Store credit cards are easier to get approved for than bank cards, even with a low credit score, because the issuer only cares about your ability to shop there
A store credit card is a card you use only at one retailer or a small group of related stores. Target, Walmart, Kohl's, Best Buy, and Home Depot all issue their own cards. The approval bar is lower than for a Visa or Mastercard because the store has less risk — you can only spend money there, and the store knows your purchase history if you shop there regularly.
Store cards report to the three credit bureaus (Equifax, Experian, TransUnion), so on-time payments build your credit history the same way a bank card does. The catch is that store cards usually carry higher interest rates and lower credit limits than bank cards, and some stores will deny you if you have recent late payments or collections accounts. But if you have been rejected for a regular secured card or a traditional credit card, a store card is often the next step.
Key Takeaways
- Store cards report to credit bureaus and build your credit score when you pay on time, just like bank cards do.
- Approval odds are higher with a store card than a bank card because the store limits your spending to their locations.
- Interest rates on store cards are typically higher than bank cards — often 20% to 30% — so carrying a balance costs more.
- Using a store card for small purchases and paying the full balance each month avoids interest and shows lenders you can manage credit responsibly.
- Some stores offer a discount on your first purchase if you open a card, but only take that offer if you were already planning to shop there.
How store cards report to credit bureaus
Every payment you make on a store card is reported to Equifax, Experian, and TransUnion. This means the card builds your payment history, which is the largest factor in your credit score. If you make payments on time, your score rises. If you miss a payment, your score drops and stays lower for seven years.
The credit limit on a store card also affects your score through something called credit utilization — the percentage of your available credit that you are using. If your store card has a $500 limit and you carry a $400 balance, your utilization is 80%, which hurts your score. If you keep the balance below 30% of the limit, your score benefits. This is why paying down the balance each month matters more than the interest rate when you are rebuilding.
Store cards versus secured cards and bank cards
A secured card requires you to put down a cash deposit — usually $200 to $2,500 — which becomes your credit limit. You own the deposit; the bank holds it as collateral. A store card requires no deposit. You get a credit limit based on the store's assessment of your income and credit history, and you keep no money on deposit.
A bank card (Visa, Mastercard, American Express) can be used anywhere those cards are accepted. A store card works only at that retailer or its partner stores. Bank cards have lower interest rates and higher limits, but approval is harder with bad credit. Store cards are the middle ground: easier to get than a bank card, but less restrictive than a secured card because you do not need cash upfront.
If you have been rejected for a bank card and do not have $200 to $2,500 for a secured card deposit, a store card is a practical starting point. Once you build six to twelve months of on-time payments with a store card, you become a stronger candidate for a bank card or a second store card with a higher limit.
Interest rates and fees on store cards
Store card interest rates typically range from 18% to 28%, though some go higher. This is 5 to 10 percentage points above what a bank might charge someone with good credit. The rate you receive depends on your credit score and income — someone with a score of 550 will pay more than someone with a score of 620.
Most store cards charge no annual fee, which is one advantage over some secured cards. However, some retailers charge a fee if you miss a payment or go over your limit. Read the terms before you open the card. The key to avoiding interest charges is to pay the full balance each month. If you charge $100 and pay it in full by the due date, you pay zero interest, regardless of the card's rate.
Which stores are easiest to get approved for
Retailers that cater to customers with lower credit scores — Walmart, Kohl's, and Fingerhut — tend to have higher approval rates than premium retailers like Nordstrom or Saks Fifth Avenue. Best Buy and Home Depot fall in the middle. None of these stores publishes their approval criteria, so the only way to know is to explore.
A hard inquiry (the store checking your credit) will lower your score by a few points for a few months, so do not explore to multiple store cards in the same week. Space applications out by at least two weeks. If you are rejected, ask the store why — sometimes it is because of a recent late payment or a collections account, and waiting a few months before reapplying can change the outcome.
Some stores offer a discount on your first purchase — often 10% to 20% off — if you open a card that day. This is a marketing tactic. Only take the offer if you were already planning to make a purchase at that store. If you open a card just to get a discount on something you do not need, you are paying interest on an unnecessary purchase.
Using a store card to rebuild credit
The goal of a store card is not to use it for everything you buy. It is to show lenders that you can manage a credit account responsibly. The best strategy is to charge one small, recurring purchase — groceries, gas, or a subscription — and pay the full balance every month. This creates a pattern of on-time payments without the risk of carrying a balance and paying interest.
After six to twelve months of perfect payment history, your credit score will rise enough that you become a candidate for a bank card or a second store card with a higher limit. At that point, you can close the store card if you want, though keeping it open (with a zero balance) actually helps your score because it preserves your payment history and lowers your overall credit utilization.
Do not open multiple store cards at once, even if you are approved. Each new card lowers your score slightly, and carrying balances on multiple cards raises your utilization. One card, used consistently and paid in full, rebuilds credit faster than several cards with scattered balances.
Common mistakes to avoid with store cards
The most common mistake is treating a store card as information programs. A store card is credit, not a gift. If you charge $1,000 and pay only the minimum, you will owe interest on the remaining balance every month until it is paid off. At 24% interest, a $1,000 balance costs you $240 per year in interest alone.
Another mistake is opening a card and then not using it. A card with zero activity does not help your credit score because it shows no payment history. Use the card for at least one small purchase every few months, and pay it in full. This keeps the account active and demonstrates responsible use.
A third mistake is missing a payment. One late payment can drop your score by 50 to 100 points and stay on your report for seven years. Set up automatic payments for at least the minimum due, even if you plan to pay more. This ensures you never miss a important date, even if you forget.
Frequently Asked Questions
Will opening a store card hurt my credit score?
Yes, but only slightly and temporarily. The store's hard inquiry lowers your score by a few points for a few months. However, the new account also lowers your average account age, which can drop your score by 5 to 10 points for the first few months. After that, on-time payments raise your score faster than the initial dip lowered it.
Can I use a store card at other retailers?
No. A Target card works only at Target. A Walmart card works only at Walmart. Some retailers partner with each other — for example, a Kohl's card may work at Kohl's and Sephora — but the card is restricted to those specific stores. If you need a card that works everywhere, you need a bank card (Visa, Mastercard, or American Express).
What happens if I miss a payment on a store card?
The store reports the late payment to the credit bureaus, and your score drops. If you miss a payment by 30 days, the store may charge a late fee (usually $25 to $40). If you miss by 60 days or more, the store may close the account and send it to collections. If this happens, contact the store when ready and ask about a payment plan or hardship program.
Can I get a store card if I have a collections account?
It depends on the store and how recent the collections account is. A collections account from five years ago is less of a barrier than one from last month. Some stores will deny you if you have an active collections account. Others will approve you but at a higher interest rate. The only way to know is to explore, but space applications out by at least two weeks to avoid multiple hard inquiries.
Should I close a store card once my credit improves?
Not when ready. Closing a card removes it from your credit history and can lower your score because it reduces your total available credit and removes a source of on-time payment history. Keep the card open with a zero balance for at least a year after you open a bank card. After that, you can close it if you want, but there is no urgent reason to do so.