You probably don’t consider yourself a subprime borrower. But have you looked in your wallet lately? If you’re carrying any store-issued credit cards, you’re hurting your credit without even knowing it.
While store cards aren’t subprime by the traditional definition, their terms and practices make them technically so, says John Ulzheimer. The interest rates on these cards are so high they wouldn’t be found on a normal credit card unless you have defaulted in the past. Call them equal-opportunity offenders: whether your credit score is 8 or 800, you’re paying the same rates on store cards. Who need that?
In addition, the credit limits on store cards are notoriously low. You may think this doesn’t matter if you’re just using the card for a purchase or two every now and then from your favorite shop in the mall, but low limit means low score. Even if you charge something modest to the card, the utilization is higher and thus worse for your credit score. Is a 10% discount really worth all that damage to your credit?