How To Build Credit With a Credit Card

There are many benefits of using a credit card, however a significant one is the fact that you can use it to build your credit score. It is important that you always use your credit card responsibly in order to improve your credit.

Be sure to keep reading to about how to build credit with a credit card.

How to Build Credit With a Credit Card

Before you apply for a credit card, make sure that you do your research to find the one that suits your interests best. Furthermore, you want to make sure you look at the interest rates, rewards, credit limits, fees, and other terms.

For instance, if you have a higher credit limit, this will allow you to make larger purchases, however, it could also make it more difficult to control what you’re spending your money on. Additionally, it might make it so that you spend more than you can pay off.

If you don’t have that great of a credit history, you might not get approved for some of the best credit cards, however, if you continue to use your card responsibly, you will be able to build credit.

Start With a Secured Credit Card

You might want to consider getting a secured credit card if you were not able to qualify for a normal credit card. Secured credit cards are good for those who need to build or improve their credit. It has a credit line that is equal to the amount of your security deposit.

With a secured credit card, your monthly payments will be reported to credit bureaus which will help improve your credit score.

How Using Your Credit Card Increases Your Credit Score

Your credit score is made up of five different categories:

1. Payment History: This is the greatest factor that impacts your credit score. It is crucial that you pay your credit card statement on time every month. This will improve your score over time, however if you miss a payment, it will harm your score.
2. Amount Owed: Your credit card companies report the amount you owe each month to credit bureaus. It is recommended that you don’t exceed 30% of your credit limit, if not lower.
3. Length of Credit History: The earlier you start using credit cards, the sooner you can start to build credit. The average age of your accounts and the oldest open account plays a factor also. Because of this, if you close an old account, your credit score may be harmed.
4. Credit Mix: Using different types of credit cards can also help your credit score. This can include retail accounts and credit cards.
5. New Credit: When you apply for a credit card, your credit score will be pulled, which may result in a hard inquiry. As a result, this will lower your credit score temporarily.

Author’s Verdict

If you are needing to build or improve your credit score, hopefully this post has informed you how. As always, it is crucial that you pay your credit card bill on time each month and use your credit card responsibly.

In addition, we have a list of bank promotions to get some extra cash in your pockets today. You may also want to check out savings accounts if you want to get started on saving up money.

Huntington Bank Bonuses & Promotions: $100, $400, $1,000 Checking Offers 2024

TD Bank Promotions: $200, $300, $500 Checking, Savings, Business Bonuses 2024

U.S. Bank Promotions 2024: $400, $450, $900 Personal Checking & Business Bonuses

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