- Centurion Member
- Posts: 179
- Joined: Fri Apr 12, 2013 4:47 pm
- Location: Indianapolis, IN
I have several store cards (Best Buy, American Eagle, Kohls) and I can say they can help your credit score, IF you use them responsibly. When I first got my Best Buy card, I maxed it in less than a year. I didn't think about the consequences of that, and now it's my biggest monthly expense after my car payment. Be careful with them because of the high APRs.
I'd suggest paying down all your store cards if they have balances and use them sparingly. Don't carry over 20-30% balances and you should be fine. Avoid having too many cards with balances, as I've seen that as a reason for credit denial.
Having many accounts *can* help your credit score, but only to a certain extent. It's more about having a good credit mix (revolving cards, loans, mortages, etc) and not having too many of one type of account. Having too many credit cards with balances DOES hurt your credit.
Don't close your oldest cards unless they have annual fees you can't afford. Having old accounts in good standing helps your credit. When you have a prime card (Amex, Discover, Chase Freedom/Sapphire, and other similar cards) you can close some of these store cards if you want, but I don't see the point in closing good accounts. The only time I'd close old accounts is if you have even older accounts and they won't give you a credit limit increase. I've seen some companies refuse credit limit increases, but they will give you a new account with a higher limit. This could be the case for your Kohl's and Macy's cards, if you want higher limits on them.
Yes, closing the cards will affect your AAoA (average age of accounts) and will hurt your score. I'd open a new card like Chase Freedom, then wait about a year before closing an account. Replace another store card with a good card (Discover IT, for example) and then close another store card. Do this every year or two until you have really good cards and you'll be set. Ask for CLIs every 6 months to a year (soft pulls only for best score) and you shouldn't have any issues.
Then, if you want to open a store card later on, they will almost certainly give you a high limit $2k+ and you can get the rewards/savings and balance transfer them onto one of your really good Visa/MC/Discover/AMEX cards.
Hope this long post helps you!
Scores on the mend...
FICO: 650 (Discover/TU, 6/23/2016)
Cards I Use Citi Double Cash, Chase Amazon, Capital One QuickSilver
Sock Drawer Discover IT, Citi Diamond Preferred, AE Visa, QuickSilver One, Walmart CC, CareCredit, CreditOne (keeping for history for now)
Short Goal Reach 680