Department Store Cards
A retail credit card from your favorite store is enticing. If you enjoy shopping and the ability to finance your purchases, you might find yourself eager to submit the application. You don't need perfect credit to get approved for a retail credit card, which can make applying even more tempting. Some store cards will approve applicants with scores as low as 550, which is considered poor.
Typically, retail credit cards have more relaxed qualification requirements. If you are just building your credit. you might think you want to start with a retail card. Retail cards with a Visa or MasterCard affiliation are issued by a bank instead of the store's financing department. For example, Capital One issues the Sears card (before the bankruptcy). These stores tend to follow the issuing bank;s underwriting criteria.
Credit cards issuers do not specify the average score necessary to obtain a retail credit card. There is no defined rage for a fair credit score, but typically a FICO score between 580 and 669 are considered fair. For a Walmart Credit card, a score of 660 or higher is recommended, but those with scores as low as 550 have reported success when applying for the card. Best Buy credit cards, which are issued by Citibank, require a credit score of at least 660.
Retail credit cards companies consider more than a credit score when reviewing applications. Your employment status, ability to pay, willingness to pay and credit score are all factors used to determine approval. A person with a low credit score because of lack of credit could be more likely to gain approval than an applicant who has a low score because of missed payments or an account in collections.
If a store chooses to extend you credit, your credit score and income are generally used to calculate your credit limit. Credit card companies may increase your limit after you display a dependable payment history. The economy also plays a role in your ability to qualify for a retail credit card. Creditors tend to tighten lending standard in a sluggish economy. When the economy is booming, standards are often more relaxed.
A retail credit card has many disadvantaged for consumers with established credit. Retail credit cards often carry higher interest rates. Simply applying for a retail credit card can hurt your score. Every application you submit appears on your credit report as an inquiry.
Retail credit cards tend to have lower limits, even an inexpensive purchase can generate a high credit utilization ratio. you utilization ratio is calculated by comparing the balances on your credit cards with the credit limits.
NOTE: Look i am going to be completely honest with you FICO hates department store cards. People that use these types of cards are prone to default. people that have good credit don't use these types of cards because of the high interest rates. Don't get a department store card.