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Key takeaways

  • Raising your rating with a credit card is one of the easiest and most effective ways to do it.
  • Consistently making payments on time and keeping your utilization low demonstrates financial reliability and positively impacts your score.
  • If you don’t want to use plastic to pay, there are other ways to boost your score including credit builder loans and payment reporting.

Building credit with a credit card is one of the most common and easiest ways to raise your score quickly. All you have to do is use your card regularly and responsibly. Pay all your bills on time every time and only spend a small percentage of your limit. You’ll demonstrate that you can manage borrowing and repaying money on a regular basis. Keep this up and your score will shoot up.

We’ll go over in detail how to raise your rating with a card and what to watch out for.

How to start building credit with a credit card

Issuers report your payment history and usage to the three major credit bureaus – Equifax, Experian, and TransUnion. They put the data on your reports which are used to calculate your three-digit scores. Use your card responsibly and you’ll be able to establish a positive payment history relatively quickly.

To start improving your score with a card you’ll first need to get one. The type you get will depend on your score, among other factors. If you have a good score, you will have your choice of cards. If your score is poor, you may want to opt for a secured card and use it to establish a positive payment history. Other options include an unsecured card for poor scores or a student card. Many issuers offer unsecured cards designed to help build up your rating but most come with an annual fee. If you don’t want your own card, you can become an authorized user on someone else’s card.

We’ll go over the choices below.

Secured credit card

Secured cards require a refundable security deposit that sets your limit. The deposit can be as low as $100 or as high as $5,000. It depends on the card issuer. Secured cards are a good choice if you have a bad score because they are easy to qualify for and often have lower fees (possibly no annual fee) and APRs than unsecured cards for poor scores. Other than the deposit, they work just like regular cards.

Be sure to make at least the minimum payment every month by the due date. Also, make sure your card issuer reports to all three bureaus as it’s the only way your score will improve.

Unsecured Credit Card

If you don’t want to put down a deposit, you can apply for an unsecured card specifically designed for those with low scores. A card in this category will often come with extra fees like an annual fee, a higher interest rate, and a low limit. Pay more than the minimum payment to avoid the high interest rate.

Use it responsibly to boost your rating, always pay your bill on time, and you can move onto a better card.

Become an authorized user

If you don’t want to apply for your own card, ask a trusted friend or family member if you can be an authorized user on their card. Make sure the primary cardholder has a good score. That way your score then benefits from their responsible use. If you or the primary cardholder don’t use the card responsibly, that could affect both your scores.

Make sure that the credit card company will report your usage to the three credit bureaus as an authorized user. This is the only way it will help you build up your score.

Read more about credit cards.

Know your credit scores

It’s important to know your scores so you know where you stand. Your scores affect your ability to obtain loans, mortgages, and even rent an apartment. They are a measurement of how responsible you are. Namely, if you can be counted on to repay what you owe. Having a good score increases your chances of getting approved for a new credit card account with a lower interest rate and a higher limit.

There are multiple scoring models. The main one used by the majority of lenders is FICO. Your FICO score is calculated by weighing the following factors:

  • Payment history – 35%
  • Utilization – 30%
  • Length of credit history – 15%
  • Types of accounts – 10%
  • New inquiries – 10%

Check your credit reports and FICO score at AnnualCreditReport.com. Look and see what you’re doing that’s keeping your FICO score down. Have you only had accounts for a short time? Have you made a lot of late payments? Are your balances too high?

Now that you know what you’re doing wrong and what goes into calculating your FICO score, you’re ready to raise your rating.

What are the best ways to use a credit card to build credit?

There are multiple proven strategies for using credit wisely while improving your credit score. We’ll go over a few to get you started.

Use only the credit you need

It can be tempting to use your card for everything but don’t. Treat your card like a debit card and only charge what you can afford to pay for in cash. That way you’ll have no problems paying in full by the due date.

What is your credit utilization ratio?

Your utilization ratio is your current balance compared to your limit. To determine your utilization ratio, divide your balance – what you’ve spent – by the total limit. This is important on all your cards cumulatively and individually.

For example, if you have a total limit of $10,000 and are now spending $2,000, your utilization ratio is 20%. That’s a good place to be.

You want to keep your credit utilization ratio low to enhance your score. Try to keep it under 10% – but above 0%. 10% can help you improve your score fast but it can be hard to do, especially if you have a low limit. A general rule of thumb is to keep your rate below 30%.

Pay off the balance in full each month

The best way to build credit with a credit card involves paying your bill on time. Set up automatic payments to ensure you never miss a due date as payment history is a critical component of your score. Always pay more than the minimum payment – the entire balance if you can. This way you’ll never be charged interest.

Tired of having your application denied?

Check out 10 tips to get your application approved!

Credit card management tips

Responsibly using a new card can have a positive impact on your score, but exactly how much will a credit card raise your score depends on your consistent payment behavior and utilization rate. To keep your score going up, follow these tips.

1. Never pay late

Always pay your bills on time. Late payments can drag down your score and stay on your credit report for up to seven years. More recent late payments will hurt your score more.

Set up autopay or reminders so that you never miss a bill. If you think you’re going to be late, call your card issuer as soon as possible. A lot of times they won’t report until a payment is over 30 days late.

Making timely payments every month is the best thing you can do for your score.

2. Always pay in full

Make a habit of paying off your bill in full every month. Firstly, you can save a lot of money on interest charges if you pay off your entire balance by the due date instead of only making the minimum payment. As of November 2023, statistics from the Federal Reserve on accounts that charged interest showed that the average interest rate is 22.75%. Some cards have even higher APRs. Make every effort to avoid these high interest costs.

Secondly, paying off your entire balance will lower your utilization rate. As we said earlier, a lower usage rate helps establish a better score.

3. Don’t apply for too many new accounts at once

Only apply for credit accounts you need. Every time you submit an application, the financial institution will do a hard inquiry which will temporarily lower your score. Your score should only drop by a few points and bounce back within a year. One hard inquiry isn’t a big deal, but a lot at once can do damage.

Go to MoneyFor for more tips and tricks.

How to build credit without a credit card

It is possible to raise your rating without a card. While they make it easy to improve your score, you do have to be careful and responsible or you can go into debt. Luckily there are alternatives.

Credit Builder Loans

One option is a credit builder loan that lets you improve your score and save money at the same time. With this loan, the borrower doesn’t get the money immediately; instead, the financial institution holds on to it and puts it in a savings account. The borrower makes monthly payments until the loan is paid off in full. The lender reports the monthly payments to the credit bureaus to boost the borrower’s score. After they’ve made their last payment, the lender gives the borrower the loan money, minus any fees owed or plus interest earned depending on the loan.

Like with any other loan, compare the fees and policies of different lenders. Before applying, you should also ensure that the lender will report payments to all three credit bureaus. Reporting payments is the only way the loan will help you improve your score.

Report ALL your monthly payments

Reporting other monthly payments can help people with a limited history or or poor scores to raise their rating. A lot of companies will report rent, utility, phone, and subscription payments. This way people can get improve their scores with bills they are already paying.

It’s a useful service if you’re wary of borrowing money and going into debt or want to give your score an additional boost. As always, make sure that the service reports to all three credit bureaus. Then continue to make on time payments as any reported late payments can hurt your score.

Use a debit card that reports payments

You can use certain debit cards to improve your score. Most of these debit cards function like secured cards without a security deposit. They report your payment activity to credit bureaus, allowing users to establish a positive payment history.

Most of them work by connecting to your bank account. The card company then sets spending limits based on your bank balance and transaction history. You can spend within your spending limit. Most cards will debit the money directly from your account so you don’t have to worry about paying a bill. Then the card issuer reports your payment activity to the bureaus.

Many of these debit cards do charge fees like an annual fee. It’s important to review the terms and conditions to understand the fees and if they fit your budget.

The great thing about a debit card that reports payments is it does not involve borrowing money, so there’s no chance of going into debt. Instead, it focuses on helping you raise your rating through the responsible use of a debit card. That said, a debit card is not as effective as a credit card at improving your score.

Frequently asked questions

It is generally better to pay off your balance in full each month. This avoids accruing interest and demonstrates that you can use the card responsibly. Carrying a balance can lead to unnecessary interest charges and potentially increase your utilization ratio, which might negatively impact your score.

The method you use to pay your bill does not matter as long as it is paid on time and in full. Setting up auto pay can help you avoid missing payments and establish a positive payment history.

Experts recommend using no more than 30% of the limit. When you have a $500 limit you should keep your spending under $150. Staying below this threshold helps demonstrate responsible usage and maintains a low utilization rate, which is favorable for your financial health.

Bottom line

Hope you got answer of the question of how much will a credit card raise my score. Cards are a convenient payment system that can also boost your score when used responsibly. But remember that they can be good or bad for you in the long run, depending on how you use them.

They can help you raise your rating if you only use a small percentage of your limit and pay off your balance in full monthly. But if you think it will be hard to control how much you spend, then try a different way to improve your score.

There are plenty of other options if you want to avoid debt and borrowing altogether. Ask be an authorized user on a friend or family member’s card. Apply for a debit card that reports payments. Or use a rent reporting service. Figure out what works for you and boost your score.

About the author

Rachel Alulis

Rachel Alulis has been the lead editor for Moneyfor’s credit cards team since 2015 and for the financial rewards team since 2023. Before joining Moneyfor, Rachel worked at USA Today and the Des Moines Register. She then established a successful freelance writing and editing business specializing in personal finance. Rachel holds a bachelor’s degree in journalism and an MBA.