Are store credit cards good for building credit? (2024)

FAQs

Are store credit cards good for building credit? ›

Easy to qualify for.

Yes, a store credit card may help you establish or rebuild your credit history and benefit your credit score. Yes, it can save you money at the point of purchase. But thanks to higher interest rates, these cards may also lead to spending more money on purchases if you don't pay off the balance in full each month.

If you handle the account well, a store credit card has the potential to help you improve your credit score. There are restrictions, though, that you should be aware of before applying.

Department store credit cards are more risky than regular cards. It's not necessarily bad to have one, but these cards can tempt you to spend more on retail items and the interest rates are ultra-high.

Soft pulls and department store credit cards

While a soft inquiry may be performed during a pre-approval process, a hard inquiry is typically performed when an application is submitted for a new line of credit.

The best credit card for building credit is the Discover it® Secured Credit Card because you won't have to pay an annual fee, it has good rewards and it reports to the major credit bureaus monthly.

Both the Capital One Walmart Rewards® Mastercard® and the Walmart® Store Card report your account information to all three major credit bureaus each month, and making on-time payments will improve your score.

Because of their higher interest rates, lower credit limits and limited usability, store cards aren't always the most efficient credit tools out there. But because they're easier to qualify for, they can be a boon to those who have borderline credit or are just establishing credit, as long as they're used responsibly.

Since store credit cards have significantly higher APRs than general-purpose credit cards, carrying a balance on a store card can be extremely expensive. Only apply for a store credit card if you are able to pay off your balance in full every month.

Canceling a store credit card can hurt your credit score. Because credit scores are determined by several factors including credit mix, credit utilization ratio and payment history, closing an account can impact these factors and, in turn, negatively affect your credit score.

What happens if you get a store credit card and never use it? ›

If you open but never use a store credit card, nothing will most likely happen. However, the issuer could close your card due to inactivity. If you want to be proactive, you can call the phone number listed on the reverse of the card to cancel it yourself.

In general, keep unused credit cards open so you benefit from longer average credit history and lower credit utilization. Consider putting one small regular purchase on the card and paying it off automatically to keep the card active. At Experian, one of our priorities is consumer credit and finance education.

The hardest store-affiliated credit card to get is the Costco Anywhere Visa® Card by Citi because it requires excellent credit for approval, which means a credit score of 750 or higher. On top of that, the Costco Credit Card is only available to Costco members.

Used carefully, store cards can be a good way to build credit. They often have more relaxed underwriting than general-use unsecured credit cards, so it can be easier to get approved. They may be a good fit for you if: You shop at the retailer often and want the rewards or discounts that come with the card.

Store cards encourage shoppers to purchase items on credit and pay them off over time. The advantage for the store is that you're locked into their ecosystem; the advantage for you is that you might receive offers and discounts that are exclusive to cardholders.

If your retailer managed its own credit properties (which is less common), you will still be responsible for paying the balance. The debt will likely be sold and you will receive directions for repayment from the company that owns the debt.

Closing a store credit card can have a negative impact on your credit score, so you may want to think about the pros and cons before taking any action. If you're on the fence about canceling your store credit card, the following questions may help you decide what your next step should be.

A credit card can be a good tool for building credit if it's used responsibly. Responsible use includes things like making on-time payments and staying well below your credit limit. There aren't really any shortcuts when it comes to building credit with a credit card. Lenders look at how you manage debt over time.

A well-managed and long-held credit card could help to build your credit score over time. A good credit score could improve your chances of being accepted for credit in future. When using a credit card, always make payments on time and minimise what you spend.