Building positive credit is an imperative part of life. Without a healthy credit score, not only will it limit your ability to rent or buy a home, but it will also affect how much you pay for vehicle financing and insurance, and perhaps even influence whether or not you land your dream job.
There are a number of ways to build credit, and securing your first credit card is a good initial step. But a new credit card that just sits in your wallet doesn’t do much. Here’s five ways to build credit using your first new plastic, along with advice on choosing that first credit card.
[SEE: Best Credit Cards to Build Credit]
1. Use Your New Credit Card Minimally
Once you’re approved and receive your new credit card, it’s important to actually use it — but minimally. “In order to improve credit scores, one of the main factors is credit usage,” says Jillian Stephenson, certified public accountant and assistant teaching professor at Carnegie Mellon University’s Heinz College. “This means having charges each month on your card without requiring you to carry a balance.”
2. Pay on Time — and in Full — Every Month
Despite what you might have heard, carrying a balance never improves your credit score. “Paying your balance in full every month, keeping your credit usage below 30% of your limit, and staying consistent — that’s where you build credit,” says Hillary Seiler, personal finance expert and founder of Financial Footwork. “Why are we paying the bank interest when anyone can build credit without paying a cent in interest by following the three steps above?”
In fact, carrying a balance can actually hurt your credit. “That’s because lenders love it when you regularly pay off what you owe. So your credit score reflects that in something called credit utilization ratio,” says Howard Dvorkin, chairman of Debt.com and certified public accountant. “Credit utilization ratio is just a fancy way of asking, ‘How much of your available credit are you actually using?’ It’s such a big deal it represents 30% of your credit score.”
In addition to paying in full, make sure you pay each bill on time, as this will be a major factor in building a positive credit history. Future lenders want to see that you are a responsible borrower, and that foundation is built on managing your accounts.
3. Keep Accounts Open
Time is your friend when it comes to credit scores, and part of your score is based on your credit history over time. The longer you’ve had credit, the more it can help your score. “Banks also consider how long you’ve been using credit and combine that history with your score to determine eligibility,” says Tessie Santiago, vice president and bilingual financial center leader with Bank of Texas. “For that reason, be cautious about closing accounts too early, especially revolving lines of credit such as credit cards and open credit lines. Keeping them active can positively impact your credit profile.”
4. Ask for a Credit Limit Increase
Just like a new employer might hire you for a probationary period of a few months, your credit card issuer thinks the same way. “After six months to a year, they trust you more. In their own words, you’ve shown ‘responsible credit behavior,'” says Dvorkin. “So, if you ask for a higher credit limit, you’re likely to get it.”
However, the advantage of this can be dangerous. “With a higher limit comes the possibility of running up bigger balances you can’t pay off,” Dvorkin warns. “But the flip side is that it can actually bolster your credit score. Since 30% of your credit score is how much of your available credit you’re using at any given time, this provides you with a larger cushion.”
If you can keep your balances modest and pay them off every month, a higher limit really helps you — because you’re not using it.
[Read: Secured Credit Cards]
5. Apply for Another Credit Card
After you have shown that you can manage credit responsibly, opening a second card can help strengthen your credit profile. Santiago often recommends having at least two credit cards — and ideally three to four — because that can support a healthier credit score.
“For many people, managing more than four cards becomes difficult to keep up with,” Santiago says. “Having multiple cards shows lenders that you can handle credit successfully. A good guideline is to wait at least three to six months between applications. Each time you apply for credit, it can affect your score, so spacing applications is important.”
Seiler suggests waiting at least six to 12 months after opening your first card before you take on a second one. “If you’ve been responsible with one, carry those habits to a second card. The second card will allow you to explore additional card benefits,” she says. “If you have a cash back and a travel card, you’re getting the best of both worlds if you know exactly how your cards’ reward systems work. Maximize those systems for the money you must spend.”
[READ: Best Credit Cards for Students]
How to Choose the Right Credit Card
If you’re new to the credit card game, or looking to rebuild your credit, a student credit card or secured credit card may be your best bet.
A student credit card can benefit students who are beginning to build their credit scores. “If and when they are ready for the responsibility and are supported with clear expectations from parents,” Santiago says. “I can’t stress enough that students need to understand that credit is not free money. It’s a tool that can help or hurt depending on how it’s used, and it’s definitely a good starting point.”
For those who aren’t students or can’t qualify for a student credit card, a secured credit card works well because your credit limit is whatever you deposit. “It might sound odd, but the big three credit bureaus — Equifax, Experian and TransUnion — will still consider this like a regular credit card and add your regular payments to your credit history,” Dvorkin says. “It’s like a credit card with training wheels.”
By making small purchases and paying your balance in full and on time each month, your positive payment activity is reported to the major credit bureaus. “This helps improve your credit score over time and may allow you to transition to an unsecured card as you begin to demonstrate responsible use,” Santiago says.
More from U.S. News
What You Need to Know About ‘Free’ Credit Scores
How to Get Preapproved for a Credit Card
Need to Build Credit Fast? Here’s How to Start
5 Ways to Build Credit With a Credit Card originally appeared on usnews.com
Update 12/02/25: The story was previously published at an earlier date and has been updated with new information.
