Am I Saving Money with a Store Credit Card?

by Joe Hancock

I was in one of my favorite retail stores, and to my delight, many things were on sale. When I checked out, the sales assistant asked me if I wanted to open a store credit card, as I would save even more money on my purchases. At first I thought that sounded great, that I could open it and then close it in a few weeks. This way, I could get my savings. But, is this a good idea or should retail credit promotions set off alarm bells in your head?

Joe Hancock with Union Home Mortgage says … NO, don’t do it! “When you open a store credit card, this will potentially lower your credit score, and it is really bad if you have opened a few of these types of accounts in just a few months. Store credit cards usually have high interest rates and again, this will hurt your credit score.”

Credit Tips To improve your Credit Score

What’s your FICO score? This is a question many of us hear, especially when applying for credit. If your score is low, it can cost you thousands in higher interest rates, higher insurance rates, and even may cost you a job opportunity.

So, what can you do? The first thing to do is take a look at your credit report. You can get a free report via www.annualcreditreport.com. If you want to see your score it can typically cost you about $40 to $60 total. There are three major credit bureaus, and all three of them are more than likely have a different score for you. You can visit their websites at www.equifax.com www.transunion.com and www.Experian.com to get your score and report. Two of your scores from Transunion and Equifax are free from www.CreditKarma.com. However, these score are sometimes a little inaccurate. Pulling your own credit score will not affect your score, as an inquiry from another source will.

If your average credit score is below 680, you are paying more for most things. What can you do to improve your score?

Look for Inaccuracies on Your Credit

Check to see if everything is reporting correctly on your credit report. If not, you can dispute the errors and have them corrected in 30 days. Be sure to have any disputes cleared up before applying for a mortgage. If they are not cleared up, it can delay your closing.

Pay Down Credit

Pay down your credit card balances to zero or at least 35% of the high balance amount. By doing this the scoring algorithm will improve your score. Why? Because it appears you are not maxing
out your credit which can show financial instability.

Don’t Close Accounts

The score algorithm looks at how many accounts you have, how long you have had them, and your payment history. Closing your accounts will actually hurt your score, as it will take out what is considered current active accounts and move them to inactive, which have lower point gains.

Increase Your Credit Limits

Contact your creditors and have your credit limits raised if possible. This will help with your ratios that calculate your credit usage.

Open New Accounts

Don’t open a store card, as this type of credit does not have a large impact on your score. Credit cards, installment loans, and mortgages have the largest impact on your score. Opening a new line and keeping it at zero helps your score in the long run.


If you have collections on your credit there is a strategy to handling them. First off, do not pay them off if you are applying for a mortgage. The reason is when you pay off a collection it will be then reported as “new” with a zero balance. The credit score algorithm will view this as a new collection and actually lower your score. In the long run, your score will improve as time passes by, but not fast enough if you are in the mortgage process. If you do not plan on using your credit for a while, then settling collections accounts and replacing them with new positive accounts will improve your score in the long run. You can also improve your score without paying off collections by just adding new positive accounts and keeping current accounts current.

Pay On Time

This is a non-negotiable. Never ever be late on anything again. This one step alone will insure your scores improvement over time if you have reporting accounts on your credit.

Do Not Use Credit Repair or Debt Settlement Companies

When you allow a third party to access and modify your credit report, you risk damaging your credit. Most of these companies’ goals are to stretch out the process to collect a monthly fee for as long as possible from you. Be very wary of any of these companies. You can do anything they claim to do for you.

Credit is an important part of our financial lives. Keeping an eye on it and making sure you are utilizing it properly can help you financially in the long run.

For more information call Joe Hancock, UnionHome Mortgage 352-275-6483

Contact Information for the Three Credit Bureaus

  • Equifax
    www.equifax.com 1-800-685-1111
  • Experian
    www.experian.com 1-888-397-3742
  • TransUnion
    www.transunion.com 1-800-916-8800