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How to Build Credit with Credit Cards



If you have a credit card, you can build your credit score. Simply make sure that you are paying off your purchases every month on time and keeping a low credit utilization rate of less than 30%.  

Bad credit doesn’t have to impact your life forever. You can build up your credit score and return to the lender’s good graces. If you have a credit card, you can build your credit score. Simply make sure that you are paying off your purchases every month on time and keeping a low credit utilization rate of less than 30%.  The key is to find a way to responsibly use your credit card.  

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Understand Your Credit Score  

Before you can start to build up your credit score, you need to understand the different parts of the credit score. Each area can impact your credit score in different ways.  

The credit score is comprised of five categories:  

  • Payment history: 35% 
  • Amounts owed: 30% 
  • History length: 15% 
  • New credit: 10% 
  • Credit mix: 10% 

Each of these different categories is rather broad. For example, 30% of the credit score is the “amounts owed.” FICO scores consider different types of debt separately. They will consider the overall debt and the amount of available credit you are using. They will also consider how much you still owe on credit cards and installment loans like mortgages and student loans when calculating your score.  

Build credit history with a credit card 

One factor of your credit score is your credit history. Companies want to know that you have a history of paying your bills on time. Unfortunately, if you have no history, it can be difficult to prove that you are reliable.  

Apply for either a student credit card, starter credit card, or a secured credit card. Use this card for purchases that you have enough money to pay off each month. For this card, use less than 30% of your credit limit. It is ideal to use only about 1%-10% of your credit limit. Pay the full balance by the due date.   

Managing a student card or a secured credit card well will improve almost every area of the credit score. If you can make all your payments on time, you will establish a track record of positive payments. Keeping the credit card open for a long amount of time will improve the length of the credit history.  

Secured credit cards 

For people with no credit or poor credit, a secured credit card is a good option. They are available to almost anyone. The big catch is that you are required to have a refundable deposit to open the account. This can often be several hundred dollars. Secured credit cards also come with high-interest rates and extensive fees. Be careful using them. Mistakes with a secured credit card can be very expensive.  

Once you have improved your score, you can consider closing your secured credit card. The company will refund your deposit if your account is paid in full and your credit card issuer may invite you to upgrade to an unsecured credit card.  

Student credit cards 

A student credit card is the first step in establishing a good credit history for many young adults. Building good credit will be necessary down the road when you want to finance that car or buy a home. Sometimes being a college student may not be enough to qualify for a student credit card.  

To get a student credit card, you need access to income to give the lender the assurance that you will pay your bills. You should have at least a part-time job to qualify for a student credit card.  

Pay bills with your credit card 

Paying your monthly bills with your credit card allows you to build up a positive payment history. If you can afford to pay the balance off each month, you should put your bills on your credit cards. Not only will you build your credit score faster by doing this, but you may also earn rewards points for travel or shopping.  

Some bills that can be put on a credit card include utility bills, cable and internet bills, cell phone bills, and subscription services. There is a risk that comes along with paying your bills with a credit card. You may incur interest and/or fees if you do not pay off your credit card balance each month. Your bills could end up costing you more money if you neglect to do this.  

Set up autopay 

If you are new to paying monthly credit card bills, autopay can be a lifesaver. It is easy to forget what day of the month it is and when your bills are due. When you do neglect to pay your credit card bill on time, it impacts your credit score. A finance tracking tool will help you manage the money you have. 

Setting up autopay will ensure that your bills are paid on time every month. You simply need to make sure that you have enough money in your bank account to cover the bill.  

Credit cards are a helpful financial tool. They provide financial flexibility in making purchases. When using your credit responsibly, your credit score will increase.  

Need Convenient Cash Fast?  

We get it—life happens, and not everyone has the money to respond to all life’s emergencies. If you’re struggling to pay off debt and you need cash fast, Jora Credit can help. While we do encourage you to look closely at your finances before adding more debt, we’re here to support you if you need a loan. 

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