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Can I Raise My Credit Score With a Store Credit Card?

Can retail therapy help cure bad debt? Money Girl answers a reader's question. 

By
Laura Adams, MBA,
store credit card

Lucia R. asks:

"I recently settled some past due credit card debt and am now looking to rebuild my poor credit so I can buy a home. If I can’t get approved for a credit card, will a retail store credit card help build my credit just as well?"

ANSWER:

Buy Now

Yes, a retail store credit card can help you build strong credit. 

Though retail cards may offer lower available credit limits when compared to regular credit cards, they still help improve your credit scores if you manage them properly.

It’s important to always keep your balance on any type of credit card below 30% of your available credit limit. The amount of debt you have compared to your available credit limit is called your utilization ratio. To boost your credit scores, keep your utilization ratio as low as possible. For instance, if your retail card has a $600 credit limit, never carry a balance that exceeds about $180 ($600 x 30%). 

An even better strategy is to make occasional small charges on a store card that you pay off in full each month. That shows that you can handle credit wisely. Over time you’ll probably be offered higher credit limits, which will further boost your credit scores if you keep your outstanding debt balances as low as possible. 

If you can’t get approved for a retail store credit card or regular credit card, an easy way to raise your credit score is to use a secured credit card. However, it’s critical that you choose one that reports your payment history to the nationwide credit bureaus, like the Open Sky Visa.

A secured credit card doesn’t require a credit check—but it does require you to pay an upfront refundable deposit. A typical deposit ranges from $200 to $3,000 (you choose the amount) and becomes your credit limit on the card. A secured credit card looks and acts just like a regular credit card—but your deposit will be used to pay your debt if you don’t make payments on time. 

As you manage your secured or unsecured credit accounts properly over time—by keeping your debt balances low and making timely payments—your credit scores will improve and you’ll be eligible for a home loan.

For 3 smart strategies to raise your credit scores, download the Credit Score Survival Kit. This free multimedia resource gives you a video tutorial on how to check your credit, correct errors, and get your credit scores for free.

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