Do Store Credit Cards Help Credit?

July 3, 2013, Written By Bill Hardekopf

Store credit cards are designed to reward frequent shoppers for their loyalty to a specific store. They offer special discounts that you can’t find without the card. Many consumers have applied for these cards due to the attractive incentives they were offered while making a purchase.

These cards do have some drawbacks such as very high interest rates and low credit limits. If used improperly, these cards can damage your credit.

So the question remains: do store credit cards help your credit profile? Let’s take a look at how these card programs work so you can determine if you want a retail store credit card in the future.

Payment History

In most cases, the money you pay on your store credit card will be reported to the credit bureaus. That means it will help you improve your credit score if you are financially responsible with your payments. A lack of payment or a history of very small payments may lower your credit score, but positive payments should provide a boost over time. If you manage your money well, you should be in good shape.

Account Longevity

Any credit card account you have for a long time is going to help your credit. Of course, this only applies if you don’t owe a lot of money on it. If you carry debt with you for a long period of time, your score will go down. Assuming you pay the card off and let it sit, you will improve your credit score by maintaining the account. Hold onto it as long as possible, unless it becomes too much of a temptation.

Debt to Credit Ratio

Having an open store credit card will improve your debt to credit ratio. This ratio compares the total amount of money you owe to the amount of credit you have available. If you have $5,000 in available credit and only $1,000 in debt, your ratio is at 20%. Take away a $1,000 store card you have, and your available credit drops to $4,000. Hence, your debt to credit ratio jumps to 25%. The lower this ratio, the better your credit score will be. That is why it is always best to keep store accounts open, even when you aren’t using them.

How Store Credit Cards Can Hurt Credit

The problem that some people run into with retail store credit cards is that they find it difficult to control their in-store spending when they have one of these cards. Once they have that card in their pocket, all they want to do is make more purchases. You have to make sure that you can pay back any money you put on your account. Otherwise, it’s going damage your credit score. Don’t just buy something at a store because you have the option to do so. It’s still money out of your pocket.

Another problem that may come up involves the credit pull that happens when you apply for the card. Having one or two credit pulls a year isn’t a big deal, but it can be problematic if you do this often in a short period of time.

A majority of store credit cards have low credit limits, which means you may not be able to charge much on your card. In this case, it’s not worth the pull to have a card you can barely use.

Also consider the fact that the rewards on your retail store credit card are going to be specific to that store. You won’t be able to use them anywhere else. You may want to consider a cash back card like Blue Cash Everyday or Discover It where you get cash back whenever you use the card. This will be much more beneficial in the long run.

Consider the pros and cons of store credit cards before you officially apply for one. Do store credit cards help credit? Yes. But they can also hurt your credit score. The key is to use these cards prudently at all times.

The information contained within this article was accurate as of July 3, 2013. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.

About Bill Hardekopf

Bill Hardekopf is the CEO of and covers the credit card industry from all perspectives. Bill has been involved with personal finance for over 15 years. He is a frequent contributor to Forbes, The Street and The Christian Science Monitor.
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