Can a Best Buy Credit Card Help You Build Credit?

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Can a Best Buy Credit Card Help You Build Credit?

Is a home loan or a vehicle loan in your future? If so, there are a few things you should be aware of before attempting to make your goal a reality. Purchasing a house or a vehicle is a significant financial commitment that demands a significant amount of time, dedication, and money. Most of us do not have enough cash to put down for the whole purchase, so we must resort to a bank for a loan to fund it.

You must have decent credit to qualify. But what if you’re just starting out or have a poor credit history? There are many steps you may take to get your credit built or back on track. One option is to apply for a shop credit card, such as the one given by Best Buy. Find out more about your credit score and how a Best Buy (BBY) credit card may help you save money.

Key Takeaways

  • Obtaining a shop credit card, such as the one given by Best Buy, may help you enhance your credit score or develop your credit history.
  • Best Buy provides an in-store credit card as well as a Best Buy Visa card, which may be used everywhere Visa is accepted.
  • Both cards provide customers with incentives that may be used to future Best Buy purchases.
  • Cardholders of Best Buy may also take advantage of flexible financing on select items.
  • Paying off your Best Buy credit card on time will help your credit score.

Understanding Your Credit Score

Before you apply for credit with Best Buy (or any other creditor), you should understand how your credit score works. Your FICO score is used by lenders to determine whether or not to issue credit to you. FICO is an abbreviation for the Fair Isaac Corporation. 1 This score is a three-digit figure calculated using your credit reports from the three main credit reporting agencies—Equifax, Experian, and Trans Union.

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The FICO score is determined utilizing five main elements, each with its own significance weighting:

  • Payment history: 35%
  • Balances owed: 30%
  • Length of credit history: 15%
  • New Credit: 10%
  • Credit Mix: 10%

More than two-thirds of your credit score is determined by your ability to pay off your debt in whole and on time. The rest of your credit score considers things like the duration of your credit history and how often you establish new lines of credit. 2

It’s important to remember that although a FICO score is a credit score, not all credit scores are FICO scores. Differences between the two include how they’re computed, how they’re utilized, and who uses them. FICO scores are used by over 90% of lenders to determine credit decisions. 3

Check your credit report on a regular basis for inaccuracies and challenge any anomalies that may lower your credit score.

How Store Credit Cards Work

You’re surely aware that practically every retail establishment accepts credit cards. After all, practically every cashier will ask if you want to apply for their credit card. The majority of these credit cards are funded by various banks or financial institutions. Some of the most well-known retailers are Target, Amazon, Walmart, Costco, the Gap family (Gap, Banana Republic, and Old Navy), and Best Buy.

Many merchants make it simple to apply for a card, particularly because the application may be completed online or at the cash register. This is due to the fact that these lenders have less limitations than typical credit card firms.

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The majority of retail credit cards have no annual fees and frequently come with a low credit limit, so you won’t overspend. You may even earn points or other prizes if you purchase often at that company, such as Best Buy. Best Buy has two credit card options: My Best Buy Credit Card and Best Buy Visa.4

Best Buy Store Card vs. Best Buy Visa

The Best Buy Credit Card is valid exclusively at Best Buy. You may get 5% back in rewards and an additional 1% if you have an elite plus card. If you’re making bigger purchases and have a credit limit that suits, you’ll also have access to flexible financing alternatives.

In contrast, the Visa card may be used everywhere Visa is accepted. You not only receive the same benefits as the in-store credit card, but you also earn 3% back in rewards on petrol purchases, 2% back on dining, and 1% back on everything else. 4 Rewards are redeemable for future Best Buy purchases.

However, there is a catch. Expect to pay above-average interest on the card, just as you would on any other shop credit card. On normal transactions, the annual percentage rate (APR) for both cards is 25.24%, and both levy a late payment fee of $40. For cash advances, the Visa card charges 27.99% plus a fee of $10 or 5% of the cash advance, whichever is larger. 5

To safeguard the integrity of your credit score, apply for a retail credit card where you usually shop and, if granted, stay up with payments.

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How the Best Buy Credit Card Can Help

If you use a Best Buy credit card but pay off the bill within the terms of the agreement, your credit score will most likely rise. Paying up any outstanding credit balances on time allows you to develop a great credit history while avoiding paying excessive interest and late penalties.

Because Best Buy provides financing on select products, you may not have to pay interest if you pay off the whole sum of the transaction on time. This will almost certainly result in a better credit score since it shows lenders that you can use the card responsibly and have the resources to repay what you have borrowed.

The Bottom Line

Before applying for any kind of credit, it’s always a good idea to understand how your credit score works and to do a regular credit score check. If your credit score is low, don’t worry; you may be able to boost it by applying for a shop credit card. Many stores, like Best Buy, provide consumers with both an in-store card and a Visa option. These are excellent choices for establishing, maintaining, and improving your credit score while also providing unique funding and benefits. Once authorized, using the card wisely will improve your credit score and put you on the right track financially.

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