Responsible ways to build credit with your first card
Consider these tips for building and maintaining good credit with responsible use of your first credit card.
Getting your first credit card can be an exciting milestone in your financial journey. And when used responsibly, a credit card can be a great way to establish and build good credit.
But before you start swiping, it may be helpful to learn a few healthy spending strategies. Consider the following tips as you start to use your card.
1. Create a budget
Creating a budget can help you develop responsible long-term spending habits. That’s true whether you’re using a credit card or not. When it comes to your first card, though, you could also set yourself up for future credit success.
By keeping track of your income and expenses, you can set limits to make sure you’re not spending beyond your means. Once you have your budget, try to stick with it. By being mindful of your spending, you’ll have a better idea when to scale back and when you can afford to splurge.
Budgeting can also help you plan ahead. For example, if you have a vacation planned, consider ways you can save leading up to the trip.
2. Use your card for the same expenses each month
When you first get your card, you may have some questions about how often you should use it. Limiting its use to a few specific expenses may be a good way to get started. For example, you could use your card to pay for things like utility bills or groceries that don’t change a lot from month to month.
That discipline can help you use your card responsibly and pay your credit card statement on time. And it can make budgeting easier. Plus, you won’t be caught off guard by surprises in your credit card bill.
Sticking to one or two small fixed expenses may also help you avoid getting close to your credit limit. Experts recommend using no more than 30% of your available credit.
3. Know your rate
Knowing your card’s annual percentage rate (APR) can help you compare cards and make more informed credit decisions. The term “APR” applies to more than just credit cards. In general, it’s the price you pay to borrow money.
And knowing how APR works can help you avoid paying unnecessary fees and interest. You can usually avoid paying interest on purchases if you pay your balance in full every month by the due date, according to the Consumer Financial Protection Bureau (CFPB). Aiming to pay off more than your minimum payment may also help avoid additional interest and fees.
4. Monitor your credit
As you’re starting to build credit, be sure to keep an eye on your progress. You’re entitled to free credit reports from each of the three major credit reporting agencies. Visit AnnualCreditReport.com to learn more. Get yours to make sure they’re accurate and up to date. And if you find a problem, take steps to correct the error.
A tool like CreditWise from Capital One can also help you understand and monitor your credit on an ongoing basis.
Building a credit history is important for a good credit score. And your first credit card can be an important first step. While navigating credit may feel confusing at first, incorporating these strategies could help you build confidence and credit.
We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.
Your CreditWise score is calculated using the TransUnion® VantageScore® 3.0 model, which is one of many credit scoring models. Your CreditWise score is a good measure of your overall credit health, but it is not likely to be the same score used by creditors. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion. Some monitoring and alerts may not be available to you if the information you enter at enrollment does not match the information in your credit file at (or you do not have a file at) one or more consumer reporting agencies.
CreditWise Alerts are based on changes to your TransUnion and Experian® credit reports and information we find on the dark web.