Tips for using credit cards to build credit history

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » Research » Guides » Cardholder Benefits » Tips for using credit cards to build credit history

Tips for using credit cards to build credit history


Updated: September 27, 2018

The content is accurate at the time of publication and is subject to change.

Credit cards could be used as helpful instruments to build excellent credit history over a period of time. This credit history will help you save thousands of dollars in the future in the form of interests paid on personal and home loans and insurance premium and also through credit card rewards. Here are some tips that could help you use credit cards the right way to improve your credit score.

Swipe your credit card for all necessary expenses

Your credit history will be better off, if you swipe and repay $500 in 3 months compared to swiping and repaying only $100. The more you spend on your credit card and repay successfully on time, the better it will be for your credit score. However, it is extremely important to remember that you should swipe your credit card for expenses only if you are absolutely sure of your ability to repay the debt. On the other hand if you swipe your card and are unable to pay back the debt, your credit history will suffer.

Low outstanding balance to credit ratio

The credit score depends on the ratio of credit used to credit available. If your outstanding balance is high and almost touching your credit limit, then your credit history will suffer. So your primary aim has to be to make consistent payments on time. This will keep your outstanding debt low and also help in increasing your credit limit after a while, owing to your creditworthiness.

Don’t incur penalties

Making one late payment could lead to higher interest rates for 6 months, assuming you don’t make any more late payments in that period. Similarly, crossing the credit limit would incur over-the-limit fees. Withdrawing cash from ATM using your credit card could lead to cash advance fees. It is important to avoid all these additional charges. Late fees and over the limit fee are seen negatively on the credit file and could lower your credit score. All these additional charges could add to your outstanding debt as well, making repayment tougher. Hence using credit card sensibly involves to what extent you can spend and repay on the credit card.

Set up auto payments with your credit card

Pay your credit card bill on time. But use your credit card to pay your other bills on time too. In fact, set up auto payment with your credit card for phone, internet and other utility bills so that you don’t miss their payments.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related Research:

Top 5 Secured Credit Cards: January 2021 – Experts’ Choice

Top 5 Secured Credit Cards: January 2021 – Experts’ Choice

Posted: October 22, 2020

The COVID-19 pandemic has made significant changes not only in people’s lives and their financial standing but also in the entire financial sector of the U.S. We have collected the best secured card offers from our partners so that you can… Continue reading

Credit Card Tips For Holiday Shopping 2020

Credit Card Tips For Holiday Shopping 2020

Posted: October 15, 2020

November and December are the busiest months as gift shopping reaches its peak. People rush around looking for the best gifts and the best deals leaving a lot of money in the shops. Holiday season may force you to go over the household… Continue reading

Top 5 Soft Pull Credit Cards: January 2021 – Experts’ Choice

Top 5 Soft Pull Credit Cards: January 2021 – Experts’ Choice

Posted: June 3, 2020

When applying for a credit card, you definitely don’t want your credit score to go down. Here, you will find the best credit cards with a soft pull from our partners. An application for such cards won’t make changes to your credit history… Continue reading

You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!