Can a Sub-Prime Merchandise Card Raise My Credit Score?

Can a Sub-Prime Merchandise Card Raise My Credit Score?
••• Jupiterimages/Comstock/Getty Images

You've set a goal to raise your credit score. That's the easy part. Now, you must begin the process of changing your spending habits. And, as counter-intuitive as it may sound, apply for credit. A traditional credit card will deny you if you already have bad credit. However, a sub-prime merchandise card offers the best and quickest way to rebuild your credit.

Sub-Prime Merchandise Cards

A sub-prime merchandise card acts like a line of credit that allows you to purchase items with a specific vendor through its catalog or online mall. Unlike a traditional credit card, you are not subject to a credit check or require a co-signer. After an approved credit limit, you make purchases on merchandise through the issuing company's website or catalog. Purchases require that you make an initial deposit on merchandise with the balance financed on the card.


The vendor reports your good payment history to the credit rating agencies, which builds up your credit score. Your total credit limit improves with the additional credit you have on the sub-prime merchandise card, as new credit accounts for 10 percent of your credit score. Carrying a small balance on your sub-prime merchandise card relative to your credit limit improves your debt-to-income ratio.


A sub-prime merchandise card locks you into a merchant agreement, which you may not want. The merchant agrees to extend you credit to capture new sales in exchange for reporting your good payment history to the credit rating agencies. However, as sub-prime customer, you are on a short leash. The merchant will have little tolerance for missed or late payments. In addition, you wind up paying more for ordinary purchases.

Payment History

Once you get your sub-prime merchandise card, set aside money in your budget to pay off your balance quickly. Fair Isaac Corp., which created the widely used FICO credit score, says payment history comprises 35 percent of your score and amounts owed account for 30 percent of your credit score.