Credit Card Rewards Programs: What Less 10% Means

When we buy things at a major retailer, we’re often offered a free ten percent discount. However, to take advantage of the promo, you first have to sign up for a store credit card. Usually, this is free. A lot of people fall for this kind of marketing, but did you know that signing up for store cards lowers your credit score significantly? It could even affect your chances of getting a mortgage with low interest rates.

Retail store credit cards are also known as limited purpose cards. They can only be used at specific locations. What they don’t tell you is that by applying for a store’s credit card you may be lowering your credit score, because of credit inquiries. Inquiries are posted in your file whenever you apply for a new credit card from a different company. This may cost you points on your credit score, especially if you’ve applied for several limited purpose cards. This could cause you to move down risk levels, potentially damaging other transactions like mortgage loans.

This is a tricky situation to be in, because there’s no real way to get your credit card score up instantly. You’ll have to earn your scores again, and wait for time to pass before you can actually get your score up. Sure, you have the option to remove the inquiries, but this is only legal if you were scammed. Fraud is the only instance when the inquiry could be removed. When you apply for limited purpose cards, they are legal even if you did them in a hurry.

All you can do is play the waiting game. Since you have slim chances of getting those inquiries removed, it would be better if you waited them out instead. It usually takes about twelve months for the inquiries to clear up, so you can do some credit score handling in the meantime. Be very strict about paying your monthly installments so your credit score does not go lower. In about twelve months, your finances should be back in shape.

Keep in mind, however, that you’ll have a small problem getting a mortgage with low interests. As your credit score goes down, your chances of going down a risk level increases as well. Should you decide to get a mortgage during this period, you’ll be paying more than you should, considering that you had a pretty good credit score to begin with. If this is the case, you have two options. First, you can continue with the mortgage. You’ll be given a higher interest, but when your credit score recovers a little (when it goes up 700), you’ll be able to refinance your mortgage for a lower interest rate. If you really need a house right now, this is the best option. Your second option is to simply wait until your credit score is higher to avoid paying unnecessarily because of the high interest rate. At this point, you have no other option if you want to save up on money. This is also the option if you’re not really in a hurry to buy a home.


CreditCards.org enables consumers to search and compare credit cards, review the best credit cards offer, and apply online. Includes a comparison of Visa, MasterCard, American Express, and Discover cards in categories such as: 0% APR, balance transfer, cash back, low interest, rewards, bad credit, small business, student, and others.