Retail Charge Cards

Most retail credit cards are processed through banks with agreements with the retailers. Very few do their own in house charge accounts, and fewer have their own banks to fund a VISA card program or accounts receivables.

A trade line with a retail charge card can be as much as 10% of a credit score, so it is helpful to have one, especially if you already 2 or more trade lines (credit accounts showing as separate items on a credit report: revolving, mortgage, fixed financing/loan, retail are the 4 most common).

The following applies to those with bankruptcies on their credit reports

In an effort to obtain credit, it is important to first know whether you have a good chance of getting your application accepted so that you don't have an inquiry that doesn't result in credit approval.

Primary questions to ask of an account specialist at the financial institution handling the retail credit program:

1. What is the companies view on bankruptcies appearing on a credit report: for some companies (HSBC/Capital One, being one), a bankruptcy appearing on the credit report results in immediate rejection of the application; for others, it may depend on the other follow-up questions.

2. How long after a BK (bankruptcy) discharge has passed before you will consider extending credit? 2-years is a common term, but shorter and longer are quite probably too.

3. Is there a minimum credit score and/or a desired credit score to consider extending credit? This will probably change the most frequently since the secondary market that purchases or funds the credit changes their guidelines with the market.

4. What credit reporting agency do you use? Let them tell you which of the 3 they pull: Equifax, Transunion, Experian. Since it is possible to get a bankruptcy removed from some credit reports after some time and effort, knowing which they use could help you navigate the sea out there for one that could work for you.

Since credit inquiries, especially those resulting in denial of credit can harm the score and stay on the report for a while, it is important to know which companies will have the highest likelihood of extending credit to you before you even apply. A little research goes a long way in this case.

With consolidation happening in the retail credit marketplace, there are about a dozen primary banks that service all the national retailers in the country. Knowing the policies of the financial institution will help narrow down the search.

One of the best cards to start with is a Target RedCard (a credit card only useful at Target, not the VISA card). They have their own financial organization, and have been known to extend a VISA card to a store card holder after some time of appropriate card usage. Even with the Target VISA card, it still makes sense to have the RedCard as it appears differently on the credit report, and helps with that 10% potential of the score.

A very common financial institution to stay away from is HSBC (being acquired by none other than Capital One--which most of us stay away from anyway). The primary reason to avoid appyling for credit at all is that they automatically deny anyone with a bankruptcy appearing on their credit report. They manage accounts for Best Buy, Fry's Electronics, Menards, Abercrombie & Fitch, Hollister, Land's End, Crate & Barrel, J Crew, Trek Bikes, Williams & Sonoma, and Pottery Barn among others.

Be aware that some retailers use different financial companies for their charge card and a different one for their VISA and/or MasterCard programs. It pays to check into both before applying.