So Do Strore Credit Cards Really Help?

[Anonymous]

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@smallfry wrote:

Back to the original question. Do you need 1 or will 0 store cards bring you the same FICO score all other things being equal.

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The bottom line is that merchant cards, in and of themselves, will not produce a FICO score increase.

As with other revolving accounts, you may see a FICO increase if there is a resulting decrease in utilization.  On the other hand, you may see a FICO decrease because of an additional inquiry and lowered AAofA.

Merchant cards do have their advantages.  They are often easier to get and frequently offer higher CL’s, so they can be advantageous for rebuilders.  They may offer some discounts, cash back or other benefits.  And they tend to be long-lived, so they can be good for AAofA.

On the other hand, merchant cards are sometimes consumer finance accounts, which can damage FICO scores for as long as they show up on your reports, even after they’re closed.  And it’s pretty dang hard to identify consumer finance accounts until after they report.  GEMB Walmart, by the way, showed up as a consumer finance account for me, as did GEMB JCPenneys.  I closed mine and have been happy with that decision.

I like my Macy’s store card because I’m a rebuilder and they offered me a high CL and generous CLI’s.  And they report as a department store card, not a consumer finance account.  DH, on the other hand, has high CL's on his bank and CU cards and a merchant card such as Macy's serves no purpose for him.  It's just good to know how merchant cards fit into the overall scheme of things, FICO and all.  It helps to be able to make informed decisions.

[smallfry]

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@Anonymous wrote:

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@smallfry wrote:

Back to the original question. Do you need 1 or will 0 store cards bring you the same FICO score all other things being equal.

---

The bottom line is that merchant cards, in and of themselves, will not produce a FICO score increase.

As with other revolving accounts, you may see a FICO increase if there is a resulting decrease in utilization.  On the other hand, you may see a FICO decrease because of an additional inquiry and lowered AAofA.

Merchant cards do have their advantages.  They are often easier to get and frequently offer higher CL’s, so they can be advantageous for rebuilders.  They may offer some discounts, cash back or other benefits.  And they tend to be long-lived, so they can be good for AAofA.

On the other hand, merchant cards are sometimes consumer finance accounts, which can damage FICO scores for as long as they show up on your reports, even after they’re closed.  And it’s pretty dang hard to identify consumer finance accounts until after they report.  GEMB Walmart, by the way, showed up as a consumer finance account for me, as did GEMB JCPenneys.  I closed mine and have been happy with that decision.

I like my Macy’s store card because I’m a rebuilder and they offered me a high CL and generous CLI’s.  And they report as a department store card, not a consumer finance account.  DH, on the other hand, has high CL's on his bank and CU cards and a merchant card such as Macy's serves no purpose for him.  It's just good to know how merchant cards fit into the overall scheme of things, FICO and all.  It helps to be able to make informed decisions.

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Where did you see the Walmart account show as a CFA? CRA actual hard copy or FICO report. I looked at my last EQ pull here and see my Walmart is considered a charge while all my other credit cards are considered credit. Thinks this makes a difference?

[Anonymous]

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smallfry wrote:  Where did you see the Walmart account show as a CFA? CRA actual hard copy or FICO report. I looked at my last EQ pull here and see my Walmart is considered a charge while all my other credit cards are considered credit. Thinks this makes a difference? 

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Hi smallfry,  (where did you get your moniker, by the way??)

EQ's use of the term charge baffles me a little.  But if you look at the account type, it says revolving.

I just posted this as a reply on another thread, so I'm cheating and popping it in here as well.  (Hey, it's late!)

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My CR's only show the type of account, which is revolving.

On my mortgage pull and on my CCT (CreditCheckTotal), they show the KOB (Kind of Business) Code.  My GEMB Walmart and GEMB JCPenneys show up as Consumer Finance/Sales Financing on both.  Some people have trouble with certain inaccuracies with CCT, but the KOB codes match my mortgage pull without deviation. 

If you have CCT, select the Credit Inquiry tab, the KOB is listed in the far left column.  If you don't have CCT, you can use their free trial period to see your reports without cost.  I'm sure there are other credit report monitoring services that show this information, I just happened to find it on CCT (after having it for about six months ).  BTW, if you like CCT and want to keep it, call and ask for a 50% discount.

Hope that helps.

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