Consumer Comeback Blog

Credit Card or Department Store Card?

If you’re hoping to improve your credit score, one of the things that you need to be especially concerned about is your ratio of debt to your available credit. The fact of the matter is that this simple ratio amounts to about a third of your overall credit score, and is second only to your bill paying history in determining what your credit score will be.

One of the obvious ways to affect this number is to pay down some of your debt. In fact, that’s the fastest way to do so. However, you can also improve that number by increasing the amount of available credit. While applying for a new credit card will temporarily impact your credit score in a negative way, over the long haul you’re better off having that higher credit limit.

One of the natural questions, then, is what kind of credit card you should apply for.

Still, the fact of the matter is that it’s not the type of credit card that matters when it comes to your credit score. The fact is that an unsecured revolving credit account – such as you have with a regular credit card or a department store credit card – is essentially the same type of credit.

What really matters in regard to your credit card is a series of factors, including:

  • How you pay your bill. If you pay your credit card or department store card bill late, it’s going to hurt your credit score, plain and simple.
  • Your limit compared to your usage. The best credit card, from your credit score’s perspective, is the one that you don’t carry a significant balance on. You want to keep your credit utilization at about 30 percent of your credit limit.

Now, the type of debt you carry is important in regard to your credit score. As much as 10 percent of your credit score depends on whether you’ve got revolving credit or whether you’ve got credit for things like mortgages. Whether that revolving credit comes from Citbank or Macy’s really doesn’t matter to your credit score.

The most important difference between these kinds of cards is going to be the interest rate you pay, and that’s most definitely worth looking at.