Can I Get A Store Credit Card With Bad Or No Credit History?

January 20, 2016, Written By Jason Steele
Happy young woman with shopping bags holding a credit card

Have you recently been offered a store credit card? During the holidays, many retailers go all out to pitch store credit cards to their customers. These cards can offer discounts on purchases, rewards for spending, and additional store benefits. But many shoppers wonder what type of credit history they will need to be approved for a store credit card.

How store credit cards work

There are many types of store credit cards ranging from basic store charge cards that can only be used at a particular retailer, to those that are offered by major banks and retailers that are part of a major payment network such as Visa or MasterCard. These store credit cards work great for retailers as they serve several functions. First, they offer financing to customers which allows them to complete purchases, resulting in increased sales for the stores. In addition, these cards often come with rewards programs that can increase customer loyalty to the store. Essentially, these cards act as an advertisement for the store that customers carry around in their wallet. In addition, stores use these cards to acquire customer’s information they can use to send coupons and other marketing materials. For these reasons, shoppers are more likely to visit the store where they hold a credit card than to shop around at competing merchants. Finally, store credit cards make healthy profits from interest charges and fees, and stores may receive some share of those returns from the banks that issue them.

How hard is it to be approved for a store credit card?

Since stores receive so many benefits from customers who apply for their co-branded credit cards, they are especially eager to offer a card that most shoppers can be approved for. Therefore, these cards are frequently offered to those with fair credit or a limited credit history. This criteria can include students, recent immigrants, and people who have had problems with their credit in the past. At the same time, some of the more competitive store credit cards that are part of a larger payment network and offer valuable rewards, may require “good” credit in order to be approved.

Unfortunately, it is very hard to get any type of credit card when you have a credit history that is considered to be “poor” or “bad.” This is the level of credit score that you will have when you have failed to make payments to one or more creditors for more than a month, when you have an excessive amount of debt, or when you have recently emerged from bankruptcy.

When store credit cards are easiest to get?

The store credit cards that will approve the most applicants are ones that can only be used for in-store purchases and are not part of a major payment network. For retailers, these cards represent the least exposure to default, while offering the most potential future sales, as the card can only be used to make new purchases from the store that issues it. For those that are rebuilding their credit, these cards can represent the first rung on the ladder towards an improved credit score, and a greater line of credit.

Nevertheless, applicants to these store credit cards should keep a few things in mind. First, these cards will not have competitive rates and terms. For example, these cards are likely to have an interest rate in the 20%-30% range, and costly fees for missed payments. In addition, it is vital that cardholders make every effort to make all of their payments on-time, as this factor is critical to improving your credit score.

What to do if you can’t qualify for a store credit card

If your credit is so damaged that you’re unable to qualify for a store credit card that is not part of a payment network, don’t give up hope. Your next step should be to apply for a secured credit card, which will generally approve any applicant who can document his or her identity and does not have any pending bankruptcy proceedings. Secured cards are much the same as other credit cards, but they do require the payment of a refundable security deposit before an account can be opened. Otherwise, these cards work just like any other credit card. Customers receive a monthly statement and must make the minimum payment each month. And like other credit cards, secured card issuers will report cardholder’s payment history to the three major consumer credit bureaus.

After a year of on-time payments, most secured card holders will find that their credit has improved enough to qualify for a standard, unsecured credit card. When that time comes, a store credit card will still be the easiest type of unsecured credit card to apply for, especially those that are not part of a payment network.

By understanding how store credit cards work, you can apply for the right card at the proper time to rebuild your credit.



The information contained within this article was accurate as of January 20, 2016. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.