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Posted on 15 February 2017 | 1,860 views

Opening a Credit Card at a Department Store Will Lower Your Credit Score

While on a shopping spree, you open credit-card accounts at several of your favorite department stores to snap up discounts of 10% or 15%. You’re saving a bundle, but you may be chipping away at your credit score.

If you answered true — you’re right!

For one thing, multiple inquiries from lenders for your credit reports in a short period can trim your score, especially if you don’t have many credit accounts or you have a short credit history.

Why? FICO says that people with six or more credit inquiries on their reports in a short period are eight times more likely to declare bankruptcy than those with no inquiries.

What could be more damaging to your score is how much you charge to your new cards.

If your balances are near the cards’ limits, you’ll likely increase your credit-utilization ratio — the amount of debt you have relative to your credit limits. The higher your ratio, the greater the negative impact on your score. If you don’t charge a lot on the cards, you pay them off quickly and you keep balances low, your score could eventually benefit from the higher credit limits. But in general, you should take on credit sparingly.


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