During the holiday shopping season, retailers push store credit cards extra hard. Right now, most consumers in Illinois and other U.S. states are spending more than usual and making bigger purchases. Therefore, when offered 20%-30% off for opening a store credit card, many consumers are tempted to say, “yes.” However, signing up for a store credit card may cost you credit score points. Occasionally, Illinois shoppers find that getting a credit card from their favorite retailer make sense. Yet, you should never apply for a card if you’re only doing it for a one-time discount.
Three Ways that Illinois Consumers Can Harm their Credit Scores by Giving in to Store Credit Card Temptations During the Holidays
Even if Illinois consumers pay all of their bills on time, there are three ways in which store credit cards can harm their credit scores.
- Hard Inquiries: When you apply for a store credit card, the creditor checks at least one of your credit reports. This check shows up on your credit reports as a hard inquiry, and knocks a few points off your credit score. Granted, the damage is minimal. Yet, if you apply for several store credit cards during a shopping trip, you could significantly lower your credit score.
- Average Age of Accounts: Adding new store credit card accounts drops the average account age on your credit reports. This drops your credit score by at least a few points.
- Credit Utilization: Normally, store credit cards come with lower limits than “regular,” multi-purpose credit cards. This makes it harder to use 30% or less (the usage recommended by most credit experts) of these spending limits. For example, if your new store credit card has a $1,000 limit, and you spend $400 on a big holiday purchase, you’re already using 35% of your limit. This may cause your credit score to fall by several points.
All of these factors added together can spell trouble for Illinois credit scores if consumers have other factors working against them. So, before applying for any credit card – store-issued or otherwise – Illinois consumers should make sure that their credit scores are in good shape. They should also make sure that they will actually benefit from what the card has to offer.
When Store Credit Card Rewards are Not Exactly Rewarding for Illinois Consumers
Illinois consumers should also consider the fact that store credit cards come typically come with higher-than-average interest rates. This is okay if card users commit to paying balances off in full every month. However, if they habitually carry balances over from month to month, interest charges quickly eat away at any rewards (percentages off) offered by store credit card issuers.
In addition, if consumers in Illinois end up spending more because they have store credit cards that offer discounts, they’re not really saving money. In fact, they are doing the opposite. If the worst happens, and they fall behind with payments and eventually default on card balances, they ruin their credit scores. Of course, this doesn’t happen to everyone who signs up for a store credit card. Yet, if there is even a chance that a consumer will overspend and find themselves in this situation, they should decline all store credit card offers. After all, your credit score and financial well-being are definitely worth more than a one-time discount on a holiday purchase.
Why All Illinois Credit Card Users Should Protect their Credit Scores by Regularly Checking their Credit Reports
No matter what kinds of credit cards they use, all Illinois credit card users should regularly check their credit reports. When you regularly use credit, creditors and the credit bureaus have more opportunities to mishandle and misreport your information. Then, unfortunately, this carelessness leads to credit report errors. Many Illinois consumers don’t know this, but about 80% of credit reports contain mistakes of some kind. Also, many of these inaccuracies are significant enough to harm credit scores.
So, verify that you have the credit score you’ve actually earned. Check your credit reports from the three major credit bureaus at least once every 12 months. This is how frequently the Fair and Accurate Credit Transactions Act (FACTA) entitles you to free copies of your credit reports from TransUnion, Equifax, and Experian. Just go to www.annualcreditreport.com to get all three credit reports from one secure and federally authorized website.
If, while reviewing your credit reports, you spot mistakes and errors, contact Credit Repair Lawyers of America in Illinois immediately. When you call us, our team of credit pros guides you through the entire credit report error disputing process, so you don’t have to deal with the credit bureaus on your own. We’ll even connect you with an experienced credit attorney who will do whatever it takes to get you clean credit reports – for free.
The Free and Legal Way to Get Better Credit in Illinois
Don’t let errors on your credit reports bring your credit score down. At Credit Repair Lawyers of America, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? All of our fees come from the defendants in settled cases. This is why our clients pay nothing for the work we do.
Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (773) 360-0665 or sending him a message through our contact page.
For more information about Free Credit Repair, please visit https://www.creditrepairlawyersam.com/illinois/credit-repair/.