Money Management

A large increase in your credit score could open up more affordable borrowing options. Read on for tips on how to boost your score to reap the benefits. 

Your credit score says a lot about you as a borrower. It tells lenders whether you’re someone who manages their debt well and can be trusted to repay debts in a timely manner. That’s why it helps to build up as high a credit score as you can. And if you’re able to raise your credit score by 100 points, you might open up a world of affordable borrowing opportunities.

A 100-point credit score boost can do a lot of good

Your credit score may not rise by 100 points overnight. But if you take certain steps to improve it, like paying all of your bills on time, then gradually, you might see it go up by 100 points.

The higher your credit score, the more likely you are to get approved when you want to borrow money or sign up for a new credit card. And you’re also more likely to snag a competitive borrowing rate on a loan when you apply with strong credit.

The reason for that is simple. Lenders perceive borrowers with higher credit scores to be less of a risk. So in return, you get rewarded in the form of a lower interest rate on the loan you’re signing. A lower credit score could lead to a higher interest rate when you go to borrow money, thereby costing you more.

As an example, let’s say you’re looking to sign a $300,000 mortgage today. FICO says that with a score of 800, the average rate you’ll get is 6.488% (as of this writing), resulting in a monthly payment of $1,894.

On the other hand, if your credit score is 700, the rate you’d be looking at, on average, is 6.710%. And that would leave you with a monthly payment of $1,938. So all told, in this case, a credit score that’s 100 points higher could save you $44 a month, or $528 a year.

How to boost your credit score

Your payment history carries more weight than any other individual factor when calculating your credit score, so it’s important to pay all of your bills on time if you want your credit score to increase. Another thing you can do is pay down a chunk of existing credit card debt. The lower your total outstanding balance relative to your spending limit across your various cards, the more it can help your score.

One additional thing it pays to do if you’re looking to give your credit score a lift is check your credit report for errors. That’s because a mistake that paints you in a less favorable light could be dragging your credit score down, and correcting it could result in a quick boost.

Let’s say your credit report shows you were 90 days late paying a bill when, in reality, you paid it on time. If you can dispute that error and get it corrected, that alone might result in a credit score boost of close to 100 points, depending on your circumstances.

All told, raising your credit score by 100 points could do a lot of good things for your finances. So if you feel your score needs work, take these steps to help it steadily improve.

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Many people shop at Costco for the express purpose of saving money. Read on to see how you can eke out even more savings. 

Shopping at Costco can be a really fun experience — especially if you throw in a trip to the food court for a low-cost meal. But for many people, the primary goal of shopping at Costco is to be able to save money. And if you put these strategies to work, you may find that you’re able to reduce your spending quite a bit.

1. Buy Kirkland products

Kirkland is Costco’s signature brand, and you’ll find the Kirkland label on everything from paper products to baked goods. You may be inclined to stick to the name-brands you know and love at Costco, and enjoy savings by virtue of loading up on them in bulk. But if you’re willing to give Kirkland products a chance, you may find you’re able to shrink your costs even more.

As one example, if you buy a bulk pack of Kirkland diapers, you’ll pay $0.18 per diaper, whereas if you buy a bulk pack of Huggies diapers at Costco, you’re looking at $0.24 per diaper. Also, these are the prices listed online at Costco.com. The prices you see at your local warehouse may be lower — and there may be even more savings by opting for Kirkland diapers over Huggies at the store.

2. Actually read through the monthly coupon books

You probably get your fair share of junk mail. And so you may be inclined to toss your monthly Costco mailers in the trash.

But before you do, give them a read and take note of items in your regular rotation that are available at a discount. If they’re things that aren’t perishable, you can stock up while they’re on sale and save yourself some money.

3. Pay attention to price reductions

It’s not uncommon for Costco items to go on sale. If that happens after you’ve purchased something, don’t hesitate to head over to customer service and ask for a price adjustment. If you’re within 30 days, Costco will generally do this without any sort of hassle whatsoever — even if you don’t have the item with you.

4. Upgrade to an Executive membership

An Executive membership at Costco costs $120 a year, while a basic one only costs $60. Upgrading and paying more might seem like a not-so-effective way to save money at Costco. But in many cases, your Executive membership will more than pay for itself.

The great thing about the Executive membership is that it gives you 2% back on all Costco purchases — even online ones. Once you spend $3,000 at Costco in a given year, you break even, because 2% of $3,000 amounts to the extra $60 an Executive membership costs. So even if you only end up snagging $65 in cash back from that upgraded membership, you’ve saved money all in.

Saving extra money at Costco often boils down to paying attention to the finer details — factors like differences in price between brands and sale items. And also, if you want to save more, don’t write off getting an Executive membership. You might come out well ahead financially despite the initial outlay.

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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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Using credit cards for all of your purchases could help you score cash back, but it could also backfire on you. Read on to learn more. 

Credit cards can be a convenient way to pay for purchases. If you have a credit card in your wallet, you don’t have to worry about running to the ATM to take out cash to buy the things you need. And the more purchases you put on your credit cards, the more opportunities you have to be rewarded in the form of cash back. When you hand a dollar to a cashier, they’re not going to hand over a few pennies as a thank you.

But only using credit cards and never paying for purchases in cash may not work out so well for you. Here’s why.

You could face your share of fees

You might be able to get away with paying the bulk of your bills with a credit card without it costing you more money. But there are certain expenses where you’re likely to face a surcharge if you attempt to pay by credit card.

First, over the past few years, more and more restaurants and small businesses have taken to imposing fees for swiping a credit card. Since these businesses are charged processing fees, they pass that cost onto their customers so they don’t have to absorb it themselves.

Secondly, if you pay a mortgage, you generally won’t get the option to use a credit card. However, some mortgage loan servicers will allow you to use a third-party system to make your payments. In that situation, though, you’re almost guaranteed to be charged a fee or surcharge for that convenience.

Some businesses won’t even take credit cards

You may be the sort of person who, as a general rule, never carries cash. But one thing you should know is that some businesses simply do not accept credit cards — and they don’t even have the equipment to process transactions on them.

Also, some businesses — notably, smaller ones — impose a minimum purchase requirement to be able to swipe a credit card. So let’s say you want to make a $7 purchase and there’s a credit card minimum of $10. You might end up spending an extra $3 needlessly to be able to use your card.

Only borrowing via credit cards might hurt your credit score

Your credit mix, which speaks to the different types of credit accounts you have, represents 10% of your credit score. If your only form of borrowing is credit cards and you don’t have any installment loans (like auto loans) or have never had any in the past, that could reflect negatively on you — and result in a lower credit score. And that could impede your ability to qualify for the credit cards you want with the best rewards programs.

There’s nothing wrong with primarily using credit cards to pay for your various expenses. But you may want to make a point to carry some cash, just in case. And you should recognize the impact it might have on your credit score if you’ve never borrowed money other than in credit card form.

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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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When a stock of yours loses value, you don’t necessarily have to panic. Read on to see why. 

Opening a brokerage account and investing in stocks is a great way to grow wealth over time. The stock market has, over the past 50 years, generated an average annual 10% return, as measured by the performance of the S&P 500. This means that if you were to put $2,000 into a group of S&P 500 stocks or ETFs today, your portfolio might be worth about $235,000 50 years from now.

Ideally, your goal in buying stocks is to see their value rise over time. But there may come a point when a stock you own loses value.

Stock values can fluctuate a lot based on various factors. A general stock market downturn could result in a stock you own losing value. Or you might see the value of a stock of yours decline following a lackluster earnings report or other negative news pertaining to the company itself.

Seeing a stock you own lose value isn’t really something that should throw you for a loop. That’s because if you play your cards right, you may not actually lose any money at all.

It pays to stay calm and ride things out

You might buy 10 shares of a given company at $100 apiece for a total of $1,000. The value of those shares might drop a few months later to $90 apiece, or $900 in total. If you were to sell those stocks at a value of $900, you’d lose $100. But guess what happens if you don’t sell? Nothing.

If you sit tight when the stocks you own lose value and don’t unload them, you won’t lose a penny. Remember, when you see a stock’s given price, it represents what it’s worth at that moment. But if your plan is to hold onto your stocks for many years, then frankly, it shouldn’t matter what the value of your stocks is today, tomorrow, or next month.

Let’s say you’re 35 years old and have built a stock portfolio that you hope will serve as your retirement nest egg. Your portfolio might take a major hit when you’re, say, 42. But if you’re not planning to retire until age 65, that gives your investments 23 years to recover. That’s a really long time. So not only should you not sweat a decline in the value of your stocks, but you also shouldn’t take action when that happens unless it makes sense to do so for tax loss harvesting purposes.

When it pays to sell stocks at a loss

For the most part, it generally pays to ride things out when the stocks you own lose value. But there can be exceptions, such as if you’re strategically opting to take a loss for the purpose of tax loss harvesting.

With tax loss harvesting, you intentionally take a loss in your portfolio to offset other gains. It’s a strategy that could make sense if you’re sitting on gains in your brokerage account and you want to reduce the tax hit.

So, let’s say you sold some stocks earlier this year at a $500 profit. You’re going to have to pay the IRS taxes on that sum. If you’re able to take a $100 loss in your portfolio by unloading some of your stocks when they’re down, you’ll reduce your taxable gain to $400.

But unless you’re dumping your stocks to reap tax benefits, you generally should not sell when their value declines — especially if you believe in the companies at hand and have reason to think they’ll recover in time. It can definitely be disheartening to see the value of your stocks drop. But if you wait things out, there’s a good chance you’ll come away not only financially unharmed, but ahead of the game.

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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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