Easy to Get Instore Credit Cards

This holiday season brings with it the urge to up our shopping quotas, and as such, we get assaulted with offers to open credit cards. Some of the deals we get are pretty darned tempting, too. I mean, hey – when they tell you that you can open a charge card today and save up to 20% on your purchase – what’s not to like? Such offers really kick in when you’re talking about big-ticket items like televisions, appliances, etc.

But for people in the market for a new home — or looking to refinance — taking advantage of in-store savings could be a long-term money loser. Especially where credit scores are concerned.

Here’s How Credit Offers May Impact Your Credit Score

Every time you apply for a credit card, your credit score drops. According to myFICO.com, “new credit” accounts for 85 out of 850 possible credit scoring points, and is defined as follows:

* Number of recently opened accounts

* Number of recent credit inquiries

* Time since credit inquiry(s)

* Proportion of accounts that are recently opened to all open accounts

And here’s an interesting fact: Holiday shoppers with only a few open credit cards will most likely see a bigger hit on their credit score than shoppers with many cards.

In any event, your credit score is worth protecting – especially if a big ticket credit purchase – such as a house – is in your future. Here’s how this might pan out…

A borrower applying for a conventional mortgage with 20% equity – with a credit score (FICO Score) of 720-739 will be offered rates 0.125% higher than a borrower who applies and has a FICO score of 740. Yes, those few points do matter. Here it how it breaks down:

• For 700-719, the rate increases by 0.375%
• For 680-699, the rate increases by 0.750%
• For 660-679, the rate increases by 1.250%

As you can see, though you may be saving on that in-store credit card offer now, you might pay big time in the future if a home purchase or other large purchase – say, a new car, is in your future.

Should I Steer Clear of All In-Store Credit Card Offers?

Absolutely not. Sometimes they help out and make good sense. Go ahead and consider taking advantage of in-store savings during the holiday shopping season, just be aware of how your credit score may be impacted.

If you’re not applying for a mortgage or making some other large credit purchase any time in the next six months, taking advantage of such credit card offers wont’ have a big negative impact on you. However, if you know you’ll need your FICO soon, consider what saving 15 percent on a $343 purchase today may actually be worth in the long-term when a bigger price tag might be in question.