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How to Start Building Credit with a Credit Card

Last Updated: August 22, 2022
4 min read

Key Points About: Building Credit with a Credit Card

  1. Getting a credit card will give you a credit utilization ratio and start your credit history, contributing factors in determining your credit score.

  2. Secured and student credit cards may be accessible cards for those with no or bad credit history and a limited income.

  3. Maintaining good credit practices, like making on-time payments, may help your credit score.

You’ve probably heard about all the reasons it’s important for you to build credit — the potential for better interest rates, higher credit limits, smaller deposits and easier approval for credit. But here’s something you might not know: You can build credit with some secured and student credit cards through responsible use.1 In fact, it can be a great way to begin your credit journey.

Here’s what you need to know when considering how to start building credit with a credit card.

How a credit card helps you build credit

How can you start building credit using a credit card? Many large credit card issuers and other lenders report your credit usage and payment record to the three major national credit bureaus: TransUnion, Equifax, and Experian. The bureaus create and maintain your credit reports, which become the basis for your credit score. Most FICO® Scores range from 300-850. The higher your score, the better. Your credit score is one way for lenders to quickly determine how much money you can borrow and under what terms.

But what do you do if you’ve never had a credit card or borrowed money for anything? How will lenders know if you’re creditworthy? One option to consider to start building credit history is to get access to a credit card. That might be a challenge if you’ve never had a credit card, or if you have poor credit. However, you have options, including opening a secured or student credit card, or becoming an authorized user on someone else’s credit card.

How to start building credit with a secured credit card

If you’re just starting out or working on rebuilding your credit, a secured credit card might be a good option. Secured credit cards function just like a regular credit card. The difference is, you provide the issuer a security deposit, which serves as the spending limit (also known as the credit limit) for your credit card. 

For example, if you pay a $200 deposit, then you’ll have a $200 credit limit. In other words, the deposit “secures” your line of credit, and may help you start building your credit history, putting you on the road to qualify for other credit cards down the road. For all these reasons, a secured credit card is one way to build credit with a credit card if you use it responsibly.1

Opening a student credit card could be a smart move

Student credit cards can be a great option if you’re in college and want to know how to start building credit history. These cards also function the same way regular credit cards do, but the perks and approval requirements cater specifically to students. Student credit cards may offer advantages and perks specifically designed for students; be sure to check the terms and conditions of any student credit card you are considering. One of the biggest benefits of a student credit card is the potential to start building credit history early. 

That’s a smart move, because credit-scoring models like FICO® Scores use the length of your credit history as a factor in your score.2 The earlier you start building a credit history, the more points awarded as your credit history ages over time. 

Become an authorized user to build your credit

Another potential option for using credit cards to start building credit history with responsible use is becoming an authorized user on someone else’s credit card.3 Here’s how it works: A credit card holder — often a parent or family member — adds you to their existing credit card account as an authorized user. You receive a personal credit card linked to their account, and as long as the primary cardholder agrees, you can use the card to make purchases. Although you’re not the primary cardholder, the account is still reported to your credit report, which can help you to start building credit history with responsible use.3

However, it’s important to note that your credit report and the primary cardholder’s can be impacted — positively or negatively — by each other’s credit card usage. So make sure that you communicate openly with each other and that expectations about purchases and payments are clear on both sides as you’re working to build your credit.

Whether you’re just learning how to start building your credit or working on a credit reboot, you can take advantage of the options discussed here to start building credit with a credit card. You can also monitor your progress along the way by staying on top of your credit score with a service like Discover’s Credit Scorecard.2

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