- How to build credit with a credit card?
How to Build Credit With a Credit Card? (Best Ways to Improve Credit)
Discover how to build credit with a credit card and learn other credit building tips.
How did your colleague who spends half their time playing Sudoku get a mortgage quicker than it takes to hide their puzzle-playing habits from the boss? And how did Harry from HR apply for a car loan faster than it took for you to register a complaint?
Well, that’s what good credit gets you (regardless of your work performance).
If you’ve got your hands on a credit card, you’re already halfway there. (The rest is as easy as calling in sick after your hairdresser accidentally dyed your hair green.)
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This article will tell you
- How to understand your credit score.
- How to use a credit card to increase your credit score.
- The best credit-building credit cards.
- Other credit-building tips and tricks.
How to Build Credit With a Credit Card (Best Ways to Improve Credit)
Whether making a payment or taking out a loan, your entire credit history is reported to at least one of the credit bureaus (Equifax, Experian, and TransUnion), who use the information to determine your credit score.
Unlike in school, where you could risk back-chatting with the teachers, you’ll need to show responsible behavior to raise your score.
With good credit, you’ll get a bunch of benefits, like—
- Lower interest rates
- Greater negotiating power
- More chance of a credit card or loan approval
- Good insurance rates
- More lender choices
Understanding your credit score
Before you begin your credit-building journey, you need to know where you’re starting from.
Many lenders and experts use FICO to calculate credit scores based on your—
- Payment history (35%)
- Amounts owed (30%)
- Length of credit history (15%)
- New credit (10%)
- Credit mix (10%)
These factors will determine where you land on the credit ladder, which is broken down into these five groups:
- Excellent: 800–850
- Very Good: 740–799
- Good: 670–739
- Fair: 580–669
- Poor: 300–579
Now that you know where you stand, let’s dive into how you can work your way up the credit score ladder (and earn those all-important bragging rights)—
Best Ways to Build Credit with a Credit Card
Learning how to build credit with a credit card isn’t complicated.
We’re going to prove it to you in eight simple steps—
1. Choose the right card for you
Let’s say you want to speak Italian. But dreaming about mingling with the locals over pizza (and saying more than just “mamma-mia”) is a little far-fetched if you don’t have a solid foundation to get started.
Building credit without the right credit card can also be a real pizza-work.
Credit cards have different credit score requirements (so you’ll need to know your own credit score before applying).
Most cards ask for good or excellent credit—but there are also plenty of unsecured cards for those with bad credit. (These tend to have higher fees and fewer rewards, but it’s a great chance to improve your credit score and graduate to a better card.)
When researching credit cards, here are some key features to look out for—
- Credit score requirements
- APR (annual interest rate)
- Annual fees
- Rewards and perks
- Cash back schemes
- Introductory offers
When you apply for credit cards to build credit, it usually only takes a few minutes. Just be careful how many times you apply, as your credit score can take a hit each time a credit issuer checks your credit history.
2. Make on-time, full payments
We’ve all been there. You rock up at a restaurant fifteen minutes late and blame it on the terrible traffic. But in the world of credit, tardiness just doesn’t fly.
Your payment history makes up 35% of your overall credit score—so any late or missed payments will have a notable impact.
If you want to build credit fast with a credit card, you can start paying off your card balance in full (and avoid paying extra interest).
If that’s not possible, aim to make regular monthly payments.
If you’ve taken a loan out in the past and it’s still hanging over you—it’s not all bad news. If you make punctual loan repayments, your good behavior will get reported to the credit bureaus, and that credit score will start to creep back up.
Be careful not to make a missed or late payment—the credit issuer will report it to the credit bureaus if it’s over 30 days late. It can stay on your record for up to seven years.
3. Use your card frequently
There’s always a little guilt after going out to buy a new pair of shoes and coming back with the entire store. But when it comes to building credit, you can feel a little less guilty about your spending habits as long as you increase your credit score with credit card payments—
Regular purchases show card issuers that you’re making the most out of your account—instead of leaving it unused. Your length of credit history—which covers how long you’ve been using your accounts and how active they are—makes up 15% of your credit score.
But as much as that payday shopping spree is calling to you—watch out not to spend more than you can afford to pay off.
A smart way to hack the system is to make small recurring transactions every month, like household bills or subscription services.
And if you’re the forgetful type, you can automate your account so you never make a late or missed payment.
4. Reduce new credit applications
“Jack of all trades, master of none” can be great for a small-town circus performer with a bunch of tricks up his sleeve—but it won’t work in your favor when it comes to building credit.
Instead of clowning around, it’s better to show predictability and consistency. When you build up your credit on one card, the bureaus can know what to expect from you.
Applying to a bunch of new cards lowers the average age of your accounts—which isn’t good for your credit score. Unusual behavior can also send red flags to lenders who might think you’re in some financial trouble.
So instead of jumping through hoops, put all your energy into one or two cards—and it’ll soon pay off.
5. Keep your credit utilization low
A word of warning—we’re about to talk numbers.
But don’t skip over this part yet, this one’s important. We’re going to keep you here by breaking it down.
Your credit utilization ratio is a fancy way of describing how much available credit you’re using.
You can figure this out by—
- Calculating the sum of all your revolving credit balances.
- Calculating the sum of all your credit limits.
- Dividing the total revolving credit balance by the total credit limit.
- Multiplying the amount by 100.
If Card A has a revolving balance of $200 and a limit of $1000—and Card B has a balance of $150 and a $600 limit—you would end up with a 21.8% overall utilization.
And if this is close to your own figure—congratulations.
Anything below 30% is considered a good credit card utilization (and if you’re below 1%, you’re passing with flying colors).
We’ve wrapped our heads around the maths—but how do you keep that utilization low?
If you have a low credit limit, try limiting your credit use and paying off your card’s balance before the due date. (You can also pay your monthly balances twice a month to really boost your score.)
6. Increase your credit limit
You’re finally ready to level up in your life plan—you’re going to make roots, get a mortgage and find a house that’s big enough for you and your ever-growing animal jumper collection.
A high credit card limit makes getting a mortgage or car loan much easier—but it’ll also help lower your credit utilization ratio. (And if we managed to keep your attention earlier, you’ll know that’s good news for your credit score.)
But this one isn’t as simple as calculating a few figures. You’ll have to show responsible credit behavior over time—make sure to keep your credit utilization low, and show you’re financially stable.
From there, you can request a higher credit limit on the card issuer’s website or call them if you prefer to speak with an actual human.
Raising your credit limit is a good idea if you want to raise your credit score. But don’t rely on this tactic if you’re struggling financially—it can easily backfire and land you in debt.
7. Monitor your transaction and credit history
The new year is here, and you’re jumping on the health and fitness bandwagon (hopefully, for more than three weeks this time).
Like with any goal, monitoring your progress can make all the difference. The same rules apply here (minus the guilty pleasures).
To help you out, Experian offers a free credit report, where you can access a bunch of features, such as—
- Current credit balance
- Payments history
- Total debt
- FICO credit score breakdown
- Daily credit monitoring
By tracking your credit status and activity you can also spot and dispute any errors or suspicious transactions which could be affecting your credit score.
Keeping tabs on everything will help you pinpoint where you're falling behind and which areas you need to improve.
(Check out this free credit monitoring tool to keep an eye on your financial goals.)
8. Use your card wisely
Think of it this way—the three credit bureaus are Big Brother and the audience. They’re watching your every credit move.
Crazy behavior can raise eyebrows, and you’re here to win—so play it safe and stick to the rules of the game.
To keep control of your spending, try creating a budget and a plan to pay off your balance or monthly bills on time and in full.
Show how responsible you are by limiting new credit card applications, staying out of debt, and keeping your credit utilization low.
Follow these steps, and you’re sure to take home the crown (and an excellent credit score).
Best Credit Cards to Build Credit Score
There are tons of credit cards out there—all promising the best interest rates, rewards, and the chance to boost your credit.
If you don’t know where to start, we’ve rounded up the best credit cards for building credit—
Discover it® Secured Credit Card
Who would say no to being rewarded for spending money? The Discover it® Secured Credit Card has a 2% cash back on gas and restaurants—plus a 1% cashback on everything else.
The card comes with a 26.74% interest rate and a 10.99% intro APR on balance transfers for 6 months. You’ll just need to cough up a $200 deposit and you’re ready to start building credit.
You don’t need a minimum credit score to apply—and Discover will report all your payments to the three major credit bureaus.
Chime Credit Builder Visa Credit Card
As the name suggests, the Chime Credit Builder Visa Credit Card is aimed at building credit—and you won’t need to reveal your credit score to get set up.
The APR goes from 15.99% to 29.99%—and there are no annual fees. To get started, all you need to do is deposit $200 deposit into your checking account.
Once you’ve got your hands on the card, you can go big or go home (literally)—with a credit limit that starts from $300 and goes up to $10k.
Petal® 2 Visa® Credit Card
If you want the freedom to splurge (while not overspending), the Petal® 2 Visa® Credit Card has an impressive credit limit of $100,000.
And you’ll enjoy spending even more with their cash back of 1%–1.5%, and 2%–10% at select merchants.
You won’t get charged any extra fees for yearly expenses or late charges—but the credit card does come with a fairly standard APR of 15.99%–29.99%.
Tomo Credit Card
For all you credit card newbies—Tomo is the best first card to build credit as there are no APR fees or annual fees to catch you off guard.
Tomo also has a bunch of other handy features, like automatic payments and discounts on major retailers. You’ll also get a 1% cash back on every purchase you make.
Tomo is pretty relaxed with their requirements—as you don't need a credit score or even US citizenship to sign up. All you’ll need to do is link Tomo to an existing bank account so you can make your weekly payments.
Capital One Platinum Secured Credit Card
For a secured card, Capital One Platinum has a pretty low minimum deposit, starting from just $49—not bad for those on a budget.
And if you really are set on budgeting—the card starts with a $200 credit limit, with the opportunity to increase it to $1,000 if you fancy splurging from time to time.
To make your life easier, you can track your score for free by using their CreditWise feature and set up Auto-Pay so you never miss a payment.
Discover it® Student Chrome
Being a student can be hard—all the time spent doing essays, meeting deadlines, and partying five days a week—but Discover it® Student Chrome makes student life a little more enjoyable with a bunch of rewards and cash backs.
This includes a 2% cash back at restaurants and gas stations, plus a 1% cashback on all other purchases.
Discover it® Student Chrome doesn’t charge any annual fees and no APR for the first six months—after which it goes up to 16.74%–25.74%.
Other Ways to Start Building Credit
If you haven’t got your hands on a credit building credit card yet (or getting one is out of your reach) you’re not out of luck just yet.
Here are some other credit building tips and tricks to try out—
If you have poor credit or you’re a first-time card owner with no credit history—opting for a secured card is a relatively easy way to start building credit with a credit card.
Many cards want good to excellent credit if you want to sign up—but there are plenty of secured cards that’ll just ask for a refundable security deposit (acting as collateral in case you fail to make payments).
You usually pay the security deposit when you open the account—it’s typically equal to the credit limit on your new account.
Sounds handy, but there’s a catch—secured accounts often come with high fees and interest rates.
Still, it’s a great starting point to build up credit and eventually graduate to a better card with more benefits.
We all know someone who wakes up at 5 a.m. to go running, has a monster green smoothie, and finishes off with a yoga session. (They usually also have an excellent credit score.)
Latching onto their good habits and becoming an authorized user is a quick way to boost your credit score.
All you need to do is sign up as an authorized user of another cardholder (preferably a close friend or family member with good credit). This way, their balances and payment history will also get added to your credit reports.
When the main cardholder shows good credit behavior, it’ll reflect on you too.
But this works both ways—if the primary cardholder starts making late payments or their account balance gets too high, you and your credit score will go down with them.
Before signing up, make sure the main cardholder is trustworthy and has a solid history with minimal credit card delinquencies.
Credit Builder Loans
Most people are pretty cautious about loans, especially when you’re trying to build credit.
Don’t get me wrong, on-time loan repayments can boost your score—but that’ll come tumbling back down if you make any late or missed payments.
Moral of the story—only take a credit-builder loan if you’re certain you can make on-time payments.
As the name suggests, these loans are designed to improve your credit. After applying, the lender will keep hold of your funds in a separate savings account until you pay off the full amount in monthly payments.
Since you don’t get your loan upfront, this isn’t the best choice if you need some emergency cash. You should also take your time to compare lenders, make sure they report to the credit bureaus and watch out for any high-interest rates.
If you’re lucky enough to have a landlord who wants to help you out—you could ask them to report your monthly rent payments to the credit bureaus.
You’ll be able to demonstrate how responsible you are at paying up on time—which will help build your credit score.
If your landlord suffers from sudden episodes of blindness every time you show him your wall mold—you might want to look elsewhere. Companies like RentTrack and Rent Reporters are there to report your rent payments for you.
- If you’ve made it this far—first, you can reward yourself with a cup of tea (or a cold beer), and second, you have no excuse to avoid building credit now.
- Knowing how to build credit fast with a credit card boils down to using your card responsibly and practicing good financial habits.
- Once you’ve achieved your ideal credit score, you’ll soon experience doors opening (without having to push your way through).
- And if you ever need motivation—just picture Harry’s face from HR when you rock up in a fancy new car.
How to use a credit card to build credit?
You can use a credit card to increase your credit score by making on-time payments, keeping your credit utilization low, limiting new credit card applications, and showing that you’re a responsible cardholder.
What is the best credit card to build credit?
There are many credit cards to improve credit scores—but the Discover it® Secured Credit Card and the Chime Credit Builder are great options if you’re looking for a secured credit card.
The best unsecured cards for building credit are the Petal® 2 Visa® Credit Card and the Tomo Credit Card.
How long does it take to build credit with a secured credit card?
With poor or no credit history, it can take up to two years to build up your credit. If your score is fair or higher, you can start to raise your credit score after one or two months.
What’s the best first-time card to build credit?
If you have no or little credit, the Petal® 2 Visa® Credit Card is the best credit card to improve credit, as they accept those with low credit scores and report to all three bureaus.
How to build credit fast with a credit card?
The fastest way to build credit is by improving your payment history—which makes up 35% of your overall credit score.
Start by making on-time payments, such as bills and loan repayments. You can also pay off the balance on your credit card or make regular monthly payments.
Editorial teamMeet the team
Lauren is a published content writer who is passionate about helping and informing others through her content. In the last 5 years, Lauren has written about a range of subjects, including business, technology and finance.
Editor, copywriter, and multilingual translator with expertise in producing tailored content for global online brands. When not editing articles for LifeAndMyFinances.com, he enjoys rummaging through paper dictionaries, walking in nature, and making travel plans.
Personal Finance Expert
Derek has a Bachelor's degree in Finance and a Master's in Business. As a finance manager in the corporate world, he regularly identified and solved problems at the C-suite level. Today, Derek isn't interested in helping big companies. Instead, he's helping individuals win financially—one email, one article, one person at a time.
Content writing and marketing professional with 4+ years of experience in the B2B and B2C sectors. Deepti has written about several subjects, including finance, project management, human resources, and more.
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