opening store credit cards and other related Qs

At what point is it worth it taking into account your credit and store-offered perks to open a new credit card? DH and I have very good credit (no debt, always pay cards in full on time, good payment history, etc) and are not looking to buy a house or car in the next year. We regularly use 2 rewards credit cards, but have a smattering of store cards as well that were opened over the years for discounts and never used after that. Some of these cards are still active, some have been deactivated by the stores for lack of use.

1. Should we close the cards we dont use or is it not worth the hit to our credit score? If we take a hit from closing cards, how major is it and how long does it take to make it up? Better to do it now with no credit checks on the immediate horizon?

2. We are making a relatively substantial purchase and have the option of receiving $125 in store credit if we sign up for a store cc (v. $10-25ish if we use our regular rewards card). Worth it to open a new card or not really?

3. What is it about credit cards that hurts your credit score? If its the amount of available capital would calling the card companies and asking them to lower your limit (on a card you never use anyway) going to help, hurt, or do nothing?

Re: opening store credit cards and other related Qs

I would contact the stores that deactivated the cards to have them closed by customer. I was told just recently that it looks bad to have the stores close your cards rather than you.

I would only open a card if you plan on using it for discounts. For example I have a Kohls card because I get discounts when I use it for purchases. Same with Macys. I have to regular Visa's that offer financial rewards so I will use that in other stores that don't offer a discount after you open the card.

Re: opening store credit cards and other related Qs

Sometimes closing a card can hurt you more than leaving it open because that positive history (length of time you've had it, payment history) helps you.

"Closed by consumer" is always viewed better than having a card closed by the company. Try to use your card at least once every 4-6 months even if you buy something small with it and pay it off.

Thing is, FICO is a very weird beast. What raises or lowers my score a lot may have little to no impact on yours. As far as credit lines, yes you can have too much available credit, but no one really knows what the magic formulas are on that one. Ditto for the number of cards and types. I've heard that it's preferable to have at least 1 major branded cards (Visa, MC, Discover) and at least 1 store branded cards along with installment history to have a balanced credit file. Again, though, there's lots of theories when it comes to FICO scoring but even FICO themselves can't say for sure what is best.

The other thing that is tricky with FICO is making sure your utilization of available credit is about 33%ish, no higher than 40% total. Even if you are paying in full monthly you can still be burned on this one depending on when your card reports to the bureaus. (For instance, if you have a Visa you routinely charge $5000/month to and your credit line is $10000 and they are reporting before your payments hit, then you may falsely appear to constantly be 50% utilized.)

If you think you have too many cards closing a couple shouldn't kill your score and you'll recover in time anyways. As far as taking on new lines for promo deals, your score will take a small hit for the inquiry and new account but it should recover those numbers relatively easily if you have a good profile otherwise.

Personally, knowing I wouldn't be looking to buy a house or anything, I'd take advantage of a $125 gift card or you get good discounts (like the Kohl's card)

Re: opening store credit cards and other related Qs

I have a whole mess of credit cards. When I was 16 I had one card & when the balance got too high I trasnfered it to another card & did this for a couple of years. So I like to think that I have a good grasp of what u should & shouldn't do with credit cards.

1. Should we close the cards we dont use or is it not worth the hit to our credit score? If we take a hit from closing cards, how major is it and how long does it take to make it up? Better to do it now with no credit checks on the immediate horizon?
Its my understanding that canceling a credit card is bad for your credit because is decreses your available credit. Which in turn makes outstanding debt a higher percent.

2. We are making a relatively substantial purchase and have the option of receiving $125 in store credit if we sign up for a store cc (v. $10-25ish if we use our regular rewards card). Worth it to open a new card or not really?
When DH & I purchased our TV from Circuit City we received the same perk. I opened the card in my name & we paid off the TV the first bill we recieved. We then received $500 in store credit, which didn't expire. When Circuit City first started talks about closeing we went back & purchased a second brand new TV, the $500 store credit paid for the majority of the new TV. IMO if the $125 can be fully used or mostly used towards a purchase of something else you need then go for it. The thing with store CC is that they charge a higher interest rate so DH & I always pay those off first. & on the flip side you will receive more discount offers.

3. What is it about credit cards that hurts your credit score? If its the amount of available capital would calling the card companies and asking them to lower your limit (on a card you never use anyway) going to help, hurt, or do nothing?
Same answer as #1.

Message edited 8/18/2010 10:23:59 AM.

Re: opening store credit cards and other related Qs

1 - I'm not sure the exact figures and besides I think it would be different for everyone just because our credit is different. But it's a credit to debt ratio. So having open credit but no debt increases that ratio and thus making your credit increase, which is a good thing. So having cards with little to no balances could actually help your credit score.
If you are going to make a move that would hurt your credit score, best to do it when you have no credit checks on the horizon.

2 - Personally to get $125 off, I would open it. Or you said store credit... do you plan on shopping there again to use the credit? If so, then go for it. If not, then it's probably not worth it.

3 - I think lowering your limit would decrease your credit to debt ratio, and thus actually lower your credit score.

I don't know your specific situation though, so above all else I would say to speak to a financial advisor about how this all pertains to your specific situation and what would be best for you.

Re: opening store credit cards and other related Qs

Posted by rosalie

At what point is it worth it taking into account your credit and store-offered perks to open a new credit card? DH and I have very good credit (no debt, always pay cards in full on time, good payment history, etc) and are not looking to buy a house or car in the next year. We regularly use 2 rewards credit cards, but have a smattering of store cards as well that were opened over the years for discounts and never used after that. Some of these cards are still active, some have been deactivated by the stores for lack of use.

1. Should we close the cards we dont use or is it not worth the hit to our credit score? If we take a hit from closing cards, how major is it and how long does it take to make it up? Better to do it now with no credit checks on the immediate horizon?

2. We are making a relatively substantial purchase and have the option of receiving $125 in store credit if we sign up for a store cc (v. $10-25ish if we use our regular rewards card). Worth it to open a new card or not really?

3. What is it about credit cards that hurts your credit score? If its the amount of available capital would calling the card companies and asking them to lower your limit (on a card you never use anyway) going to help, hurt, or do nothing?

Re: opening store credit cards and other related Qs

If you have only the one purchase on these store cards you technically have no history so it's not essentially helping you.

Re: opening store credit cards and other related Qs

Re: opening store credit cards and other related Qs

Re: opening store credit cards and other related Qs

Re: opening store credit cards and other related Qs

Re: opening store credit cards and other related Qs

Re: opening store credit cards and other related Qs

so... for whatever old cards we do have (victorias secret? express? jcrew?) is it better to close them and do it now, so the negative impact has time to wear off and so it's closed by us and not the stores, or is it better to use them for a small purchase once a year and keep them open and active? (or just leave them as is and risk having the stores close them)

Assume no balances will be carried on any cards and that any store cards were used once and paid off immediately.

Message edited 8/18/2010 11:36:39 AM.

Re: opening store credit cards and other related Qs

Re: opening store credit cards and other related Qs

Re: opening store credit cards and other related Qs

Re: opening store credit cards and other related Qs

Posted by Kaitlyn747

Posted by rosalie

At what point is it worth it taking into account your credit and store-offered perks to open a new credit card? DH and I have very good credit (no debt, always pay cards in full on time, good payment history, etc) and are not looking to buy a house or car in the next year. We regularly use 2 rewards credit cards, but have a smattering of store cards as well that were opened over the years for discounts and never used after that. Some of these cards are still active, some have been deactivated by the stores for lack of use.

1. Should we close the cards we dont use or is it not worth the hit to our credit score? If we take a hit from closing cards, how major is it and how long does it take to make it up? Better to do it now with no credit checks on the immediate horizon?

2. We are making a relatively substantial purchase and have the option of receiving $125 in store credit if we sign up for a store cc (v. $10-25ish if we use our regular rewards card). Worth it to open a new card or not really?

3. What is it about credit cards that hurts your credit score? If its the amount of available capital would calling the card companies and asking them to lower your limit (on a card you never use anyway) going to help, hurt, or do nothing?

I happen to know a lot about credit and can give you some advice as I know it.

1. DONT close the cards you dont use. Part of your creidt score is length of creidt and amount of credit available to debt.



Lets say all you CC cards have credit of 10,000. Lets say you put 2,000 on one card. That means you are using 20% of your available credit. If you close some accounts, that number will go up to 30% or 40%. The more your percentage is, the worse your credit score.

So dont close the accounts if you dont have to.

Also. Lets say ONE of those accounts is your oldest account at 20 years old. The other cards are only open in the past 10 years. You will go from an average age of credit from 15 years to 10 years. Thats a big deal.

So keep open your oldest cards and make sure you put something on them to keep them active.

(I had a card from sears from when I was 18. They closed my account without notice. My age went from 12 years to 4.)

2. Its worth opening the card IF (BBIIGGGG IF) you pay it off IMMEDIATLY. The savings you get by opening the card will be offset by the usery percentage rate of 28%.

So, if you pay it off before its due date, yes, its ok to open the card. If plan to carry a balance, no way.

Aso, you hit it on the head witha ding to your creidit as far as an inquery. Thise stay on for 3 years? I think. So if you are looking to buy a house I would stay stay away.

3. DO NOT ask them to lower your limit. That LOWERS your available credit and could HURT your credit score.

Your not using it, its not hurting you.

Let me know if you have any more questions. I fixed my credit with all this information and I only use 1 credit card now. I have like 8 open and wont close any untill we buy a house.

Re: opening store credit cards and other related Qs