Department stores, such as Macy’s, Sears, and many others, all have their own credit card brand to help increase their profits. Often, these stores will offer you a credit card when you make purchases as an incentive to help you afford the purchase.
While often these cards are seen as a bad idea because of the high interest rates, if you have a low credit score, these cards can actually help you improve your score.
Once you have applied for the department store credit card, use it carefully. You want to pay off the majority of your balances and keep between 0% and 10% of a balance on your card at all times.
Having a store credit card will help you build your reputation with the credit card companies and will enable you to raise your credit score.
By using the department store credit card responsibly, you will boost your credit score in no time.
CREDIT TIP: When applying for these department store cards, don’t get discouraged if you are not approved.
While these cards can help many people build their credit scores through responsible credit usage, there are other options for people who are not approved for these cards.
Secured Credit Cards
DEFINITION ALERT: A secured credit card is a credit card for which you make a security deposit when you open the account. Banks will often use the deposit amount as your credit limit and will use the deposit if you do not make a payment.
Secured credit cards are a great option for those with either no credit history or those with a poor credit history who wish to rebuild their credit. Basically, a secured credit card is still a credit card, but with some differences. A secured credit card requires an initial deposit (often this will be between $300 and $600).
After making the deposit, you will use the card just like any other credit card. You can charge purchases to it and then pay the bill each month just like on any other credit card. Also, similar to many credit cards, the secured credit card will charge you interest on your balances and often include annual fees for using the card.
However, even with the annual fees and high interest rates, a secured credit card is a great option for those who can not obtain other types of credit cards. These cards enable you to prove that you can pay your bills on time and be responsible with your credit.