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How to Start Building Credit with a Credit Card

Last Updated: December 14, 2023
4 min read

Key points about: building credit with a credit card

  1. Getting a credit card can help you establish credit history, one factor used to calculate your credit score.

  2. If you have bad credit or no credit history, a secured or student credit card may still be an option.

  3. Good credit practices, like making on-time payments, can help your credit score.

There are several reasons it’s important to build credit history—the potential for better interest rates, higher credit limits, smaller deposits, and easier credit approval, to name a few. But where do you start?
Here’s what to know to jumpstart the process and find the best credit card for you:

How to Use a Credit Card to Build Credit

Once you open a credit card, your financial institution, credit union, or card issuer typically reports your credit usage to one of the three major credit bureaus (Experian®, Equifax®, and TransUnion). 

A card issuer may report information such as payment history (including whether you've made a late payment or missed a payment) or credit utilization (the portion of your credit limit that’s still available credit.)

Each credit bureau collects and stores this personal finance information in your credit report to determine your credit score. Credit scores are three-digit numbers that indicate your creditworthiness (how much of a risk you are as a borrower.) 

Credit scores generally range from 300 to 850. A higher score is considered a good credit score or an excellent credit score and signals to lenders that you’re responsible with credit. A lower score is considered poor credit and may indicate you're a risky borrower. 

Generally, lenders review your credit score and credit report when determining how much money you can borrow and under what terms. A good credit history and a low credit utilization ratio (under 30%, according to Experian, a major credit bureau) can tip the scales in your favor.

Credit cards that can help you build credit

You can build a positive credit history with responsible credit behaviors, like keeping your balance low and making your monthly payment on-time. Plus, a credit account that has been open for a long time is better for your credit score than a new credit card account since it brings up the average age of accounts (another factor used to calculate credit scores.)

But how can you get approved for a credit card if you have no credit history or you're just beginning to build your credit?

Did you know?

There are a few ways to get a credit card and start building your credit score even with no credit history or bad credit history, like with a secured credit card, a student credit card, or by becoming an authorized user on someone else’s credit card.

Let's take a deeper look at each of the options:

Building credit with a secured credit card

A secured card might be a good option if you’re trying to establish credit history for the first time or repair your credit due to a bad credit score. A secured credit card is designed to help build or rebuild credit history. Typically, a secured card requires little to no credit history to qualify, and using the card responsibly can help you build credit history which can appear on your credit report

A secured card functions like an unsecured credit card—the only difference is that you provide the card issuer with a security deposit, usually equal to the card's credit limit.

The deposit for a secured card is generally refundable after you establish a track record of responsible payment history, which may also qualify you for an unsecured credit card. For example, with the Discover it® Secured Credit Card, you get your deposit back after six consecutive months of on-time payments and maintaining good status on all your credit accounts. After seven months, we begin automatic monthly account reviews to see if you qualify to upgrade to an 'unsecured' card and get your deposit back.1

Building credit with a student credit card

If you’re a college student trying to establish credit history and build your credit score, a student credit card could be a good choice. A student card functions like an unsecured credit card but is designed specifically for students building a credit history. 

Some student cards may also offer rewards specific to your needs. For example, with the Discover It® Student Chrome, you can earn 2% Cashback Bonus® at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically.2

Building credit by becoming an authorized user

Another way to build credit history using a credit card is to become an authorized user on someone else’s credit card.

To be an authorized user, the primary cardmember (often a parent or family member) can contact their credit card company and add you to their existing credit card account. You receive a credit card (with your name) linked to the account and can use it to make purchases. 

As an authorized user, you’re not responsible for making payments. However, the account activity may appear on your credit report and could help you establish your credit history if the card issuer reports to a major credit bureau.

It’s important to remember that the primary cardmember and authorized users’ credit scores may see positive or negative changes based on the combined usage. It can help to set clear expectations about making reasonable purchases and timely payments.

Use a credit card to build credit

Whether you’re starting to build credit history for the first time or working on rebooting a bad credit score, with the right credit card for you and healthy financial habits like making your monthly payment on time, you can be on your way to a good credit score. No matter where you are on your borrowing journey, now is the right time to build good credit.

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  1. Getting your deposit back: Monthly reviews start your seventh month as a customer. We will refund your security deposit if you have made all payments on time for the last six consecutive billing cycles on all your Discover accounts including any loans, and you've remained in "good status" on all credit accounts you are responsible for whether they are Discover accounts or not. "Good status" means: (1) your credit report shows no delinquencies, charge-offs, repossessions, or bankruptcies for the six months prior to our review; and (2) your Discover secured card is not in a prohibited status at the time of our review, including, but not limited to: closed, revoked, suspended, subject to tax levy, garnishment, deceased, lost/stolen, or fraud. Monthly reviews may be delayed if you change your payment due date. We typically process your refund in 2-3 business days based on your delivery preference. If you close your account and pay in full, we'll return your deposit within two billing cycles plus ten days.

  2. You earn a full 2% Cashback Bonus® on your first $1000 in combined purchases at Gas Stations (stand-alone), and Restaurants each calendar quarter. Calendar quarters begin January 1, April 1, July 1, and October 1. Purchases at Gas Stations and Restaurants over the quarterly cap, and all other purchases, earn 1% cash back. Gas Station purchases include those made at merchants classified as places that sell automotive gasoline that can be bought at the pump or inside the station, and some public electric vehicle charging stations. Gas Stations affiliated with supermarkets, supercenters, and wholesale clubs may not be eligible. Restaurant purchases include those made at merchants classified as full-service restaurants, cafes, cafeterias, fast-food locations, and restaurant delivery services. Purchases must be made with merchants in the U.S. To qualify for 2%, the purchase transaction date must be before or on the last day of the offer or promotion. For online purchases, the transaction date from the merchant may be the date when the item ships. Rewards are added to your account within two billing periods. Even if a purchase appears to fit in a 2% category, the merchant may not have a merchant category code (MCC) in that category. Merchants and payment processors are assigned an MCC based on their typical products and services. Discover Card does not assign MCCs to merchants. Certain third-party payment accounts and digital wallet transactions may not earn 2% if the technology does not provide sufficient transaction details or a qualifying MCC. Learn more at Discover.com/digitalwallets. See Cashback Bonus Program Terms and Conditions for more information.

  3. Build credit with responsible use: Discover reports your credit history to the three major credit bureaus so it can help build your credit if used responsibly. Late payments, delinquencies or other derogatory activity with your credit card accounts and loans may adversely impact your ability to build credit.

  4. Minimum Security Deposit: If approved, you must make a minimum security deposit of $200 (or more, in increments of $100 up to $2,500), which will equal your requested credit limit. Discover will determine your maximum credit limit by your income and ability to pay.

  • Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.