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Added August 31, 2010 from: Mike Killian
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 Mike Killian
Answered By Mike Killian: The best answer to your question is that the net effect will be minimal, if any at all. If we were talking about a regular credit card such as those you might research at CardRatings.com, it could affect your credit score by a couple of points, but a store credit card affects you even less. It really depends on the store's policy for reporting to the credit bureau. But again the worst that would happen is a loss of a few points on your credit score.

Your score is determined by a number of factors, including on-time payment, which represents 33 percent of your score. The amount you owe compared to how much credit is available to you comprises another 30 percent. The length of your credit history accounts for 15 percent of your score and new credit account applications for another 10 percent. Finally, the type of credit you have--for example, secured, unsecured, store credit--accounts for the final 10 percent.

The last category is the one that pertains to your question, because there is a hierarchy associated with different types of debt. Secured debt is the highest and unsecured debt is much lower, with retail credit cards such as Target being lower in the hierarchy. So you can see, your Target credit card account would affect you least of all.

Having said all of that, I would recommend you not close the account, but instead, destroy the card without saying anything to the store. Or simply do not use the card or account other than to make payments. In this way you won't lose even 2 or 3 points, and the account will still be available in years to come if you change your mind. The exception is if you are paying an annual fee. In that case, you would want to cancel the card, so you won't have to pay for a card you aren't using.

This question is about:  Retail Credit Cards
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