Store Credit Can Hurt Your Overall Credit

Store credit cards seem so inviting when you are at the check-out and the possibility of savings arise if you get approved. Many people fall into the trap of signing up for a new card without out ever reading the fine print for interest rates or rules behind their promotions. Any type of financial decision made in a hasty way could become a problem.

If you look at the pros for signing up for that extra 20% at the register, saving money on your immediate purchase sounds great! The cashier will also tell you about the possibilities for future savings with coupons mailed or emailed directly to you. Who does not want to save money? It doesn’t hurt to apply, right?

Actually, applying for too many credit cards can hurt your credit. Each time someone other than yourself checks your credit history, it does take away from your credit. Each of these inquiries will stay on your report for a year or so. Creditors do not like to see that you are trying to expand your credit too much. I wouldn’t want to lend to someone who is constantly looking to get further in to debt with others. When it comes to credit history, it is good to think like a creditor and who you would want to loan money to.

Having some credit is a good thing. In order to build QuickQuid credit you have to use it. People with no credit cards are shocked to discover that their scores are low. Even if you have just one or two cards, you will want to use them and pay them to keep your credit built up. Store credit cards are good for that purpose if you are not going to get further into debt with them. They are good for promotional deals and for building credit, other than that, store credit cards can cause problems for many.

First of all, you have to be in control of your spending. Buying items you do not need just because you can get them at a discount for using your card traps many vulnerable compulsive shoppers. The fact is, that you do not need to have a credit card to save. many of these same stores will have discount coupons if you just sign up for their mailing list. Competition is too strong to limit savings to just card holders. If you do shop often at a particular store, the extra savings may come in handy for normal purchases, but be aware that store credit cards usually have much higher interest rates. These bills should be paid off as soon as possible in order for you to really save on your purchase. A few months of interest could get you spending more for that item.

The added credit card will affect your debt to income ratio which will lower your credit score. The idea that you have the extra money to spend could prevent you from getting financial credit which could be more universally spent. A card to a local department store will not fill your gas tank if you are low on cash. Just as you need to be wise about decisions you make with your earnings, do the same for your credit. Making good decisions now will protect you for future financial possibilities. Getting a payday loan can put you in the same situation as a credit in that if you don’t pay off the balance when expected, you may be looking at long-term debt that is hard to get away from.