So Do Strore Credit Cards Really Help?

smallfry · ‎04-10-2010

So far as contributing to the FICO mix of credit would a run of the mill revolving store(Walmart) card help or is it meaningless?

Anonymous · ‎04-10-2010

Good morning!

The CRBs like to see at least one major bank card in your mix. That having been said, your store cards also figure in your payment history and utilization the same as any other revolving accounts.

CB

MarineVietVet · ‎04-10-2010

@smallfry wrote:
So far as contributing to the FICO mix of credit would a run of the mill revolving store(Walmart) card help or is it meaningless?

To be honest with you smallfry I've wondered the same thing myself.

From a BK years ago to:
8/09 TU-765 EQ- 783
9/09 EX pulled by lender 802
3/10 EQ- 800

You can do the same thing with hard work

Credit Scoring 101
Common Abbreviations
Frequently Requested Threads
Credit Problems Which Is Worse?
Whats In Your FICO Score

smallfry · ‎04-10-2010

Mix of credit is 10% of your score. So would a store card qualify as a retail account?

Jazzzy · ‎04-10-2010

I've seen nothing in the FICO scoring categories that seem to want you to have a store credit card or gas card. Major bank card yes. Store or gas card no.

I've always understood that the "credit mix" they are talking about has to do with having more than just credit cards. I think the "mix" refers to installment loans, mortgages, credit cards, etc. I think a store or gas card simply counts as a credit card and doesn't add to the "mix."

The only negatives I've read are here in the forums from someone who was pricing car insurance. Those companies often check credit. The poster said that he was turned down because he had too many individual score cards, and the auto insurer saw that as a sign of risk.

Also, I think you have to be careful about some store cards. Apparently some deals that offer credit cards that let you, for example, buy furniture with no money down and no interest for a year or two, can show us as "consumer finance accounts." You don't want a consumer finance account to show up on your reports if you can help it, so I'd say to just chose your store cards carefully.

That said, store cards have been valuable to consumers just starting out or repairing credit. Like most things in life, they're probably fine in moderation.

smallfry · ‎04-10-2010

So what does a "retail" account mean? It's right there in the FICO explanation for credit mix.

Anonymous · ‎04-10-2010

Hi smallfry,

I think you’re referring to this text from myfico.com’s Credit Education Center “What’s In Your Score”:

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.)

Although this is a list of the types of information the formula is evaluating, it is not a list of accounts that have positive impacts or that will yield score increases. This is evidenced by consumer finance accounts being included in the list.

When trying to understand how different accounts affect our FICO scores, it helpful to look at the published info -- the FICO Reason Codes. Having access to these codes helps us understand FICO scoring and how we can affect our own FICO’s. You can google them, or they are stickied at the top of Understanding FICO Scoring: FICO scoring reason codes. Remember that everyone has four FICO reason codes for each CRA FICO score, they are "negative" factors, and they are a clear window into the FICO scoring process.

Remember happy’s Team Guinea Pig results, which posted FICO results for opening a first merchant account. You can check that out here: Guinea Pig Results

Hope that's helpful!

Anonymous · ‎04-10-2010

Just a shorthand note for those who really don't want to get into the reason codes (especially on a nice - well at least it's nice in my neck of the woods - weekend):

Although much of FICO scoring is under wraps, the FICO codes are published.

They want you to have an open revolving account with a bank or national credit card co. (That’s code #3 – you will get dinged if you don’t).

They want you to have activity on that bank or national account (Code #15 – you will get dinged if you don’t)

They want you to have a revolving account (That’s code 16 – you will get dinged if you don’t).

By having a bank card, you hit two birds with one stone (#3 and #16). By using it, you meet the requirements of #15. After one bank card is in place, you don’t have to worry about whether a card is a store or bank card. FICO does not ding you for not having a store (merchant) card.

That being said, there are some advantages to store cards. For rebuilders, they tend to be easier to be approved for, may have higher CL’s than rebuilder bank cards, and tend to be long-lived so they add to your AAofA over time. Some store cards offer customer perks. So bank cards and store cards both have a niche. Bank cards definitely help your FICO score in and of themselves. Store cards can help with higher rebuilding CL’s, long-term AAofA and cardholder perks. You can (and some may argue should) get to the 800’s without a single store card in sight. DH was at 802 with one ($500CL) bank card only.

I’m a rebuilder – so I’m quite fond of my store cards. But I did not receive a FICO score increase--in fact I lost five points with my first store card. It’s a Macy’s and it serves my needs well – but not because of FICO scoring practices.

smallfry · ‎04-10-2010

Thanks to all for responding. Well I guess I don't need the Walmart card at all. Not having it won't affect anything since I am now up to 6 open revolving lines including it in the equation.

Anonymous · ‎04-10-2010

@Anonymous wrote:
Just a shorthand note for those who really don't want to get into the reason codes (especially on a nice - well at least it's nice in my neck of the woods - weekend):

Although much of FICO scoring is under wraps, the FICO codes are published.
They want you to have an open revolving account with a bank or national credit card co. (That’s code #3 – you will get dinged if you don’t).
They want you to have activity on that bank or national account (Code #15 – you will get dinged if you don’t)
They want you to have a revolving account (That’s code 16 – you will get dinged if you don’t).
By having a bank card, you hit two birds with one stone (#3 and #16). By using it, you meet the requirements of #15. After one bank card is in place, you don’t have to worry about whether a card is a store or bank card. FICO does not ding you for not having a store (merchant) card.

That being said, there are some advantages to store cards. For rebuilders, they tend to be easier to be approved for, may have higher CL’s than rebuilder bank cards, and tend to be long-lived so they add to your AAofA over time. Some store cards offer customer perks. So bank cards and store cards both have a niche. Bank cards definitely help your FICO score in and of themselves. Store cards can help with higher rebuilding CL’s, long-term AAofA and cardholder perks. You can (and some may argue should) get to the 800’s without a single store card in sight. DH was at 802 with one ($500CL) bank card only.

I’m a rebuilder – so I’m quite fond of my store cards. But I did not receive a FICO score increase--in fact I lost five points with my first store card. It’s a Macy’s and it serves my needs well – but not because of FICO scoring practices.

Activity, as in carrying a balance?