Someone posted this comment on another one of my posts, so I decided it would be best to address this issue as a new topic:
Q: I have almost no credit history (just a cell phone) and want to get my first credit card. Do you think I should start with a store card? I shop a lot at Gordmans and they have their own credit card. Will that be added to my credit report and help me build credit in 2013 and beyond?
A: First of all, having a cell phone (or any utility bill) will not help you build credit. As long as you pay them, they aren’t reported to the credit bureaus. The only time they do report is when you default (and when that happens, that’s only going to hurt).
On the other hand, all reputable credit cards will show up on your credit report. Whether they help or hurt you, I will discuss in a moment. But rest assured, the Gordmans credit card will show up on your report.
But should you apply or not? Consider this…
- No annual fee
- Very easy to get – Someone with little to no credit history should have a good shot at being approved. Because Gordmans clothing stores focus on low pricing, you can bet they’re expecting younger people with limited credit to apply.
- Good rewards program – For every $200 spent on the credit card, a $10 reward is given to use on a future purchase. That’s like getting a 5% rebate, which is pretty good for a department store credit card.
- Coupons and discounts – As you would guess, they send cardholders the occasional coupon. For example on your birthday, you get one for 10% off a purchase.
- High interest rate – Carry a balance? Be prepared to pay 24.99% interest. To avoid that, always pay the bill in full.
- Issued/managed by Comenity (formally known as WFNNB) – Also known as World Financial Network Bank, Comenity manages credit cards for dozens of different stores. Although I haven’t heard any reviews or complaints specific to the Gordmans card, if the customer service is anything like the other WFNNB cards, it’s not exactly going to be peaches ‘n cream!
- Low credit limits are likely – Not a big surprise but it’s worth mentioning, because having credit limits which are too low might mess up your debt to credit ratio… and that has the potential to hurt your credit score.
At the end of the day, all of the drawbacks listed are the status quo for a retail branded credit card. So despite their ugliness, they are what they are. If you are starting out, I do think the Gordmans credit card is a good idea. Of course that’s assuming you shop there regularly and pay off your full balance each billing cycle. As long as you use it responsibly, it will help you build credit. But make sure you also get an entry level Visa or MasterCard, because it takes more than store cards to achieve a good credit score.
Written or last updated for 2013