Key Takeaway: To build credit with a credit card, use it to make small, consistent purchases that won’t cause you to max out your credit limit. Then, pay your bill on time — and ideally in full — every month or billing cycle to establish a positive credit history.
Building credit with a credit card starts by looking at your monthly expenses and deciding what kinds of small, consistent purchases you can make with the card. Then, as you make those purchases, keep an eye on your credit utilization and make sure you don’t get too close to maxing out your card. When you get your credit card bill at the end of the month, be sure to pay it on time and ideally in full.
Repeating these steps each month will help you build good credit habits and a positive credit history, leading to better credit scores over time.
If you don’t have a card yet, you also can consider becoming an authorized user on a trusted person’s account. You can benefit from the main user’s good credit history, which can potentially boost your scores even more.
- Use your credit card for small, consistent purchases
- Keep your credit utilization low
- Pay your bills on time, every time
- Become an authorized user on another person’s credit card account
- Which types of credit cards help build credit?
- How to build credit without a credit card
- Next steps: Track your credit-building progress
- FAQs about building credit with credit cards
1. Use your credit card for small, consistent purchases
The most straightforward way to build credit with a credit card is by making small, consistent purchases with a credit card. As you make these purchases and pay your bill on time, you’ll build a more substantial credit history, leading to better credit scores and the potential for credit limit increases.
By keeping your purchases small, you’ll use less of your available credit limit and likely have an easier time avoiding any overspending. If the purchases are consistent, you can more easily stay on budget.
We recommend looking at your monthly expenses and choosing which ones you’ll charge to your card. Consider regular, recurring purchases such as …
- Gas
- Groceries
- Streaming subscriptions
- Gym memberships
2. Keep your credit utilization low
Keeping your credit utilization rate (the percentage of your available credit you use) low helps improve your credit scores by showing lenders that you’re not overextended financially. It’s one of the most important credit factors in common credit-scoring models from FICO® and VantageScore®.
Credit card utilization compares your total credit balances to your credit limits across all of your cards. Experts generally recommend keeping your credit utilization below 30%. For example, if your credit cards have a total combined credit limit of $1,000, you should aim to keep your combined balances below $300.
Keeping your credit utilization rate under this threshold can be difficult when your credit limit is low. For example, if you only have a $200 limit, you’d have to keep your balance below $60 to stay under 30% utilization, which isn’t practical for many cardholders. That’s one reason trying to use your card only for smaller purchases is a good idea — you’ll probably have an easier time using less of your credit.
3. Pay your bills on time, every time
To build a positive payment history with credit bureaus, you must pay at least the minimum amount due on time, every single month.
The most important factor in your credit scores is typically your payment history. This factor makes up 40% of your VantageScore® 3.0 credit score (the score you see on Credit Karma) and 35% of your FICO® Score 8 credit score (FICO’s most popular scoring model).
It’s also important to remember that while paying the minimum keeps your account in good standing, paying your balance in full every month will allow you to avoid paying interest charges and carrying debt that will keep your credit utilization rate high.
Setting up automatic payments or calendar reminders can help you keep your payments on track.
4. Become an authorized user on another person’s credit card account
Becoming an authorized user on someone else’s credit card can help you build credit without having to apply for a card yourself. As an authorized user, you’ll have the credit activity and payment history of that account factored into your credit scores.
If you’re added to the account of a trusted person with good credit, then you can potentially benefit from their good habits and the account’s positive credit history. But if you’re added to the account of someone who’s struggling with their credit, then the opposite can happen and your credit can suffer.
Keep in mind that the authorized user typically receives their own credit card with their name on it, but they don’t actually control the main account.
Which types of credit cards help build credit?
If you’re looking for a credit card to help you build credit, it’s best to start with one geared toward that purpose. Not all credit cards are designed for beginners — many travel rewards cards, for example, are only available to people with good to excellent credit.
Here are some credit card types that are often more accessible for people building credit.
- Secured credit cards — Secured cards are designed for people new to credit or rebuilding credit. To apply, you send the issuer a refundable security deposit, which usually determines your credit limit. You’ll get the deposit back after a set amount of time or when you close the account, provided you don’t owe any money.
- Unsecured cards for building credit — Just like other traditional credit cards, unsecured cards designed for building credit don’t require a security deposit. But they might charge high annual fees and interest rates, and eligibility requirements might still be stricter than those of secured cards.
- Student credit cards — Many major card issuers offer rewards cards specifically for eligible college students. Unlike secured cards, student cards generally don’t require a security deposit. If you’re eligible, these cards are typically the best option available to students.
- Retail credit cards — Retail cards, also called store credit cards, tend to have less stringent approval requirements than standard credit cards. But these cards often come with high interest rates and low credit limits, and some can only be used at that specific store or family of stores. If you don’t shop very often with the retailer, this type of card is likely not worth getting.
Before you apply, make sure you keep credit requirements in mind. Look for issuers that label their cards with a credit score range to help people better understand their chances at approval, or those that allow prequalification for credit cards.
Credit Karma Approval Odds provide a window into credit card offers you’re more likely to be approved for. Approval Odds consider thousands of data points as well as insights from many credit-score versions.
Keep in mind that while Approval Odds use statistical analysis, the final approval decision rests with the credit card issuer after you submit a formal application.
How to build credit without a credit card
Using a credit card isn’t the only way to build credit. To work on your credit without one, you can …
- Open a credit-builder loan: With a credit-builder loan, the lender typically holds the loan amount in a locked savings account rather than giving it to you immediately. You make monthly payments, which the lender reports to the bureaus. Once you’ve paid off the loan, the funds are released to you.
- Consider the Credit Karma Money™ Credit Builder plan: Similar to a credit-builder loan, Credit Karma’s Credit Builder plan can help those with low credit scores build a track record of on-time payments. This plan allows you to contribute to a locked savings account until you reach $500, when your money is then transferred back to you. Each contribution is reported as a line of credit payment to the three major credit bureaus — Equifax, Experian and TransUnion — which can help you build a positive payment history.
- Enroll in a credit-boosting account that reports bill payments. Some products, like Credit Karma’s Credit Spark™ help people build credit by reporting on-time bill payments not typically reported to credit bureaus. For example, you may be able to build credit when the service reports your rent payments or utility payments to the credit bureaus. If you consistently pay these bills on time and in full each month, they can have a positive impact on your credit scores.
- Use your student loans: If you have student loans or another installment loan, you’ve already begun building credit. Be sure to read your contract carefully so you know when payments begin.
Next steps: Track your credit-building progress
Building credit is a marathon, not a sprint. To stay on the path to a strong credit history, you’ll need to keep practicing these foundational habits for improving your credit scores — like paying your bills on time and keeping your credit utilization low — in the long run.
As you practice these habits, track your credit-building progress by checking your scores and reports about once a month. Regularly monitoring your credit reports and scores helps you see what’s working and allows you to spot any potential errors that could bring your scores down.
You can check your credit reports and VantageScore® 3.0 credit scores from Equifax and TransUnion for free on Credit Karma.
FAQs about building credit with credit cards
The best credit cards for building credit are ones specifically geared toward that purpose, such as secured credit cards, student cards and unsecured credit-building cards. In general, the best credit cards for building credit will offer low fees, relatively high credit limits and low credit requirements for approval. Secured credit cards are typically the most accessible options because they have low or no credit requirements and instead require a cash deposit as collateral.
You can become an authorized user by asking to be added to a trusted family member’s or friend’s account. That person will then have to make the request through their card issuer. Once you’re added, you’ll typically be issued your own credit card, but the primary account holder will still be responsible for paying the issuer on time for any purchases you make.
Building credit with a credit card often takes a few months, at minimum, and likely at least a year. It takes at least six months of payments to generate a FICO credit score and at least one month to generate a VantageScore score. It may take years of on-time payments to build excellent credit, especially if you’re just starting to build credit.
No, carrying a credit card balance won’t help you build credit. It can even harm your credit by using up some of your credit limit at the start of your next billing cycle, which could make it hard to keep your credit utilization rate low. The best way to build credit with a credit card is to use it for smaller purchases that keep your credit utilization low and to then pay it off on time and in full every month. By doing this, you’ll build a positive payment history and avoid getting into credit card debt.
A good credit score falls between 661 and 780 on the VantageScore scoring scale and between 670 and 739 on the base FICO scoring scale. But every lender has its own criteria for what counts as a good score, so your score may not meet the requirements for a certain loan or product even if it falls into one of these ranges.
Most credit score models take the same five primary factors into account: payment history, credit usage, length of credit history, credit mix and recent credit activity. While each scoring model weighs these credit score factors a little differently, payment history is typically the most important. That’s why paying your bills on time is usually the simplest way to make a positive impact on your scores over time.