Using a credit card responsibly is one of the best ways to build credit history. You should pay on time, every time, and spend only a small portion of your credit limit. With that routine, you can generate an excellent credit score.
We’ll go into how using a credit card to establish credit works, as well as how to apply for your first credit card and use your partner’s or parent’s card as a credit card if you’re not yet ready to handle a credit card of your own.
Building credit can feel like a slow and tedious process but understanding the key factors that influence your credit score can help you make informed decisions and accelerate your progress. One of the most common questions is: how often should you use your credit card to build credit?
The Importance of Credit Utilization:
Credit utilization, which refers to the percentage of your available credit that you’re currently using, plays a significant role in your credit score Ideally, you should aim to keep your credit utilization below 30% This means if you have a credit card with a $1,000 limit, you should try to keep your balance below $300.
The Frequency Myth:
While it’s true that using your credit card at least once a month can help establish a positive payment history, the frequency of use is not as crucial as the amount of credit you utilize. In fact, making multiple small purchases throughout the month can actually increase your credit utilization and negatively impact your score.
The Golden Rule: Pay Your Balance in Full Every Month
The most important factor in building credit with your credit card is paying your balance in full and on time every month. This demonstrates responsible credit management and helps establish a positive payment history, which is a major component of your credit score.
The Optimal Usage Strategy:
Here’s a simple strategy for using your credit card to build credit:
- Use your card for small, recurring expenses: Choose a few regular expenses, such as groceries or gas, and pay for them with your credit card. This ensures consistent usage without exceeding your credit limit.
- Pay off your balance in full every month: Avoid carrying a balance, as this will accrue interest and hurt your credit score.
- Monitor your credit utilization: Keep track of your credit utilization and aim to stay below 30%.
- Review your credit report regularly: Check your credit report for any errors or inaccuracies that could be affecting your score.
Additional Tips for Building Credit:
- Apply for a secured credit card: If you have limited or no credit history, a secured credit card can be a good starting point. These cards require a security deposit, which acts as your credit limit.
- Become an authorized user: Ask a family member or friend with good credit to add you as an authorized user on their credit card. This allows you to benefit from their positive credit history.
- Keep your credit accounts open: The longer your credit history, the better your credit score will be. Avoid closing old credit accounts unless they have high annual fees or are no longer needed.
Remember, building credit is a marathon, not a sprint. By using your credit card responsibly and following these tips, you can gradually improve your credit score and unlock better financial opportunities.
Build credit with a student card
If you’re a college student, there are credit cards specifically designed to help you build credit history.
One student card that stands out is the Capital One SavorOne Student Cash Rewards Credit Card. With no annual fee and no deposit needed, this card can be obtained by customers with fair to limited credit.
- Receive an infinite amount of 3% cash back on dining, entertainment, popular streaming services, and groceries (not including superstores such as Walmart and Target) and 1% off all other purchases.
- Earn $50 when you spend $100 within the first three months of the Early Spend Bonus.
- Get 2010 percent cash back on purchases made through Uber.
- With $0 Fraud Liability, you can relax knowing that you won’t be held accountable for any unauthorized charges.
- Enjoy no annual fee, foreign transaction fees, or hidden fees
- Get up to 5 percent cash back on hotels and rental cars when you book through Capital One Travel. This is the place where you can find the best deals on thousands of travel options. Terms apply.
- Refer friends and family, and when they’re accepted for a Capital One credit card, you can earn up to $500 annually.
- Get 8% cash back on entertainment purchases when you make reservations via the Capital One entertainment portal.
- Build your credit with responsible card use
- This card could be a possibility for you if you’re enrolled in a community college, four-year university, or another type of higher education.
- Some of the benefits offered by Visa® or Mastercard® for Capital One products listed on this page may differ depending on the specific product. Details can be found in the corresponding Guide to Benefits, as terms and exclusions apply.
Recommended Credit
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Notably, this card comes with a generous cash back program. %20Cardholders%20earn%203%%Cash%20Back%20on%20dining,%20entertainment,%20popular%20streaming%20services, and%20at%20grocery%20stores%20(apart from superstores like Walmart%C2%AE%20and Target%C2%AE); %205%%Cash%20Back%20on%20hotels%20and%20rental%20cars%20booked%20through%20Capital%20Travel%20(terms%20apply); %208%%Cash%20Back%20on%20Capital%20One%20Entertainment%20purchases; %201%%Cash%20Back%20on%20all%20other%20purchases
Still, it comes with a potentially high APR: 19.99% – 29.99% (variable). Check out our review of the
Becoming an authorized user on someone else’s credit card
Consider requesting to be added as an authorized user to one of your family member’s or close friend’s credit cards if you are unable to obtain credit on your own (or simply don’t want one) but they are responsible with their money.
Becoming an authorized user can quickly boost your credit score. When using multiple cards, the credit reports of the primary cardholder and any authorized users are updated with balances and payment histories. This implies that even if you never use the card yourself, you are effectively “borrowing” your family member’s or friend’s account history if they use it.
On the downside, the primary cardholder is ultimately responsible for any credit card charges you do make. Make sure you’ve worked out the specifics of how to pay back any purchases you make in order to prevent disputes with family or friends. To reduce temptation to overspend on the account, you can even decide that the primary cardholder will hold onto the physical card the issuer sends you.
If you’re ready to move forward after a year or so as an authorized user, you might be able to get approved for your own credit card. In that case, review our recommendations for the best credit cards for beginners.
BEST Day to Pay your Credit Card Bill (Increase Credit Score)
FAQ
How often should I use my credit card to build credit score?
How many times should I use my credit card per month?
How much should I put on my credit card each month to build credit?
How often should you use your credit card?
Even if you pay your credit card balances in full every month, simply using your card is enough to show activity. While experts recommend keeping your credit card utilization below 30%, it’s important to note that creditors also care about the total dollar amount of your available credit.
How long does it take to build credit with a credit card?
You can build credit with a secured credit card in as little as one to six months, but it can take many months or even years to build a consistently good or excellent credit score. The length of time also depends on whether you’re building credit from nothing or rebuilding damaged credit.
How much credit limit should I use a month?
Using 1% to 10% of your credit limit each month can help you raise your score quickly and inexpensively if you always pay the bill on time and in full. You’re not required to pay in full every month, but carrying a balance can slow down your credit growth and prove quite expensive.
How often should you pay off your credit card?
Make credit card payments more than once a month. This way, your balance never gets too high. Your credit card issuer will typically report your credit activity to the credit bureaus once a month. So, if you pay off a portion — or even all — of your credit card bill before that date, you can lower your credit utilization.