How to Build Credit with a Credit Card

A credit card can be one of the simplest ways to build a credit history, because card issuers report your account activity to the credit bureaus. Used carefully, a card shows lenders that you borrow and repay reliably. Used carelessly, it does the opposite. This guide covers the habits that matter most.

Start with the right kind of card

If you have little or no history, issuers typically steer you toward starter products. A secured card asks for a refundable deposit that backs your credit line, while a student card is designed for people who are enrolled in college. Some issuers also offer cards for people with fair or limited credit. Compare the annual fee, the recommended credit profile and how the issuer reports to the bureaus before you apply.

Pay on time, every time

Payment history is the factor most credit scoring models weigh heavily. Set up automatic payments for at least the minimum due, and pay the full statement balance whenever you can so you avoid interest altogether.

Keep your balance low relative to your limit

Credit utilization is the share of your available credit that you are using. Lower utilization generally helps. Using the card for a small recurring bill and paying it off each month keeps the account active without building debt.

Apply sparingly

Each application can trigger a hard inquiry, and new accounts lower the average age of your history. Apply when you have a clear reason, and use the pre-qualification tools some issuers offer, which typically do not affect your score.

Be patient

A credit history grows over time. Keep your oldest account open if it has no fee, check your reports regularly for errors and confirm current terms on the issuer’s site before you apply for any card.