Home Credit Card How A Store Credit Card Can Hurt Your Credit

How A Store Credit Card Can Hurt Your Credit


Cashiers at stores often ask people if they would like to open a credit card account when they are checking out. Many people will open a credit card account because they do not seem the harm in doing so. However, there are two important things that you will need to consider before you open a credit card account. You have to think about this card will affect your credit. You will also have to think about how you will be using this credit card in the future.

Tiffany Aliche is a financial educator. She is also the author of “The Budgetnista.” She stated that many people underestimate how much a store credit card can affect their credit card score. Store credit cards often have low limits. If you use too much of your credit limit, then this will reduce your credit score.

You will need to keep that credit utilization ratio under 30 percent. For example, the limit on the credit card is $600. You do not want to spend more than $200.

It is also important to note that your credit score will be checked every time that you apply for a credit card. One credit check will only cause your credit score to dip a few points. However, if you get several credit checks in a short amount of time, then your credit score will drop several points.

Even though store credit cards have risks, there are some things that you can do use them to your advantage. You can make small purchases with them and pay them off every month. You will get positive reports sent to your credit every month.

You should only use one or two store credit cards. As long as you do not open too many credit cards at one point, pay on time and stay within your budget, you will be able to benefit your credit.