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"Same As Cash" Offers Hurt Credit Scores

Even though you really want that new high-def plasma TV with the booming home theater system, $5,000 smackers might sound a bit too rich for your pocketbook at the moment. So why not use a "same as cash" offer to postpone paying the debt for 90 days or maybe even 24 months? Sounds quite appealing on the surface, but the truth is "same as cash" offers can really have a negative impact on your credit score. Here are the two main reasons why:

  • They kill your credit utilization ratio, which accounts for about 30 percent of your credit score. For example, if you bought a $5,000 home theater system and didn't make a single payment for the 24-month grace period, then you will have had a maxed-out $5,000 balance on your credit report for the entire grace period.
  • "Same As Cash" deals are considered loans, which will require a new inquiry and a new account on your credit report. Both can lower your credit score, so keep this in mind before filling out an application for any "same as cash" offer. If you don't have the money, should you really be buying it?
on Sat, 2008-08-09 17:00