Department store credit card questions...

[zeusta20]

Alright...I read somewhere where it says that department store credit cards can hurt your credit. Is that true? I forgot where I read/saw it from, but I heard that its best to get credit cards through financial institutions. Is this true or no? I was just asking because there's been some department store cards that i've actually been wanting to get so i'd be able to get the sales, discounts, etc.... But not to the expense of my credit. 

[09Lexie]

Just like opening a bank credit card, the initial ding from the inq/acct will hurt. Store cards usually carry higher int rates and if you are prone to carrying balances it will affect your util - which in turn will hurt your credit score.

If the discount is worth the temp ding and you PIF - I wouldn't worry about it. However, there are some prime lenders (Chase comes to mind) that do not look at store cards for rev cc history.

[zeusta20]

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@09Lexie wrote:
Just like opening a bank credit card, the initial ding from the inq/acct will hurt. Store cards usually carry higher int rates and if you are prone to carrying balances it will affect your util - which in turn will hurt your credit score.

If the discount is worth the temp ding and you PIF - I wouldn't worry about it. However, there are some prime lenders (Chase comes to mind) that do not look at store cards for rev cc history.

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Really??? So would that be a good thing? That prime lenders won't look at store cards for revolving cc history??? If you have a store credit card maxed out (just as an example), that wouldn't show up on the report that they pull since they don't consider store cc histories??? Is that right or am I just not getting it? lol

[09Lexie]

No, you are not getting it. LOL. The 'maxed' out card will be on your cr and lenders will see it-so will your CS. My example, was if you only have store cards and app for a Freedom- they 'like' a file which includes bank/national cards. Just like Chase, tends to not take into account AUs to satisfy their rev cc history requirement.

YMMV

[enharu]

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@09Lexie wrote:
No, you are not getting it. LOL. The 'maxed' out card will be on your cr and lenders will see it-so will your CS. My example, was if you only have store cards and app for a Freedom- they 'like' a file which includes bank/national cards. Just like Chase, tends to not take into account AUs to satisfy their rev cc history requirement.

YMMV

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+1.

Let me explain it a little further.

Certain lenders do not "include" store cards into their consideration for approval odds. If those store cards are network branded (i.e. visa, amex, etc), then they usually will consider it. 

For those lenders, a store card can only hurt you, but not help you as much as a real bank card would. So you can kinda view them as an auto loan / installment loan, which has less "weight" on your score.

For example, if you maxed out the card, or if it's been late / charged off, or if it's a brand new account, that will affect you just like any other revolving line of credit / loan. 

However, some stores do not count CL on your store cards towards your overall CL. For example you have a 5000 CL Macys card and a 5000 Freedom, and you owe 4000 on the Freedom. If you include everything, your utilization is supposed to be 40%, but certain lenders will calculate your utilization to be 80% instead.

I don't have a list of all lenders that does this, but from my personal experience, Barclays is one of them. 

[zeusta20]

Oh okay...haha @Lexie...I knew that right after I clicked that "Post" button, I was like, "What I just said didn't make sense one bit" haha.

@enharu, thanks for explaining...I see now. What about the CC's that are department store cards but still have a visa logo? Would those still be treated the same or no? Say for example, I saw that Nordstoms, banana republic, etc. has a department store cc, and a cc with the visa logo. Would the one with the visa logo still be considered when it comes to review? or no?

[enharu]

if they have a payment network to it, chances are it will be included, such as Macys Amex etc. I'm not entirely sure though, since the only 2 store cards I have do not have a payment network.

[09Lexie]

They will be categorized as credit cards as opposed to charge cards ( store cards)