Why the hate for store cards if you’ve also got prime cards?

Where you can talk about store credit cards, like gas station cards, department store cards, etc.
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CarefulBuilder14
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Why the hate for store cards if you’ve also got prime cards?

Postby CarefulBuilder14 » Fri Feb 06, 2015 10:31 pm

I’ve heard a few people on here and MF say that having a bunch of store cards is viewed negatively in the eyes of lenders — and I don’t completely understand why. I can definitely understand why lenders like to see a history of prime lenders, old accounts, and high limits. But why should the additional presence of store cards be a bad thing?

Let’s say someone has a clean history with 2 prime cards — let’s say a US Bank and an Amex. The cards are each 10 years old and have limits of $15k. So far, this person sounds like a customer that most prime issuers would want.

Let’s say this person also has 8 retail store cards with limits of $300 to $2500 each. Let’s say these cards have an average history of 4 years, but all are at least two years old. A few are even from Comenity. Maybe some cards occasionally report a high utilization, but they are always paid on time and in full.

Now if this person applied for another prime card, do you think the presence of the store cards would really be a concern? Or does the strength (old age, high limits, PIF) of the US Bank and Amex cards override any of those concerns?

I can see how starting with store cards and adding a lot of them in a short period of time could hurt someone who didn’t yet have any prime cards. If someone gets 10 cards in a year, each with limits in the $300-$500 range, I can see how this would make prime lenders uneasy about giving someone his or her first $5k limit. But the critics of store cards seem to go much further than this — apparently saying, if I understand correctly, that 8 retail store cards could somehow ‘drag down’ someone with old, high-limit prime cards.
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popamode72
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Postby popamode72 » Fri Feb 06, 2015 10:49 pm

I get really tired of seeing that argument myself though I still agree that getting too many store cards at one time, especially of the Fingerhut kind and super low limit sort of SCT stuff when you're trying to establish your credit just makes it a lot harder to get cards you actually want later on with decent starting limits. Moderation is key IMO. Made that mistake last April with the toy limit junk I got approved for and really because I was still unaware of a lot of these things back then.

I actually think some of the store cards I got were very helpful in helping me get good limits with prime lenders later on, especially since I got them relatively early in my credit building. I've even noticed that sometimes when I get approved for a new card that the limit is matched with something I already have that's has aged more overtime. I strongly suspect that with the Propel card and the Sams Club card I had gotten several months ago. Chase AARP's initial limit and WalMart to a lesser degree and my BoA card is closely behind my Paypal Smart Connect and that was a CLI I got through calling recon.

This reminds me of a topic I recently saw over at both Credit Boards and MF where a credit analyst answered a whole ton of questions about these sorts of issues. It was a pretty enlightening piece and confirmed a lot of what I had suspected before.
Macy's TLs (21k), Lowes (17k), CSP (10k), Sam's Club (10k), Nordstrom (5k), AARP (4.2k), Freedom (3k), Discover (1.5k), Quicksilver (2k), BoA (3k), Barclaycard Arrival (2.5k), Amazon Store (6k), Paypal (4.9k), Sam's Club MC (3.6k), Walmart MC (1.2k)

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Postby takeshi » Mon Feb 09, 2015 8:51 am

CarefulBuilder14 wrote:I’ve heard a few people on here and MF say that having a bunch of store cards is viewed negatively in the eyes of lenders – and I don’t completely understand why.

A lot of people don't have a good grasp of causality and rely on oversimplified generalizations. You always have to consider the source. The cards themselves aren't an issue. Those with poor credit tend to have more of them and people assume the cards to be the cause IMO.

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Postby yfan » Tue Feb 10, 2015 11:52 am

takeshi wrote:A lot of people don't have a good grasp of causality and rely on oversimplified generalizations. You always have to consider the source. The cards themselves aren't an issue. Those with poor credit tend to have more of them and people assume the cards to be the cause IMO.

This. +1,000,000.

Credit considerations aside though, I don't really see the point of getting or hanging on to a bunch of low-limit store cards once you have graduated to prime or even just regular credit cards. A lot of cards these days give you deals that rival store cards anyway, and keeping track of too many accounts can be a pain. But I guess to each her (or his) own.

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Postby popamode72 » Tue Feb 10, 2015 1:39 pm

takeshi wrote:A lot of people don't have a good grasp of causality and rely on oversimplified generalizations. You always have to consider the source. The cards themselves aren't an issue. Those with poor credit tend to have more of them and people assume the cards to be the cause IMO.


That makes sense. That's why those people usually have really low limit toy store cards for a while and products like Fingerhut. Those are the best things they can get outside of the first premier credit one trap. There are some store cards though that do offer financing deals or some kind of discounts at the store and even some that can be upgraded to MCs, Visa Signature that come with desirable perks too that I think make them worth it.
Macy's TLs (21k), Lowes (17k), CSP (10k), Sam's Club (10k), Nordstrom (5k), AARP (4.2k), Freedom (3k), Discover (1.5k), Quicksilver (2k), BoA (3k), Barclaycard Arrival (2.5k), Amazon Store (6k), Paypal (4.9k), Sam's Club MC (3.6k), Walmart MC (1.2k)

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Postby CarefulBuilder14 » Wed Feb 11, 2015 8:39 pm

I know someone who has a $10K Barclays LL Bean card. That's a higher CL than I have on any of my cards (except for maybe PRG). It has grown a lot with customer-initiated CLIs.

So much for the idea that all store cards have low limits.
Wallet: Prestige CSP SchwabPlat Freedom It Hyatt SallieMae AAPlat
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Postby Vattené » Fri Feb 13, 2015 2:47 pm

This is a pet peeve of mine, too. I believe people offering that advice may just be projecting their negative connotations of those cards on to creditors.

I also strongly believe those types of accounts acted as stepping stones to prime land for me. I had around 9 accounts before applying for my Discover, and when I did I was approved with a CL over double my next highest. Of course I didn't go on an app spree over the course of a month. I gradually accrued them over time and kept a clean history. As I was acquiring them I saw the CLs I was getting creep up; add a Discover and an Amex to the mix and they shot up when I requested increases. Those accounts weren't a deliberate, long-term plan to get my current cards, and I may have been able to get them without all of those accounts. However, there's no way I would have the credit limits I currently do without them.

Some people seem to be lucky enough to get a low-limit Freedom right out of the gate, but many others have to work their way up to that level. I know I've said this before but I think they're a much preferable alternative to secured cards.
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FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

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Postby CarefulBuilder14 » Sun Feb 22, 2015 12:03 am

http://ficoforums.myfico.com/t5/Credit-Cards/Ask-A-Back-Office-CC-Company-Employee-ANYTHING/td-p/3815867

That's an interesting thread on MF.

One of the lessons is that to determine a new CL, some analysts will look not just at someone's highest CLs, but also at average CLs. So having $10k-ish limits, then getting a bunch of low-limit store cards, can lead to lower future CLs than would otherwise be possible.

Although it would not explain your Amex and Discover CLs, Vattene. Your history with store cards let you get great prime limits without as many intermediate steps.
Wallet: Prestige CSP SchwabPlat Freedom It Hyatt SallieMae AAPlat
SD: Arrival BrooksBros BCE ED IHG
Letting new accounts cool off since May
Really not sure what I'll add next or when

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Postby flan » Sun Feb 22, 2015 8:01 am

CarefulBuilder14 wrote:http://ficoforums.myfico.com/t5/Credit-Cards/Ask-A-Back-Office-CC-Company-Employee-ANYTHING/td-p/3815867

That's an interesting thread on MF.

One of the lessons is that to determine a new CL, some analysts will look not just at someone's highest CLs, but also at average CLs. So having $10k-ish limits, then getting a bunch of low-limit store cards, can lead to lower future CLs than would otherwise be possible.

Although it would not explain your Amex and Discover CLs, Vattene. Your history with store cards let you get great prime limits without as many intermediate steps.


So, assuming the dude over there is what he says he is, it sounds very much like the real work is done by the computer, and that the basis for the computer's decisions isn't terribly well communicated. That's not surprising, but I wouldn't trust everything he's saying to be true, even about whatever bank he works for -- not because he's lying, but because they don't tell him everything, and the mechanisms are complicated.

It's well known that the limit is determined by the other accounts you have, but it's not clear whether the bank is calculating a maximum limit, and then deciding how much of that to offer based on your other accounts. For instance, they determine they'd lend you $10K. They look at your collection of store cards with $23 credit limits, and say "he'll be thrilled if we offer him $55!", or they sell your collection of bank cards, with $20K limits, and decide "we have to give him all ten". Store cards are supposed to be reported as such, and banks know that people get them for various reasons (including just to get the intro sale[1]), and that the limits are pretty meaningless. Most people aren't so obsessed with limits as people here and myfico are, so if the limit is big enough for the purchases they're going to make, they're happy. Showing a good payment history is good, too, and there's evidence that number of payments made on time is consideration. That's absolute number, not just a percentage. 100% of 200 payments is better than 100% of 100. I don't know the number at which it becomes meaningless, but for people trying to establish credit it matters.


[1] We bought some furniture a while ago. There was a discount if you applied for the store's card. So, my wife did. We didn't use the card, in part because the limit they offered was just over what we were spending. (But also because cash back on other cards...) We got the discount.

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Postby popamode72 » Sun Feb 22, 2015 9:14 am

CarefulBuilder14 wrote:http://ficoforums.myfico.com/t5/Credit-Cards/Ask-A-Back-Office-CC-Company-Employee-ANYTHING/td-p/3815867

That's an interesting thread on MF.

One of the lessons is that to determine a new CL, some analysts will look not just at someone's highest CLs, but also at average CLs. So having $10k-ish limits, then getting a bunch of low-limit store cards, can lead to lower future CLs than would otherwise be possible.

Although it would not explain your Amex and Discover CLs, Vattene. Your history with store cards let you get great prime limits without as many intermediate steps.


I asked three questions there and one of them was about having cards like Fingerhut, Credit One, First Premier, etc with 250-500 limits but other than that, keeping them in good standing and seeing if they'd be a negative factor in getting higher limits in the future.

http://ficoforums.myfico.com/t5/Credit-Cards/Ask-A-Back-Office-CC-Company-Employee-ANYTHING/m-p/3816975#M1061001

I'm sure that question was also answered in a similar thread here on another website that was posted on MyFico too.

http://creditboards.com/forums/index.php?showtopic=539687
Macy's TLs (21k), Lowes (17k), CSP (10k), Sam's Club (10k), Nordstrom (5k), AARP (4.2k), Freedom (3k), Discover (1.5k), Quicksilver (2k), BoA (3k), Barclaycard Arrival (2.5k), Amazon Store (6k), Paypal (4.9k), Sam's Club MC (3.6k), Walmart MC (1.2k)



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