department cards

[Rico23]

I just received a department store credit card ,I've heard its best to stay under 30% UTIL is that true for department credit cards too? And will this department card help or hurt me ?

[corymcd88]

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@Rico23 wrote:
I just received a department store credit card ,I've heard its best to stay under 30%UTIL is that true for department credit cards too? And will this department card help or hurt me ?

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I would always try to keep under 35% to 30% at all times, I keep under on my LOC of 30%, also depends on you line too 1k vs 3k.

[CreditDunce]

I am in the minority.  I don't see a problem of maxing out a credit line as long as you pay in full each month.  This is especially true for small credit limits.

The argument against is it will hurt your credit score if any of your CC's report as being maxed out.  If you are borderline a CCC could get upset if your score drops too much.  However, the score drop is only temporary.  You can gain all of the points you lost by paying the CC off.

Having one or two store cards may help with your credit mix depending on the FICO model used to score your report.  However, this the FICO models that give you bonus points for store cards are older models that are not used very much.  Some internal credit scoring models (e.g. Chase) go so far as to ignore store cards. 

My recommendation is to only apply for store cards if they will benefit you.  For example, Kohls & VS gives coupons to CC holders.  Target and Lowes gives 5% off your purchase.  Store cards can also be useful while rebuilding.  They often have lower credit standards.  Some can even be applied for without a HP.   However, for rebuilding, I wouldn't go crazy.  Maybe 1 or 2 cards.

Note: any new TL (CC, installment loan, etc) will lower your AAoA.  There also may be a small penalty for new accounts.  This may lower your credit score in the short term.  However, in the long term it should increase your credit score assuming you pay on time, every time.

[BearsAndTurtlesRtheBest]

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Its okay to max out a CC as long as you can afford to PIF when payment is due. Ive learned this the hard way, CCs are awesome when managed the right way, and can be a nightmare when used without thinking of the consequences if you cant afford to pay back the balance.

[CreditDunce]

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@BearsAndTurtlesRtheBest wrote:

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Its okay to max out a CC as long as you can afford to PIF when payment is due. Ive learned this the hard way, CCs are awesome when managed the right way, and can be a nightmare when used without thinking of the consequences if you cant afford to pay back the balance.

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This is doubly true of store cards.  They have outrageous interest rates.  Some store cards offer 0% financing for X months, which is ok.  But many times it comes with retroactive interest at a very high APR if you don't finish paying by the end of the X months.