Does the Target RedCard Build Credit? Everything You Need to Know

Credit cards like the Target RedCard are popular with regular Target shoppers because they offer a 5% discount on all purchases. But does using the RedCard really help you build credit? This guide will look at how the Target RedCard affects your credit score and profile.

How the Target RedCard Can Help Build Credit

The Target RedCard is a credit card, so the three major credit bureaus—Experian, Equifax, and TransUnion—will see what you do with it. This lets lenders see your credit history when they are deciding whether to give you a loan, mortgage, or other credit product.

Here are the key ways the Target RedCard can help build your credit:

• On-time payments—It’s very important that you pay your RedCard bill on time. Late payments negatively impact your score.

• Credit utilization – Keeping your utilization ratio low (ideally under 30%) boosts your score. The RedCard’s higher limit helps manage utilization.

• Credit history – Longer credit history improves your score. Using your RedCard responsibly over time builds positive history.

Caveats to Keep in Mind

While the Target RedCard can aid credit building, there are limitations:

• High APR – The RedCard has a high 29.95% variable APR. Carrying a balance makes it costlier to repay debt.

• Limited non-Target benefits – The card offers minimal rewards outside of Target. For everyday purchases, other cards may be better.

• Overspending risk – The 5% discount could lead to overspending. Stick to a budget and avoid unnecessary purchases.

Tips for Building Credit with the RedCard

If you want to use the Target RedCard to build credit, follow these tips:

• Pay off your balance each month to avoid interest charges and maintain low utilization.

• Keep utilization under 30% – this is ideal for credit building.

• Don’t close the card, as longer credit history boosts your score.

• Check credit reports regularly to fix any errors hurting your score.

• Use the card to make on-time payments, keep utilization low, and avoid overspending.

Does the Type of RedCard Matter for Credit Building?

Target offers two types of RedCards – credit and debit. The credit RedCard reports to credit bureaus and can help build credit through on-time payments and utilization management.

The debit RedCard doesn’t report to credit bureaus. It acts like a regular debit card, so it won’t build credit on its own. However, using it responsibly to avoid overdrafts demonstrates financial responsibility.

How Long Does It Take to Build Credit with the RedCard?

Building credit takes time – often many months or years depending on your profile. Paying on time, keeping balances low, and using the card responsibly over time contributes to credit building. Check your reports periodically to monitor your progress.

What Credit Score Do You Need for a RedCard?

Specific approval requirements aren’t public, but data shows most RedCard holders have scores of 670 or higher. Those with lower scores may receive a lower limit or higher APR. The card is relatively accessible for those new to credit or with limited profiles.

Is the RedCard Worth It for Non-Target Purchases?

The standard RedCard is a closed-loop card, meaning it can only be used at Target. The upgraded Target Mastercard can be used elsewhere, but its rewards and benefits are limited beyond Target. For non-Target spending, you’re often better off with a different card like the Citi Double Cash for flat-rate cash back.

The Bottom Line

Used wisely, the Target RedCard can help build credit through on-time payments and credit utilization management. However, be mindful of the high APR, overspending risk, and limited non-Target benefits. Consider your spending and financial habits before applying. Monitor your credit profile over time to ensure the card is benefiting your credit trajectory.