Can you receive a store credit card with no credit history?
While shopping online or in a store, you may have been prompted to sign up for a store card. A store credit card (otherwise known as a retail credit card) helps stores incentivize customers by offering discounts, rewards and other perks. This is different from a store loyalty card, which is a rewards program that lets you earn points when you spend in that store.
Some retail store credit cards can be an option for people who want to receive a credit card but have limited or no credit history, but many cards run a credit check before issuing your card.
Store credit cards encourage consumers continue purchasing items from their store. Depending on the store, you may be able to get approved despite lacking a credit history. Store cards can present those without a credit history to begin making purchases on a credit card; therefore, building their credit history and credit score.
They also present an opportunity to those with no credit history to begin making purchases on a credit card. Depending on the store, you may be able to get approved despite no credit history. However, you may be subject to a higher annual percentage rate (APR) and lower credit limits.
In this article, you will learn:
- How to get a store credit card with no credit history
- The benefits of using a store card for purchases
- If a store card can help build your credit
How can I get a store card with no credit history?
Sometimes, when you go to check out at a store, you may be asked at the register if you’d like to sign up for the store’s credit card. There may be promotions included, such as 20% off your purchase, to encourage you to apply.
Keep in mind many stores will run a credit check before approving an application. However, some stores may offer instant approval and rewards associated with the retailer. If you apply for an instant approval card with no credit history, you could be asked to provide the following information:
- Phone number
- Email address
- Date of birth
- Mailing address
- Social Security number
Once you’ve been approved, you may use your store card for purchases made at that specific store.
Benefits of using a retail store card for purchases
Should you get approved for a store credit card, you’ll be able to benefit from using it to pay for your purchases in several ways.
Additional time to pay a purchase in full
Using a retail store card to make a purchase(s) can give you additional time to pay off the total billing statement at the end of a billing cycle. While you won’t be paying for this purchase the day you receive your item, you will be prompted to pay at least your minimum payment by a due date each billing cycle. Just like a regular credit card, any balance that remains unpaid after the due date will accrue interest, so you will be paying more for these items over time. Be sure to use only what you need, as early credit is essential for having a good start on your credit journey.
Rewards and perks
A store card can also set you up to receive a wide range of rewards and discounts. It could help you to save on purchases at a store you frequently buy from (however, this may not be the case if you do not make your payments in full by the end of the billing cycle or accrue interest on those purchases). You may be given additional perks or savings that a customer without a store card wouldn’t be able to receive.
Building good financial habits
Having your own store card gives you an opportunity to practice good credit card habits and budgeting to make payments. Be aware that store cards often have low credit limits and high APRs, so making your payments in full and on time can avoid additional costs like interest and late fees. Eventually, as your store card helps you grow your credit history and increase your credit score, you may qualify for another credit card of your choice.
Types of retail cards
There are two kinds of store cards you could apply for:
- Closed-loop—with this card, you can only make purchases with that card at that particular store. You can’t make purchases at other retailers with this card. However, in some cases, you may be able to make purchases within that store’s brand (for example, Gap, Banana Republic and Old Navy).
- Open-end—also known as co-branded cards, you can use this card with the specific retailer in addition to other locations that will accept it. They normally have a Mastercard® or Visa® logo in addition to the co-brand’s logo. These are cards that are associated with banks like Chase and partner with well-known retailers. Although you can make purchases with this type of card wherever it’s accepted, you may earn rewards at an accelerated rate on purchases with the partnered retailer.
Both cards can give you an opportunity to benefit from rewards and discounts. Even with no credit history, these types of cards could potentially also help you build up your credit score.
Will a store card help my build credit?
If you don’t have any credit history, the closed-loop credit card may be beneficial for you. Depending on the store and issuer, you might be given access to your card without a credit history or a credit check. An open-end or co-branded card will likely run these checks to ensure your creditworthiness.
Creditworthiness is a factor that lenders and creditors consider when you want to take out loans or credit cards. It takes into account your payment history, credit score and credit reports. Being “creditworthy” helps you to get approvals for loans, credit cards and other large purchases. Chase Credit Journey® offers some tools to help you with becoming more creditworthy with free credit scores, monitoring and services to help educate yourself on your credit score. If you make consistent and timely payments, you can improve your credit history and enhance your creditworthiness.
Keep in mind that having a store card doesn’t necessarily mean you’ll be approved for major loans or other large purchases. To build good credit, the three major credit bureaus—Experian™, Equifax® and TransUnion®—collect and interpret information about your payment history as one major factor to contribute towards your credit score. However, this is good data to monitor so that, one day, if you decide to apply for a card through a bank, you can show your creditworthiness.
Consider applying for a starter card
You may be limited to making purchases at specific retailers with a store card, and not every store will offer cards without a credit history. That’s why it may be worth considering opening a starter credit card to build your history and get access to more store cards and rewards.
Even without a credit history, you can apply for a starter credit card. These cards may start you off with a low credit limit and high interest rates. While this can be restrictive at first, it provides you with an opportunity to showcase your ability to manage your finances and make timely payments. As you start building your credit history and increasing your credit score, you’ll find that you could have more opportunities to apply for more cards, increase your credit limit and lower your APR.
Applying for a store credit card can be a great way to start your credit journey. However, you may find that without a credit history, your options could be limited. Many stores will want some form of credit history, so it may be difficult to find a card that will approve you without one.
The first step to build your credit is to know your credit score and enrolling in Chase Credit Journey®. This will be the start to a journey towards empowering your financial well-being.