How to Build Your Credit Using a Credit Card
Credit card usage has a direct impact on the most important factors that make up your FICO score. Using a credit card regularly and responsibly is one of the fastest and most reliable ways to build credit. How can you wisely utilize a credit card to improve your credit score?
Pay off in full and on time
Payment history accounts for 35% of your FICO score. Putting regular expenses such as groceries and gas on your credit card and making on-time payments every month helps to establsh a good payment history. Additionally, paying off your balance in full each month lets you build your credit while avoiding interest.
Keep your balance low
Amounts owed is the second most important factor, accounting for 30% of your FICO score. FICO looks at your credit utilization (the amount you owe in comparison to your total available credit). The lower your credit utilization, the higher your score. Aim to keep your credit card balances at 30% or less of your available credit to boost your FICO score.
Keep your accounts open
The length of your credit history accounts for 15% of your FICO score. Every time you close an old account, it lowers the average age of your accounts. Be sure to keep yur credit card account active and open. Rather than moving from one card to another, find one credit card that meets your need and keep it.
Stay smart about your card
Be vigilant about your credit card usage. Using your credit card irresponsibly can hurt your credit score. But if you use your credit card wisely, regular and responsible credit card use can help you build your credit score without carrying any debt. Remember: carry a low balance, pay on time, pay in full and watch your credit score soar.