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A Pile of Store Credit Cards

When in the process of purchasing a home, every seasoned loan officer, realtor and banker will tell you that you should not opt for new in-store credit cards because it will lower your credit. But few of them can articulate why it does so. There are potentially four reasons why. 1) When you open a new line of credit, the issuing party will perform a credit inquiry. Because you have the potential to take on more debt. This will ultimately result in a deduction in your credit as the inquiry takes place. 2) If you successfully qualify for the card, you then are issued a new line of credit. New credit lines make your credit score suffer a bit as it is a way of preventing someone from "escalating debt" and opening an unlimited amount of cards simultaneously. 3) Once you receive your new card, it will negatively impact your overall length of credit history. A brand new card will bring down the average length of time your accounts have been open and active and negatively impact your score as well. 4) If you make a charge on your new store card, you could potentially upset your debt-to-limit ratios on your current credit lines. Which will certainly lower your credit score. While there are many benefits to store cards, like saving 15% on your current purchase, it's best to put that decision off until you close on your home. Kurt Jalbert Loan Ready Credit



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