit checks when you apply for service. So if you need to get electricity, water, gas, internet, or cellphone service, there will most likely be a credit check involved.

When you have a high credit score, you can get these services without paying anything upfront. When you don’t, service providers often require a security deposit to protect them in case you don’t pay your bill.

How to raise your credit score

A high credit score is valuable, and it’s not complicated to get one. Several factors go into your credit score, but the most important are your payment history and your credit utilization.

Your payment history is a record of whether you pay your bills on time or late. However, not all on-time payments get reported on your credit file. It’s usually just credit card and loan payments. Make sure you have at least one credit card, use it every month, and pay the bill on time. If you do that, your payment history will get better and better.

Your credit utilization is the amount of money you’ve borrowed compared to how much credit you have available. For example, if your card has a $1,000 credit limit and the balance is $100, then your credit utilization is 10%. A popular rule of thumb is to keep your credit utilization below 30%. It’s also recommended to pay your credit card off in full every month, so you’re not charged any interest.

As you build your payment history and maintain a low credit utilization, your credit score will improve. With just those simple financial habits, you’ll be able to get a high credit score and all the benefits that come with it.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Explore savings and luxury with Sam’s Club. From gourmet foods to travel discounts, discover why it’s perfect for couples, even those without kids. [[{“value”:”

You might think warehouse clubs like Sam’s Club are only for the bulk-buying, minivan-driving parent crowd, but think again. Couples with no kids have just as much to gain from a Sam’s Club membership. Here’s why diving into the world of bulk goods and membership perks can be a savvy move for your personal finances, even if you’re not stocking up on diapers and jumbo packs of chicken nuggets.

1. Unbeatable savings on everyday items

Let’s start with the obvious: savings. Sam’s Club is renowned for offering quality goods at lower prices, thanks to the bulk purchase model. For couples, this means savings on daily essentials like toiletries, cleaning supplies, and non-perishable food items. Did you know that according to a 2022 report, households can save about 30% on their grocery bills by shopping at warehouse clubs? Even if you’re buying less quantity-wise, the price per unit is often unbeatable, freeing up space in your budget.

2. Gourmet food and wine selections

For the foodies out there, Sam’s Club offers an unexpected benefit: a fantastic selection of gourmet foods (like cheese) and wines. This isn’t just about buying in bulk; it’s about quality. For example, members rave about the Member’s Mark manchego.

You can find specialty chocolates and an impressive array of wines (Kim Crawford and Kendall-Jackson to name a few) at Sam’s Club, too. Picture this: a romantic evening with a fine bottle of wine and a spread of gourmet snacks, all sourced from Sam’s Club without breaking the bank.

3. Fuel discounts

Fuel costs are a concern for everyone, and Sam’s Club members enjoy a $0.05 discount at the pump. With fuel prices fluctuating, even a few cents off per gallon can add up to considerable savings over time. For couples who love road trips or have a daily commute, this perk alone can justify the membership cost.

4. Health and wellness benefits

Sam’s Club doesn’t just stop at groceries and gas. The membership comes with a surprising array of health and wellness benefits, including discounts on prescription medications (you can save up to 80%), optical services, and even fitness equipment. In an era where healthcare costs can be unpredictable, these benefits provide not only savings but also peace of mind.

5. Travel and entertainment discounts

Finally, let’s talk about fun. Sam’s Club offers a range of discounts on travel and entertainment, perfect for couples looking to explore or just enjoy a night out. From cheaper movie tickets and dining out to discounted rates on hotels and rental cars, Sam’s Club can be your secret weapon for affordable adventures. Yes, you can save up to 60% on hotels around the world and 25% on rental cars.

It pays to consider a membership

Clearly, a Sam’s Club membership isn’t just a ticket to buy toilet paper in bulk for the next pandemic; it’s a versatile tool that can enhance various aspects of your life, from daily essentials to luxury experiences. The savings on everyday items are just the beginning. With gourmet food selections, fuel discounts, health and wellness perks, and entertainment benefits, there’s a wealth of reasons for couples without kids to consider joining.

To join, you simply sign up online and choose between two membership options:

The Club membership: Opting for the Club membership ($50 a year) offers an affordable way to enjoy Sam’s Club prices, making it a budget-friendly choice.The Plus membership: For those looking for extra perks, the Plus membership ($110 a year), though pricier, adds on benefits including complimentary shipping, no-cost curbside pickup, 2% back in Sam’s Cash, and the convenience of shopping early.

So, the next time you drive past a Sam’s Club, it might be worth stopping in. Who knows? You might just discover that the bulk-buying lifestyle isn’t just for big families, after all.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Closing a credit card can have some unintended consequences for your credit score. Here are three times you should do it anyway. [[{“value”:”

You’ve got an unused credit card that’s taking up valuable real estate in your wallet. Closing that card might seem like an easy call, but it’s actually not always a straightforward decision. Canceling that card could have unintended consequences for your finances, so it’s best done only in specific situations. Here are three times it’s actually worth closing a credit card and one thing you should do after closing the card to minimize the effect it has on your credit score.

What’s wrong with closing a credit card?

Closing a credit card means you lose access to that credit limit. It might not be a big deal to you if you weren’t using it. But it matters to the three credit bureaus — Equifax, Experian, and TransUnion. Losing access to credit raises your credit utilization ratio — the ratio of the amount of credit you use each month and the amount you have access to.

For example, if you have a $10,000 limit and you have a $2,000 balance, your credit utilization ratio is 20%. It’s important to keep this under 30% to keep your credit score high. That’s why many prefer to leave old credit cards open, even if they just collect dust.

When should you close a credit card?

There are three times when closing a credit card can be worth the hit to your credit score.

1. The card charges an annual fee

Cards with valuable rewards, like some travel credit cards, often have annual fees. These can sometimes cost cardholders hundreds of dollars per year. If you use the card enough to get the annual fee back in rewards, it’s not a big deal. But if you’re not using the card, holding onto it is a waste of money.

2. It’s tempting you to overspend

Some people are tempted to spend their available credit even if it’s not the best move for their finances. Charging more to your credit cards than you can pay back each month results in costly interest charges and often a debt cycle that’s hard to get out of. Those worried about falling into this pattern may prefer to remove the temptation of the unused card altogether.

3. You don’t want to keep monitoring it

Even if you’re not using a credit card, it’s still a good idea to check your account periodically to make sure no one else is. Perhaps you made a family member an authorized user a while back and forgot about it. Or maybe an identity thief got hold of the card and is racking up fraudulent purchases in your name. Checking the account might be the only way to catch this before you get a bill. But if you don’t want to do this regularly, closing the card might be the better option.

What to do after closing your credit card

To close your card, all you have to do is contact the card issuer and let it know that you want your account closed. This won’t get you off the hook for any money you still owe the issuer, though.

Then, wait a month or two to be sure the card issuer has had time to report the account as closed to the credit bureaus. After that, you probably want to check your credit reports and scores. This will give you an idea of how closing the card has affected your credit.

You can view your credit reports for free at AnnualCreditReport.com. This shows all of the open credit accounts in your name, your balances, and your payment history. But it doesn’t tell you your credit score, which is what lenders use when deciding whether to loan you money.

There are many companies offering free credit scores, but you want one that’s offering FICO® Scores, since that’s the one lenders use most often. FICO, the creator of FICO® Scores, now enables you to get access to your Equifax FICO® Score for free. Experian also offers a free FICO® Score service.

Scores range from 300 to 850, and a higher score is better. Ideally, you’d like a score of 670 or higher. If your score is lower than this, you can try taking steps to raise it. But this usually takes time.

Closing your credit card raises your credit utilization ratio, but there are ways to lower it again. First, you could charge less to all your credit cards each month. Or you could pay your bill twice per month. Credit card issuers only report your balance to the credit bureaus once per month, so paying twice makes it appear as though you spent about half as much as you actually did.

You could also try requesting a credit limit increase on some of your other cards. But it’s best to do this only if you feel reasonably confident that you’ll be approved. You’ll have the best shot if you’ve been a reliable borrower and you haven’t applied for new credit within the last six months or so. Applying for too much new credit raises a red flag with lenders because it makes it appear that you need to borrow money in a hurry.

After you make your changes, check your credit scores again in a month or two to see their effects. And keep taking positive steps as much as you can to keep your credit score high.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Being late with a homeowners insurance payment may or may not damage your credit. But other problems can ensue. Read on to learn more. [[{“value”:”

The three credit bureaus — Experian, TransUnion and Equifax — are tasked with maintaining consumer credit histories. When you apply for a loan or credit card, the issuer does a hard inquiry on your credit report to see how risky a borrower you are.

Your payment history on your credit report will detail how timely you are with bills, such as credit card balances and installment loans. But insurance payments are typically not reported to the credit bureaus — for better or for worse.

To put it another way, timely installment loan payments have the potential to help your credit score. On-time insurance payments generally will not help your score because they’re not reported.

And on the flipside, if you’re late paying your homeowners insurance, it generally will not impact your credit negatively. But while you may not see your credit score take a hit following a late homeowners insurance payment, other unfavorable consequences could ensue.

Failing to pay for homeowners insurance could cost you in other ways

In some cases, your homeowners insurance company may decide to turn to a collection agency to get paid on the premium you’re supposed to be covering. And in that situation, if a collection agency reports your debt as delinquent, that information could appear on your credit report and damage your credit score.

Usually, though, when you fail to make your homeowners insurance payment on time, you’ll be given a notice from your insurer asking you to submit that payment within a certain period. If you go beyond that grace period of sorts, your insurer will have the right to cancel your policy. But that alone could hurt you in a couple of ways.

First, if you don’t have homeowners insurance in place, you won’t have protection in the event that your home is damaged. Some types of damage could cost tens of thousands of dollars to address, so letting your homeowners policy lapse really is not a good thing.

Remember, too, that your homeowners insurance gives you liability coverage in the event that someone is hurt on your property. If you don’t have that coverage in place, you risk getting sued personally if someone gets injured in the course of, say, delivering a package to your front door.

Furthermore, if you’re still paying off a mortgage on your home, once your homeowners insurance policy lapses, your lender will receive a notice that you no longer have coverage. At that point, your lender could buy insurance for you and stick you with the bill — a bill that may be considerably higher than the cost of the initial policy you let lapse.

Don’t put your home at risk

Being a little bit late with a homeowners insurance premium payment may not hurt your credit or cause your policy to lapse. Being very late might.

Rather than let that happen, contact your homeowners insurance company if you’re having difficulty paying your premium when it’s due. Your insurer may be willing to work out a payment plan so you don’t fall into the delinquent category and put your coverage at risk.

You can also shop around for different homeowners policies to see if you might reap savings elsewhere. But don’t just blow off a homeowners insurance premium you can’t swing, because doing so could hurt you financially for a really long time.

Our picks for best homeowners insurance companies

There are many homeowners insurance companies to choose from. We’ve researched dozens of options and short-listed our favorites here. Looking for a green build discount or easy bundle policies? Want an easy-to-use interface? Read our free expert review and get a quote today.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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