56% Think a Holiday Store Credit Offer Will Ding Their Credit Scores
Norwalk, Conn. — August 12, 2010 — An October survey of 1000 Americans 18+ revealed that 56% think that opening a store credit card offer will lower their credit scores. Seven percent of respondents said it will lower score significantly, 48% said it will lower scores slightly. 21% said accepting a credit card can increase scores slightly, while five percent think it will increase scores significantly.
Results of the FreeScore.com survey are as follows:
After the holiday season, the percent of Americans 18+ that expect...
|Credit scores will be much lower:||7%|
|Credit scores will be slightly lower||48% total lower: 56%|
|Credit scores will be slightly higher:||21%|
|Credit scores will be much higher:||5% total higher: 26%|
|Credit card balances to be the same:||19%|
Also, according to simulations of actual credit score changes among adults 18+ conducted by FreeScore.com, opening a new credit card account with a $2,500 limit (which many Americans will do this holiday season) could knock a credit score down by as much as 52 points. Further results show increasing a credit card balance by $2,000 can lower credit scores by as much as 68 points. FreeScore.com based its findings on FreeScore.com members who conducted 78 simulations on the FreeScore.com Credit Score Predictor. The results are:
|Action||Range of Credit Score Changes|
|*Open new credit card with $2,500 limit||-52 points to +14 points|
|*Increase balance $2,000 on existing card||-68 points to +16 points|
|*Add 1 credit inquiry plus getting 1 new credit card with a $2,500 limit||-55 points to +14 points|
According to Carrie Coghill, director of consumer education for FreeScore.com, "Saving 10% on your next purchase, or no interest for a year, might sound good at the cash register, but may not be worth it in the long run. Before consumers take credit card actions, they can get a reading on what will happen to their credit scores. Without knowing up front, you are playing credit score roulette. For most people with good credit, you might have minor ups and downs opening a new store credit card; but those with a poor history of credit, a credit card deal can really hurt credit scores."
Coghill also commented on why credit scores could increase: "Credit scores are based on calculations of various aspects of a person's credit history.
"While most understand that overextending your credit can lower credit scores, having too little credit can also lower your scores. Not enough credit lowers your credit scores because the credit bureaus do not have enough of your credit history to determine your ability to pay. Therefore, in some instances, when people add a credit card or increase a credit balance their credit scores can actually increase."
About FreeScore LLC
FreeScore.com is the leading online consumer credit service, providing members with affordable, unlimited access to all three credit scores and their complete credit profile. For more information, go to FreeScore.com.