How Store Cards Affect Your Credit Score

Shopping is a pastime that almost everyone likes. It’s something enjoyable and fun. Indeed everyone has heard of retail therapy – something you indulge in to cheer yourself up when you’re feeling a bit blue. But there are consequences too, especially if you use store cards.

Store cards are just like credit cards. They enable you to buy items on credit and then pay back the balance, or some of it, each month. However, the big difference is the interest rate. Store cards are notorious for their high interest rates and it is these rates that can get consumers into a lot of trouble.

Why are Store Card Rates so High?

Store cards rates are high simply because they are set by the stores. The stores are able to set whatever rate they like and since consumers have been willing to pay the rate then why would they change them?

What if I Don’t Meet the Repayments?

Having a store card is fine if you use it wisely and pay it off correctly. If possible you should pay the complete balance each month. If this isn’t possible then you should at least make sure you pay off the minimum payment, this covers the interest. The problems occur when you start missing payments.

Just like with any credit cards, if you miss payments this information is stored on your credit file. It is your credit file that helps lenders determine whether or not they will lend credit to you in the future.

This means mortgages, loans and credit cards. Therefore defaulting on your store card could have a huge affect on your ability to obtain any future credit.

Credit profiles are determined by credit scores. The scores show a lender immediately whether or not you fit with their lending criteria so you could be turned down within a matter of minutes.

Can I Check my Credit Score?

It is possible to check your credit score and profile. Several internet based companies offer this service either for free or for a small charge. It is a good idea to check your score as there may be information on your profile that is incorrect. If this is the case then you can have this information corrected. You would not want to have a bad credit score affecting you ability to take out credit when the ‘bad’ element is false would you?

In today’s economic climate obtaining credit is becoming more difficult anyway. Keeping a good credit profile and score will at least give you a better chance of getting a mortgage or a loan should you need one so be sure to keep up all payments on store cards and credit cards and check your profile to make sure it is all correct.

Store cards can be great and a lot of help but you must use yours correctly, don’t spend what you can’t afford and always pay off as much as possible each month, making sure you at least cover the minimum payment.