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Can You Build Credit with a Credit Card?
July 1, 2025
Quick Answer
Yes, using a credit card responsibly is one of the most direct and effective ways to establish a strong credit history.
Should You Build Credit With A Credit Card?
Let's weigh the advantages and disadvantages of using a credit card for this purpose.
Benefits
- Reports to credit bureaus: Consistent, on-time payments are reported to the major credit bureaus, which is essential for establishing a credit history.
- Accessibility: Secured cards and student cards are often available to those with limited or no credit, providing a clear entry point.
- Rewards and protections: Many cards offer perks like cash back or points on purchases, along with robust fraud protection.
Costs
- Interest charges: Carrying a balance past the due date will result in high-interest charges on the remaining amount.
- Potential for fees: Some cards come with annual fees, and all charge fees for late payments.
- Risk of debt: The convenience of credit can make it easy to overspend and accumulate debt if not managed carefully.
How to Build Credit With A Credit Card
Building credit with a credit card is a strategic financial move. Used responsibly, it demonstrates your creditworthiness to lenders, paving the way for better rates and future financial opportunities.
- Choose the Right Card: Select a card suited for your credit journey. Many cards are designed for beginners or those rebuilding credit. You can use resources like the Kudos' Explore Cards tool to find a match for your needs.
- Make Small, Regular Purchases: Use your card for small, planned expenses you can easily pay off, like a subscription or a tank of gas. This demonstrates consistent and responsible usage to credit bureaus without risking overspending.
- Pay Your Bill On Time, Every Time: Your payment history is the most significant factor in your credit score. Always pay your bill by the due date to avoid late fees and negative marks on your credit report.
- Keep Credit Utilization Low: Aim to use less than 30% of your total credit limit. A low credit utilization ratio shows lenders that you can manage your credit responsibly without relying too heavily on debt.
- Monitor Your Credit Report: Regularly check your credit report from the major bureaus (Equifax, Experian, and TransUnion). This helps you track your progress, spot any inaccuracies, and understand the factors affecting your score.
Impact On Your Credit Score
Using a credit-builder card can influence your credit score in several ways. Understanding these factors is key to effectively building a positive credit history.
- Payment History. Consistently making on-time payments is the most significant factor in your credit score. A record of timely payments demonstrates financial responsibility to lenders and can boost your score over time.
- Credit Utilization. This ratio compares your outstanding balance to your total credit limit. Keeping this ratio low, ideally below 30%, shows you can manage credit wisely and positively impacts your score.
- Length of Credit History. Opening a new account can temporarily lower the average age of your credit history, causing a slight dip. Over time, however, a long-standing, well-managed account will contribute positively to your score.
Alternative Ways To Build Credit
Rent Reporting Services
One effective way to build credit without a credit card is by having your rent payments reported to the major credit bureaus. Various services can do this for a fee, turning your largest monthly expense into a credit-building asset. By consistently paying your rent on time, you demonstrate financial responsibility, which can positively impact your credit score over time.
Credit-Builder Loans
Credit-builder loans are another excellent tool. Unlike traditional loans, you don't receive the money upfront. Instead, you make fixed monthly payments to a lender, who holds the funds in a savings account. These payments are reported to credit bureaus. Once you've paid the loan in full, the money is released to you, leaving you with both savings and an improved credit history.
Choose the Right Card to Build Credit
Starting your credit journey on the right foot is crucial, and it begins with selecting the right card. With a database of nearly 3,000 cards, Kudos helps you cut through the noise. Our tools allow you to compare options side-by-side, ensuring you find a card that truly fits your financial goals. Explore our curated list of the best starter credit cards to begin building your credit with confidence.
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Frequently Asked Questions
How long does it take to build credit with a credit card?
You can see initial credit score improvements within a few months of responsible use and consistent on-time payments.
What is the best type of credit card for building credit?
Secured credit cards or student credit cards are excellent starting points for those with limited or no credit history.
Does closing a credit card hurt your credit score?
Yes, it can increase your credit utilization and reduce your average account age, potentially lowering your credit score.
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Editorial Disclosure: Opinions expressed here are those of Kudos alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
