Reply
Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008

Debate: Store Cards & Gas Cards have no value

[ Edited ]

Okay, they have a little value, but I want to discuss what their limited value in general is.  I do this, because I see many credit newbies and rebuilders make a mistake thinking they have values that they really do not.  So, this is intended to educate on their real and true values as opposed to the mistaken ideas of value.

 

1.  Store and gas cards do NOT add to your "mix" of credit more than any other revolving major card.

 

2.  Store cards DO help establish and build credit when it is harder to get a major card.  But, this is only because they add to your TL and CL in general, but they do NOT provide any FICO or credit benefits for have them as a specific type of credit (aka "mix" ) .

 

3.  If you could have the equivalent CL / TL in a major card (Visa, MC, Discover) vs. a store or gas card, the major would be better in practical use and credit terms.

 

4.  Credit scoring and review looks more to "premium" and "bankcards" for any extra consideraion. 

 

5.  "Mix" of credit means types of credit, ie:  Revolving, Installement, Mortgage & Real Estate.  It does not mean 17 different types of revolving.

 

6.  The main benefit of store and gas cards it they tend to be easier to get and give CL's that could not be obtained in major cards when you are building credit.  Example, my oldest card is a Macy's 21 years old.  It is my only store card and its age is the only reason I keep it.

 

7. A major card allows you to shop any gas station or store where you find the best price, product or convenience of location.

 

8.  A store card encourages purchases that you may not purchase if you did not have it (though the same can be said of major cards in many ways too).

 

9.  A store or gas card means you shop a certain label and their limited locations.  Those cannot be the best price, most convenienct location or best product 100% of the time.  They may at times, but not at all times.  A major cards allows you to shop the best price, product, location.

 

My attempt here is to educate on what appears to be a misunderstanding by many credit newbies or credit builders.  Many seem to believe there is a value in the "mix" of credit by getting store and gas cards.  There is a value in that it helps establish credit in general, provides useful CR TL's and CL's for utilization percentages.  But, there is no, none, nada extra value for having them for "mix."  They help build credit, but they don't do a thing for the mix.  In fact, many store cards can have a detrimental view by lenders when reviewing your mix, sometimes.

 

Now, for those who want to argue my points, I'm not arguing, I'm providing an FYI from my experience.  And that experience has shown that these cards have no special benefits except the general "establish and build" revolving credit effect and that they are easier to get than majors, and CLI's are often more frequent and larger than the majors.  This helps utilization and the appearance of CL's in general....but for the "mix" they add nothing.

Message Edited by txjohn on 05-18-2009 09:07 AM

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
Frequently Requested Threads * FICO High Achievers  *  FICO Score Estimator


09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Valued Contributor
mjbfan79
Posts: 1,998
Registered: ‎03-31-2008

Re: Debate: Store Cards & Gas Cards have no value

There helping me build i can care less about rewards. I always use them once a month then pay them off before the statement cuts so I'm not paying any interest on these cards an there always reporting a 0 balance. I like the available credit in case of emergency but if i don't have to the cash at the end of the month to pay them off i don't use them. Credit cards can be a big trap if your not careful. I've been there before an i refuse to fall in the trap again.

Starting Score 3-31-08: EQ 582 TU 577 EX 625
Current Score 3-19-10: EQ 703 TU 712 EX No Clue
Goal Score: 800 By January Of 2012


Take the FICO Fitness Challenge
Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008

Re: Debate: Store Cards & Gas Cards have no value

[ Edited ]

mjbfan79 wrote:
There helping me build i can care less about rewards. I always use them once a month then pay them off before the statement cuts so I'm not paying any interest on these cards an there always reporting a 0 balance. I like the available credit in case of emergency but if i don't have to the cash at the end of the month to pay them off i don't use them. Credit cards can be a big trap if your not careful. I've been there before an i refuse to fall in the trap again.

BUILD:  This was a stated "value" of these type of cards.   These cards are easier to get and generally allow for higher CL's than a major during the "getting established" or build/rebuild years....and that is not argured.

 

What is argued is that they present NO value to "mix."

 

REWARDS:  Why not obtain some type of reward for the money spent anyway?  One of the arguements made for store cards is they provide discounts, coupons or other incentives.  Rewards are no different and they apply everywhere not just the limited purchases of a single establishment.  If you are going to spend $100 and have the option of getting 2-5% rebate back to your statement, why not go for the cashback if all other things are equal?

 

Message Edited by txjohn on 05-18-2009 06:15 AM

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
Frequently Requested Threads * FICO High Achievers  *  FICO Score Estimator


09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Valued Contributor
Scamp
Posts: 2,791
Registered: ‎03-18-2007

Re: Debate: Store Cards & Gas Cards have no value


txjohn wrote:

Okay, they have a little value, but I want to discuss what their limited value in general is.  I do this, because I see many credit newbies and rebuilders make a mistake thinking they have values that they really do not.  So, this is intended to educate on their real and true values as opposed to the mistaken ideas of value.

 

1.  Store and gas cards do NOT add to your "mix" of credit.

 

2.  They only add to your TL and CL in general, but they do not provide any FICO or credit benefits for have them as a specific type of credit.

 

3.  If you could have the equivalent CL / TL in a major card (Visa, MC, Discover) this would be better in practical and credit terms.

 

4.  Credit scoring and review looks more to "premium" and "bankcards" for any extra consideraion. 

 

5.  "Mix" of credit means types of credit, ie:  Revolving, Installement, Mortgage & Real Estate.  It does not mean 17 different types of revolving.

 

6.  The main benefit of store and gas cards it they tend to be easier to get and give CL's that could not be obtained in major cards when you are building credit.  Example, my oldest card is a Macy's 21 years old.  It is my only store card and its age is the only reason I keep it.

 

7. A major card allows you to shop any gas station or store where you find the best price, product or convenience of location.

 

8.  A store card encourages purchases that you may not purchase if you did not have it (though the same can be said of major cards in many ways too).

 

9.  A store or gas card means you shop a certain label and their limited locations.  Those cannot be the best price, most convenienct location or best product 100% of the time.  They may at times, but not at all times.  A major cards allows you to shop the best price, product, location.

 

My attempt here is to educate what appears to be a misunderstanding by many credit newbies or credit builders.  Many seem to believe there is a value in the "mix" of credit by getting store and gas cards.  There is a value in that it helps establish credit in general, provides useful CR TL's and CL's for utilization percentages.  But, there is no, none, nada extra value for having them for "mix."  They help build credit, but they don't do a thing for the mix.  In fact, many store cards can have a detrimental view by lenders when reviewing your mix, sometimes.

 

Now, for those who want to argue my points, I'm not arguing, I'm providing an FYI from my experience.  And that experience has shown that these cards have no special benefits except the general "establish and build" revolving credit effect and that they are easier to get than majors, and CLI's are often more frequent and larger than the majors.  This helps utilization and the appearance of CL's in general....but for the "mix" they add nothing.


txjohn, sorry to have to refute you on such a well-thought-out post, but if you take a look at What's In Your FICO Score in the Credit Education section on here, you'll find the bit about how mix of credit has a 10% stake in scores, and that retail accounts are listed in the types of accounts that are factored in.  That would include most, if not all, store and gas cards.

 

As well, anecdotal evidence from many, many, members on here does show a score benefit from having at least one gas or store card in one's credit portfolio. 

_____________________________________________________________________________
It's never too late to become the person you might have been. ~George Eliot

02/12/09 EX: 701 / 02/08/10 EQ: 719 / 02/08/10 TU: 723

Backdoor Numbers, Credit Scoring 101, Understanding Your FICO Score PDF
Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008

Re: Debate: Store Cards & Gas Cards have no value

[ Edited ]

Scamp wrote:

 

txjohn, sorry to have to refute you on such a well-thought-out post, but if you take a look at What's In Your FICO Score in the Credit Education section on here, you'll find the bit about how mix of credit has a 10% stake in scores, and that retail accounts are listed in the types of accounts that are factored in.  That would include most, if not all, store and gas cards.

 

As well, anecdotal evidence from many, many, members on here does show a score benefit from having at least one gas or store card in one's credit portfolio. 


Scamp -  I must refute your refute, respectfully of course :smileyhappy:

 

The link you reference is misleading, IMO.  I

 

1.  The FICO link states that 35% of your credit is Payment History, which includes various types of credit, including RETAIL and FINANCE COMPANY accounts.  This just means paying your bills on time is a factor.  And we all know that FINANCE accounts are generally not helpful, unless you have no other TL's.

 

2.  The FICO link states that FICO considers the "TYPE OF CREDIT USED" which includes RETAIL and FINANCE.  Again, this only means they are a factor of your score, not that they are a particulary positive factor or that they recommend all of those categories.  And again, I will cite that FINANCE accounts ususally are not helpful and are often in the "WHAT's HURTING YOU" comments.  

 

Therefore, I submit for your consideration, that these types of accounts do NOT add extra benefit, except to establish and build credit.  But all things being equal, if you have no retail and finance accounts, but a strong mix of major cards, you take no ding for this, and IMO may actually help yourself a bit in certain circumstances, such as those related to "Finance" Accounts, as well as having "premium" and "bankcard" accounts which are often commented as things that either are missing or are helpful.

 

While I am not suggesting these cards be avoided, I just want people to understand that their true value is the same as Orchard, HSBC, First Premiere and other builder cards.....they help establish credit, are generally easier to get, give higher CL's and more frequent CLI's which help add TL's, CL's toward utilization and age (example my oldest is 21 year old Macys).  But as a mix, for benefit, none whatsoever, IMO.  And I have studied hundreds of reports to compare this question.

 

I do not think I would have had less score if my oldest account (Macys) were a major card and thus I had zero store cards.  In fact, if I had a 21 year old Visa/MC, a LO review would appreciate that moreso than a Macys, IMO.  FICO wouldn't really care.

Message Edited by txjohn on 05-18-2009 06:34 AM

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
Frequently Requested Threads * FICO High Achievers  *  FICO Score Estimator


09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Established Contributor
Susyquk
Posts: 504
Registered: ‎03-27-2009

Re: Debate: Store Cards & Gas Cards have no value

[ Edited ]

txjohn wrote:

 

2.  The FICO link states that FICO considers the "TYPE OF CREDIT USED" which includes RETAIL and FINANCE.  Again, this just means they are a factor of your score, not that they are a positive factor or that they recommend all of those categories.  And again, I will cite that FINANCE accounts ususally are not helpful and are often in the "WHAT's HURTING YOU" comments.  

 

Therefore, I submit for your consideration, that these types of accounts do NOT add extra benefit, except to establish and build credit.  But all things being equal, if you have no retail and finance accounts, but a strong mix of major cards, you take no ding for this, and IMO may actually help yourself a bit in certain circumstances, such as those related to "Finance" Accounts.


Also in the Improving section it says

 

Types of Credit Use Tips
  • Apply for and open new credit accounts only as needed.
    Don't open accounts just to have a better credit mix - it probably won't raise your credit score.
  • Have credit cards - but manage them responsibly.
    In general, having credit cards and installment loans (and paying timely payments) will raise your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.

 

IMHO the mix is what John says it is... Installment Loans & Credit Cards (which the definition includes, in this case, store cards and gas cards.)

 

The thing is tho I also think that they do have a weird kind of value - in that most people will, at some point, open one for one reason or another and when it is open and stays in good standing over a period of time it has value from age, payment history and util.  But not what people are saying that having a card that is a store or gas card is a stand alone item that by its very existence on your credit report would add value.

 

Of course the only way to check would be to get two people with identical history and get one to open a store/gas card and the other to open a credit card with equal limits.  But unless someone knows identical twins with the exact same credit history i think that's out of the question

 

 

Edit: And TXJohn updated his post whilst i was typing... too slow

Message Edited by Susyquk on 05-18-2009 06:34 AM
Valued Contributor
Scamp
Posts: 2,791
Registered: ‎03-18-2007

Re: Debate: Store Cards & Gas Cards have no value


txjohn wrote:

Scamp wrote:

 

txjohn, sorry to have to refute you on such a well-thought-out post, but if you take a look at What's In Your FICO Score in the Credit Education section on here, you'll find the bit about how mix of credit has a 10% stake in scores, and that retail accounts are listed in the types of accounts that are factored in.  That would include most, if not all, store and gas cards.

 

As well, anecdotal evidence from many, many, members on here does show a score benefit from having at least one gas or store card in one's credit portfolio. 


Scamp -  I must refute your refute, respectfully of course :smileyhappy:

 

The link you reference is misleading, IMO.  I

 

1.  The FICO link states that 35% of your credit is Payment History, which includes various types of credit, including RETAIL and FINANCE COMPANY accounts.  This just means paying your bills on time is a factor.  And we all know that FINANCE accounts are generally not helpful, unless you have no other TL's.

 

2.  The FICO link states that FICO considers the "TYPE OF CREDIT USED" which includes RETAIL and FINANCE.  Again, this only means they are a factor of your score, not that they are a particulary positive factor or that they recommend all of those categories.  And again, I will cite that FINANCE accounts ususally are not helpful and are often in the "WHAT's HURTING YOU" comments.  

 

Therefore, I submit for your consideration, that these types of accounts do NOT add extra benefit, except to establish and build credit.  But all things being equal, if you have no retail and finance accounts, but a strong mix of major cards, you take no ding for this, and IMO may actually help yourself a bit in certain circumstances, such as those related to "Finance" Accounts, as well as having "premium" and "bankcard" accounts which are often commented as things that either are missing or are helpful.

 

While I am not suggesting these cards be avoided, I just want people to understand that their true value is the same as Orchard, HSBC, First Premiere and other builder cards.....they help establish credit, are generally easier to get, give higher CL's and more frequent CLI's which help add TL's, CL's toward utilization and age (example my oldest is 21 year old Macys).  But as a mix, for benefit, none whatsoever, IMO.  And I have studied hundreds of reports to compare this question.

 

I do not think I would have had less score if my oldest account (Macys) were a major card and thus I had zero store cards.  In fact, if I had a 21 year old Visa/MC, a LO review would appreciate that moreso than a Macys, IMO.  FICO wouldn't really care.

Message Edited by txjohn on 05-18-2009 06:34 AM

txj, I have to get to work, so pardon me for having to put our discussion on hold at least 'til lunchtime, after this post, or else to leave it to my fellow mods who are able to be on here during my workday.  From the link I provided:

 

"Types of Credit Used

  • Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.) "

 

 

_____________________________________________________________________________
It's never too late to become the person you might have been. ~George Eliot

02/12/09 EX: 701 / 02/08/10 EQ: 719 / 02/08/10 TU: 723

Backdoor Numbers, Credit Scoring 101, Understanding Your FICO Score PDF
Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008

Re: Debate: Store Cards & Gas Cards have no value


Susyquk wrote:

txjohn wrote:

 

2.  The FICO link states that FICO considers the "TYPE OF CREDIT USED" which includes RETAIL and FINANCE.  Again, this just means they are a factor of your score, not that they are a positive factor or that they recommend all of those categories.  And again, I will cite that FINANCE accounts ususally are not helpful and are often in the "WHAT's HURTING YOU" comments.  

 

Therefore, I submit for your consideration, that these types of accounts do NOT add extra benefit, except to establish and build credit.  But all things being equal, if you have no retail and finance accounts, but a strong mix of major cards, you take no ding for this, and IMO may actually help yourself a bit in certain circumstances, such as those related to "Finance" Accounts.


Also in the Improving section it says

 

Types of Credit Use Tips
  • Apply for and open new credit accounts only as needed.
    Don't open accounts just to have a better credit mix - it probably won't raise your credit score.
  • Have credit cards - but manage them responsibly.
    In general, having credit cards and installment loans (and paying timely payments) will raise your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.

 

IMHO the mix is what John says it is... Installment Loans & Credit Cards (which the definition includes, in this case, store cards and gas cards.)

 

The thing is tho I also think that they do have a weird kind of value - in that most people will, at some point, open one for one reason or another and when it is open and stays in good standing over a period of time it has value from age, payment history and util.  But not what people are saying that having a card that is a store or gas card is a stand alone item that by its very existence on your credit report would add value.

 

Of course the only way to check would be to get two people with identical history and get one to open a store/gas card and the other to open a credit card with equal limits.  But unless someone knows identical twins with the exact same credit history i think that's out of the question


The links that you and Scamp cite do not state that having all the categories they mention as best.  They only suggest that all of those categories will be considered in your score.

 

So the question comes down to this.  Do you believe that if someone had 1 store, 1 gas, and 4 major cards, their score would be higher than an identical report which had 6 major cards of equal CL's and age?  Would this even make sense?

 

 

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
Frequently Requested Threads * FICO High Achievers  *  FICO Score Estimator


09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Established Contributor
Susyquk
Posts: 504
Registered: ‎03-27-2009

Re: Debate: Store Cards & Gas Cards have no value

[ Edited ]

txjohn wrote:
The links that you and Scamp cite do not state that having all the categories they mention as best.  They only suggest that all of those categories will be considered in your score.

 

So the question comes down to this.  Do you believe that if someone had 1 store, 1 gas, and 4 major cards, their score would be higher than an identical report which had 6 major cards of equal CL's and age?  Would this even make sense?

 

 


Did I word myself that poorly?

 

I was agreeing with you.  Actually the stuff I posted was supporting what you said (from the Improving your score section) It doesn't mention anywhere a need to have store or gas cards.

 

I guess I have lost the ability to write clearly after 14 hours of work

 

And no, my point was that if they had otherwise identical reports with one having 6 credit cards (not subprime) and the other 4 credit cards, one gas card and one store card I would expect their credit score to be either the same or the one with the 6 CCs to be minorly better.

Message Edited by Susyquk on 05-18-2009 06:44 AM
Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008

Re: Debate: Store Cards & Gas Cards have no value


Scamp wrote:

 

txj, I have to get to work, so pardon me for having to put our discussion on hold at least 'til lunchtime, after this post, or else to leave it to my fellow mods who are able to be on here during my workday.  From the link I provided:

 

"Types of Credit Used
  • Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.) "

 


What, you have to work?  :smileyvery-happy:

 

And please do not fail to eat just to reply to my "devil's advocate" debate :smileyhappy:  

 

My only question to your last post:  Do you believe the information you provided suggests that having all of the revolving credit types mentioned is FICO superior than having only some of the categories.

 

Here is my "stress test" for consideration.  Take a CR, put only gas and store cards on it, no majors.  What is the result.  Then take the same CR and put only major cards on it, no store or gas.  Now compare and consider which has a superior view for overall credit (to a lender or LO)?

 

Which type of account is harder to get?  Thus which will have more benefit?  If you could have Target Visa or Target Red, which provides the best value and best TL?

 

CONCLUSION:  I absolutely agree that RETAIL and FINANCE account payment history will affect your FICO.  And that their CL and age factor into AAoA, oldest/newest and utilization.  And that they count toward your mix (only as a revolving account - not as a specific type of revolving - I believe mix is revolving, installement, mortgage/real estate).   Lastly, store and gas cards can be good builder and establishing TL's.  But I do not believe any FICO benefit exists for having these accounts in addition to majors.  I cite my previous examples of comparing 2 CR's, one with all store/gas and one with all major.  You make the call. 

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
Frequently Requested Threads * FICO High Achievers  *  FICO Score Estimator


09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549

myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+