How to Build a Credit Score With a Credit Card

Having a poor credit score canhave a negative effect on many aspects of your life. In addition to hindering you from getting a loan, a poor credit score can cause high car insurance premiums, prevent you from renting and even cost you a potential job. If you haven't built credit you will also find yourself in situations where a lack of credit can be detrimental to getting the things you need. There are ways to build your credit score by using a credit card.

Instructions

1

Check your credit score. Before you can build up your credit, you have to know what your credit is scored. By law, you are eligible for free yearly access to your credit report from the three major reporting agencies; Experian, TransUnion and Equifax. Per the Federal Trade Commission, under federal law, AnnualCreditReport.com is the only authorized source to get your free annual credit report.

Viewing your credit rating will allow you to clear up any inconsistencies or inaccuracies that could be causing a lower score and it will also help you in deciding the types of credit cards for which you are eligible.

2

Apply for a credit card to begin building a credit history. There are generally two basic types of credit cards: secured and unsecured. If you have no credit or if your credit is bad, getting an unsecured credit card from a major issuer will be difficult. Apply for credit cards from businesses such as gas stations or department stores.

Visit your bank or credit union to apply for a secured credit card. With a secured credit card, you place a certain amount of money in the bank which will reflect the limit of card. If you do not make a payment, the money in the bank is used to make up for the lack of payment. When used responsibly, a secured card may be able to be changed to an unsecured card.

3

Build a positive history of paying the full amount of your bill in a timely manner. As soon as you receive your bill, send in a payment, either by mail or online. Avoid making payments close to the due date to prevent the chance of delays caused by unforeseeable circumstances. Try to pay more than the minimum amount and get into the habit of paying off the entire amount of your bill at one time.

4

Display responsible spending habits. Use your card to make small purchases that you can quickly and easily pay off. Use no more than 30 percent of your credit card balance at any given time. Never spend up to or exceed your credit limit, which will reflect poorly on your credit rating.