How to use a credit card to build credit

How To Use A Credit Card To Build Credit

Wondering how to build credit with a credit card?

The strategy will be different for each stage of your credit-building journey.

These credit-building strategies will work for most people. 

  • Pay credit card bill in time in full 
  • Keep credit utilization ratio less than 30%
  • Avoid credit card debt 
  • Keep old credit card accounts open 
  • Use a secured credit card if you are just starting out 
  • Make use of student credit card/store credit card 
  • Be ready for the long haul

See how each credit-building strategy helps you and how you can use them to build credit. 

Business Plan Template

Want to write a business plan?

Hire our top business plan writers now!

How to build credit with a credit card

How to Build Credit with a Credit Card?

Your credit card is one of the most effective tools for building credit. 

We recommend these strategies to optimize your credit card use and build excellent credit. 

1-Pay Credit Card Bill in Full Every Month

When you pay your credit card bill on time and pay in full, your credit score improves. 

When you pay bills in full and carry no balance, it shows that you are using a credit card to spend your current income. 

It also shows that you are not using a credit card to extend your income. 

Also, when you pay your credit card bills on time, you won’t have to pay any interest.

2-Avoid Credit Card Debt

You need to be a careful spender to build your credit. 

Think of your credit card as a debit card. Make a budget and live within your income. 

Make a budget irrespective of your credit card. To build and maintain good credit, you’ll have to develop a habit of living within your means. 

Spending with a credit card is easy, you just have to follow your urge. Most people overspend with credit cards and accumulate debt. 

A credit card debt has a whirlwind effect. In many cases, people are unable to pay credit card bills in full and their credit score suffers.

3-Control Credit Utilization 

The credit utilization ratio is the credit you use compared to the credit available. 

Make a goal of keeping credit utilization under 30%. 

For example, if your available credit is $30,000, use less than $9,000 of your credit. 

The idea number in credit utilization is 10%. However, since you need to use some of the credit to build credit, you can focus on 30% credit utilization.

4-Don’t Close Paid Credit Card Accounts 

Keep your credit card accounts open even if you are not using them. 

Your credit accounts add to the total credit available to you. When you keep your spending in check, a bigger credit limit can help with the credit utilization ratio. 

Your old credit accounts also help with your credit history. 

Your credit history starts with your first credit card. Closing an old credit card reduces your credit history and lowers your credit score.

5-Choose Credit Cards Suitable for Your Goals

Consider how you’ll use your credit. 

What are your goals with your credit card? Do you want to use your credit card for traveling, buying stuff, or financing your small business?

If your only goal with a credit card is to build credit, think about how you’ll use 10% of your available credit. 

When you are building credit from scratch or you are repairing bad credit, a secured credit card is a good option. 

If you are a frequent traveler, pick a credit card with generous travel rewards and low APR. However, keep credit use in control. 

Bonus Tip: Did you know that you could get business credit on net 90 terms and also build business credit on the side? Check out list of net 90 vendors for building business credit to know more. 

Related Article: Is 750 a good credit score

Business Plan Template

Looking for Best Credit Card?

We recommend this list of the best business credit cards to help you choose the best credit card for your credit-building goals. 

How Long Does It Take To Build Credit?

Building credit will take a different length of time for different people. 

When you are just starting and there is no credit record, you will need at least 6 months to establish credit. Still, achieving a good or excellent credit score will take considerably longer. 

When you are repairing your credit score, the amount of time required depends upon the amount of damage. 

You can recover from the impact of a pattern of lousy credit use within 1-2 years. However, if you have had a bankruptcy, it may take up to 10 years to fully recover from the damage. 

Still, in the case of bankruptcy, you can achieve a good credit score and gain access to most of the credit offers.


Business Plan Template

Need to Build Business Credit Fast?​

Check out our guide on how to build business credit fast written and approved by credit experts if you want to build credit quicklytop business plan writers now!

How To Get Your First Credit Card?

Getting your first credit card without a credit history or credit score limits your options. 

When you are shopping for your first credit card, consider getting any of these three. 

  • Student Credit Card 
  • Secured Credit Card 
  • Store credit card 

You can get most student credit cards at no annual fee. Many credit cards will also come with bonuses and rewards. 

Secured credit cards can be opened by paying a security deposit equal to your credit card limit. 

When getting a secured credit card, use these criteria to find the best-secured credit card. 

  • Low or No Annual Fees 
  • Low Minimum Security Deposit 
  • The Credit Card reports to all three credit report bureaus 
  • Watch out for hidden charges

Store credit card is easy to get and mostly cheap. However, if your spending habits are out of control, you may have to reconsider your choice. 

Most store credit cards come at a high interest rate and hidden fees. Make sure you check the instructions etc. before getting the credit card. 

How To Build Credit With A Secured Credit Card?

A secured credit card is suitable for anyone without credit or with poor credit. 

A secure credit card is only helpful when you have good credit habits. 

If you pay bills on time, live within your means, keep your credit utilization ratio low and pay your debts, a secure credit card will help you build credit. 

Try to use your secure credit card daily and make small purchases. 

Pay credit card bill on or before time every month. 

Building credit with a secure credit card will require intentional effort for you for months. Be prepared to put in the work.

How To Build Credit With A Student Credit Card?

A student credit card is the start of your credit journey. 

If you are younger than 18 years, you may need a cosigner to get a credit card. 

For students under 21 years of age, they’ll need to show evidence that they have enough income to pay their debts. 

You can show your part-time job income, parental support, student loans or any scholarships, etc. 

Here are some ways you can build credit with a student credit card.

  • Get a small limit student credit card 
  • Become an authorized user on a family member’s credit card 
  • Make a habit of paying your bills in full on time 
  • Keep only one credit account open at a time
  • Use Experian Boost to get rent and utility payments counted towards your credit score 

Develop And Maintain An Emergency Fund

An emergency fund is your saving set aside for a time of dire need. 

As Dave Ramsey puts it, the pizza delivery guy knocking at your door is not an emergency. So keep the definition of emergency strict. 

A good emergency fund should be at least $1000. 

An emergency fund helps you stay responsible with your credit card and debt. You won’t need to use a credit card now and then. 

Moreover, when you accumulate debt in a personal emergency, it may become hard to pay. 

Life happens. We can’t stop emergencies but we can prepare for them with an emergency fund. 


To build credit with a credit card, you should make consistent, on-time payments, keep your credit utilization low, and avoid maxing out your credit limit. Additionally, it’s important to use your credit card responsibly and not accumulate excessive debt.

Using a credit card responsibly and building a positive credit history can help you establish a solid credit score, which is essential for obtaining future loans, mortgages, or better interest rates. It also demonstrates financial responsibility to potential lenders.

It is generally recommended to keep your credit card utilization below 30% of your credit limit. This means if your credit limit is $1,000, you should aim to keep your balance below $300 to maximize your credit-building potential.

While making minimum payments will help you avoid late fees, it’s generally advisable to pay off your credit card balance in full each month. This shows lenders that you can manage credit responsibly and avoid accruing high interest charges.

Building credit takes time and consistency. It may take several months or even years to establish a solid credit history and see significant improvements in your credit score. Patience and responsible credit card use are key to building credit effectively.

Spread the love