How to Use a Credit Card to Build Credit

Learn tips for managing your credit cards responsibly and building credit over time


You’ve got financial goals, right? Like building or rebuilding your credit, for example. Did you know that using a credit card responsibly could be part of making both things happen?

Simply using your card for purchases won’t help build or rebuild your credit. Instead, building and rebuilding is about using your card responsibly over time to help improve your credit score. And a better credit score could help with things like qualifying for a mortgage and even getting a job. Read on for tips for building credit as a cardholder.

Know Your Credit Score

First things first. When you’re building or rebuilding your credit, it may be helpful to know a few things: What exactly is a credit score? What’s considered a good credit score? And how does your credit score work hand in hand with your credit report?

Here are some quick basics about your credit score:

  • It’s a three-digit number. Most scores range from 300 to 850.
  • It’s based on information in your credit report. That information can include things like your payment history, how many credit accounts you have and whether you’ve applied for new loans. 
  • Lenders use your score as a quick measurement. For example, it can tell them how likely you are to repay your debt on time.

It may also help to know that you actually have multiple credit scores. Each is calculated using a different scoring model. Scoring companies like FICO® and VantageScore® even have different versions of their own scores. So you might see slightly different scores depending on what model was used. 

Tips for Using a Card to Build or Rebuild Credit

With a better understanding of where you're starting, you can make a plan to improve your credit. It could be helpful to remember a couple of things as you work toward that goal: improving credit takes time, and everybody’s situation is different.

With that in mind, let’s look at some tips for using a credit card to build or rebuild credit.

Use Only the Credit You Need

One way to use a credit card to help build or rebuild credit: Use only the credit you need. In fact, the Consumer Financial Protection Bureau (CFPB) recommends staying well below the credit limit on your credit card.

That's because your credit score may be affected by how much of your available credit you’re using—that’s what’s known as your credit utilization ratio. When it comes to your ratio, the CFPB recommends trying to keep your credit card balances around or below 30% of your credit limits. 

The big idea: It may help to know your credit limit and stay well under it.

Pay Off the Balance in Full Each Month

Another tip for using a credit card to build or rebuild credit? Pay off your balance in full each month.

Paying your balance in full versus making only your minimum payment may help you avoid interest charges, which can make it harder to pay off debt. Paying off your balance every month may also help improve your credit utilization ratio. 

Monitor Your Transaction History

Regularly checking your credit card statements may also help you in your journey to improve your credit. The practice could help you stay well below your credit limit, for example, by keeping your balance top of mind.

Another potential benefit of checking your statements is that you may spot transactions you don’t recognize. That could help protect you from fraud. And the sooner you notice and report credit card fraud, the quicker you can stop any unauthorized spending in your name. 

Monitor Your Credit 

If you’re monitoring your transaction history, good job! While you’re at it, you may also want to monitor your credit. 

But first, it may help to understand more about how credit reports work: When you use your credit card responsibly and do things like make on-time payments, your activity may be reported to the major credit bureaus, Equifax®, Experian™ and TransUnion®. Monitoring your credit can help you see how that information adds up over time to impact your credit score. Specifically, information that shows you’re practicing good financial habits can help assure lenders that you may be ready to handle other types of debt.

Another benefit of monitoring your credit is that it may help you spot errors in your credit report. According to the Federal Trade Commission, credit report errors may lower your credit score, which may end up costing you money. Monitoring your credit report can also help you spot potential fraud attempts that may be hurting your credit.

With CreditWise from Capital One, you can access your TransUnion® credit report and weekly VantageScore 3.0 credit score—without hurting your score. And it’s free for everyone. You don’t even have to be a Capital One customer to enroll.

You could also get a free copy of your credit report from each of the three major credit bureaus. Visit AnnualCreditReport.com to learn how.

Choosing the Right Credit Card for You

Whether you’re building credit for the first time or looking to improve your score, there are credit card options for you.

If you want to build credit, getting your first credit card and using it responsibly may be a good place to start. Or maybe you’ve started to build a credit history but it’s still not perfect. You may have options, too. In fact, many credit card companies—including Capital One—offer credit cards for people with less-than-perfect credit. 

If you’re actively looking for a new credit card, you can research cards and their terms online. You may also find it helpful to check out pre-approval offers that come by mail or email. 

When it comes to Capital One cards, you can quickly see whether you’re pre-approved using Capital One’s pre-approval tool. Pre-approval is quick and doesn't hurt your credit score, so it can be helpful for comparing options and finding the right fit.

Consider a Secured Card

Secured credit cards may be another option for rebuilding your credit or building credit from scratch

Secured cards are a lot like traditional credit cards except that you’re required to make a security deposit before getting one. If you’re approved for a secured card, you put a deposit down to open the account. That deposit acts as collateral, similar to a security deposit for an apartment rental. 

Your deposit is usually refundable. With the Secured Mastercard® from Capital One, for example, you’ve got two ways your deposit can be refunded: You can earn back your deposit as a statement credit by using your card responsibly. Or Capital One will refund it when you close your account and pay your balance in full.

As a secured card cardholder, you may eventually want to graduate to a traditional, unsecured card. The right timing depends on your situation and goals. Some credit card companies may allow you to move seamlessly to a traditional card without closing your original line of credit. The process may even involve returning your deposit.

Check with your credit card company to understand what’s possible and how your account will be treated if you transition to a traditional card. And be sure to understand how closing your secured card account could affect your credit.

Become an Authorized User

Another option for building or rebuilding credit? You could consider becoming an authorized user on someone else’s credit card account. 

When someone adds you as an authorized user—a family member with good credit, for example—you’re allowed to make purchases with their card. Since they’re the primary cardholder, it’s ultimately their responsibility to make the monthly payments. 

The primary cardholder’s responsible use of their card may help build your credit and boost your own score. Keep in mind, the opposite can also be true: Negative information, like missed payments, could affect your credit, too. So make sure it’s someone you trust to use credit responsibly.

You don’t generally need to apply to become an authorized user. There’s generally no credit check, either. And keep in mind that you may want to check with the card issuer to see how they handle reporting authorized users to credit agencies. 

Working Toward Your Goals With Good Financial Habits

As you’re working toward building or improving your credit, remember that there aren’t any shortcuts. Building credit takes time and good financial habits. 

But if you put a plan into action—one that may include using a credit card responsibly to help build or rebuild credit—you just might find yourself on the way to a better financial future.


Learn more about Capital One’s response to COVID-19 and resources available to customers. For information about COVID-19, head over to the Centers for Disease Control and Prevention

Government and private relief efforts vary by location and may have changed since this article was published. Consult a financial adviser or the relevant government agencies and private lenders for the most current information.

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 scoring models used by lenders. It likely won’t be the same model your lender uses, but it is an accurate measure of your credit health. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion. Alerts are based on changes to your TransUnion and Experian® credit reports and information we find on the dark web. The tool is not guaranteed to detect all identity theft.

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