Credit Cards: How to Use Them to Build Credit

(April 2024)

Credit Cards: How to Use Them to Build Credit

In This Article

Want to know how you can build credit with credit cards? If yes, you are in the right place. Let’s face it, merely buying items here and there with your card won’t build your credit. Building credit with a card happens seamlessly if you use the credit card responsibly. And you need to own a credit card before you think of rebuilding or building credit with it.

Unpack in this article how credit cards work and how you can use them to build credit.

      1. How to Use Credit Cards to Build Credit
        • Pay Your Bill on Time
        • Maintain a Low Utilization Rate
        • Limit New Credit Applications
        • Use Your Credit Card Regularly
        • Increase Your Credit Limit Periodically
      2. How to Use “Other” Credit Cards to Build Credit
        • Build Credit With a Secured Card
        • Build Credit With a Student Card
        • Build Credit With a Store Card
        • Become an Authorized User on Someone Else’s Credit Card
      3. How to Build Credit With Credit Cards After Bankruptcy
      4. How to Build Credit Without a Credit Card
      5. How to Monitor Your Credit

Want to find out more? Don’t go anywhere.

1. How to Use Credit Cards to Build Credit

To boost credit with credit cards, understand how to go about it. Responsible use of any credit product is the best way you can boost your credit score. Consider the following tips to build credit with credit cards:

Pay your bill on time

You can’t overemphasize the importance of early payments of your bills. Think about it: Your FICO score contains 35 percent of your payment history (for your VantageScore score, it’s 41 percent).

Maintain a low utilization rate

Your credit utilization is the amount of your credit limit you spend. Keep your credit utilization percentage below 30%. This ratio makes 30% of your FICO score.

Limit new credit applications

Applying for new credit accounts leads to a hard inquiry that reduces your credit score.

Use your credit card regularly

Use your card regularly but don’t spend more than you can easily pay. Note that you don’t need to make every purchase on your credit card to build credit. You can charge your monthly recurring payments, streaming subscriptions, for example, to your credit card.

Increase your credit limit periodically

Your credit comes with a lower credit limit, which you can increase with time as you use the card responsibly. If you use a secured credit card (where your collateral determines your credit limit), you should demonstrate a high level of responsible behavior in using credit to boost your credit limit.

2. How to Use “Other” Credit Cards to Build Credit

If you’re really serious about building credit with credit cards, understand how to go about it with other credit cards—for example, secured card, student card, and store card). Most credit cards offer favorable terms and conditions for people with good or excellent credit scores.

Build credit with a secured card

If you have no track record of credit, lenders will find it difficult to understand your financial prudency and your experience with handling credit. So lenders will be reluctant to extend you credit—and thus getting a card may seem difficult. To bridge the gap, apply for a secured credit card.

If you need a secured credit card, present a security deposit (collateral) that’s worth the credit limit on the card you apply for. The card issuer reports your account’s activities to Experian, Equifax and TransUnion. If you use your card wisely, a secured credit card is a booster to your credit score. Don’t forget to opt for a secured credit card that requires reasonable collateral, charges affordable fee, and allows for easy upgrade to a an unsecured credit card.

Understand that a secured card is not for everyday spending. That said, find the secured card that reports your activities to credit bureaus. Use your secured card responsibly by ensuring you don’t exceed your credit limit and maintaining a lower balance so that your credit utilization percentage can plateau at 30% or lower. Also, make on-time payments on your balance and pay in full.

Build credit with a student card

Student cards are unsecured credit cards you don’t require any security deposit to get, and are tailored to meet the needs of young people in college or job applicants who do not have any credit history.
Research different student cards and select the one that offers you the most favorable terms and conditions—one that offers $0 annual fee and no initial deposit, for example.

Build credit with a store card

A store card works just like a credit card, except that you can only use it at a specific store. You can also borrow money with a store card, but get ready to pay a higher interest rate. Store cards issuer simplify the process of acquiring it and report your activities on the card to credit bureaus. Hence, a store card can undoubtedly help you to build your credit.

Become an authorized user on someone else's credit card

What happens if you can’t present any collateral to get a secured card? Consider becoming an authorized user one someone else’s credit card. You don’t need to open a credit account of your own if you become an authorized user.

Here’s how it works: Someone who uses credit responsibly adds you as an authorized user on his or her credit card account such that you get a credit card while someone else is responsible for the credit account. Note that if the account owner doesn’t clear your monthly expenses early, your credit score still experiences a decline.

3. How to Build Credit With Credit Cards After Bankruptcy

File for bankruptcy and wondering how to build credit with credit cards? If yes, it is not an unthinkable endeavor. Ideally, you need to rely less on credit cards after bankruptcy. But improving on your credit worthiness in the sight of lenders after bankruptcy is not a bad idea.

The truth is that most credit card issuers may not find you trustworthy after bankruptcy. So to get a credit card quickly, you may require to make refundable security deposit and apply for a secured credit card. Although, the card may charge higher interest rate, but if the issuer reports your activities on the card to credit bureaus, it can be a great means of building your credit. What is more? If you use them responsibly, some secured credit cards automatically graduate you to an unsecured credit card.

4. How to Build Credit Without a Credit Card

If you don’t have a credit card, you can still build credit. Consider options like getting a credit builder loan, rent reporting, and using Experian Boost.

  • Credit builder loans. Here, you apply for a credit builder loan and upon approval, you receive the money after you pay in full. Logically, you repay the loan before actually getting with a credit builder loan. Credit builder loans are not free but offer you a better way of building credit without credit cards. Enquire whether the lender report to the credit bureaus before you apply.
  • Experian Boost. Use this free service by Experian to boost your credit. Note that the credit enhancement Experian Boost offers doesn’t apply to TransUnion and Equifax.
  • Rent reporting. Ask if your landlord reports your rent payment to the credit bureaus. If yes, it’s also a great way of building your credit score.

5. How to Monitor Your Credit

To build your credit, know how to monitor it. You can get a copy of your credit report for free once every year from Experian, Equifax or TransUnion. One cool thing is that this year, you can request your credit report once a week from Annual Credit Report website.

>>>GET SMARTER: How Do Credit Cards Work?


Building credit with credit cards requires discipline. The first step is to know how you can use credit cards to build credit. Then you can also consider how to use other types of credit cards, student cards, for example, to build credit. If you file for bankruptcy, understand how to build credit with credit cards and find out the possibilities of building credit without credit cards. Lastly, always monitor your credit.

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