Building good credit may start with your first credit card (with responsible use, of course). If you’re in college, a student credit card might be the right card for you. If you’re out of school, and haven’t had a chance to start building credit, you may want to consider a secured credit card.

As you get access to credit (i.e., credit cards, personal loans, etc.) you can start building a good credit history if you act responsibly and meet the terms of your credit agreement. Consider these simple credit card tips that may help you along the way:

1. Consider a Student or Secured Credit Card

You might be wondering how to build a credit history if you have little to no credit. One way to start is with the Discover it® Secured Credit Card, in which you provide a refundable security deposit when you apply, after which your credit line will equal your deposit amount (starting at $200).*

Be sure to charge only what you can pay for each month so that your balance remains low and you’re able to make your monthly payments on time and establish good habits. You can also check with the issuer of your card to help ensure they’re reporting this activity to all three major credit bureaus.

If you are in school and want to build a credit history without a security deposit, you may consider the Discover it® Student Cash Back credit card, which offers rewards while you build your credit history.

2. Pay Your Credit Card Bill On Time and In Full

Make automatic payments your friend! Spend within your budget so you can pay that entire balance every month when it’s due. At the bare minimum, make your minimum payments so that you don’t incur late fees or trigger penalty APRs. Missed or late payments can appear on your credit report for lenders to see when you apply for credit cards, loans, mortgages, etc. in the future.

3. Only Apply for the Credit You Need

When you’re just starting to build your credit history, you might think that opening a bunch of accounts will help your score. In reality, this might have the opposite effect.

First, you need to know the difference between soft inquiries and hard inquiries. Soft inquiries are when a business checks your credit report to prescreen you and will not affect your credit score. On the other hand, a hard inquiry, such as an inquiry made as the result of a credit card application, can affect your credit score.

For example, with FICO® Scores, quickly opening accounts and applying for new credit (which includes assessment of hard credit inquiries) makes up roughly 10 percent of your credit score. Too many hard inquiries can hurt your credit score and possibly lead to denied applications.

4. Use Your Credit Responsibly

While you might want to take that new credit card out for a spin by buying a full size refrigerator for your dorm room, it’s best to start small. Use your credit card minimally, and for less extravagant items. You might even want to take a few of your smaller, regular monthly purchases — think music and TV streaming services — and automate them. This will keep your credit card active and will also keep your spending within your means.

5. Monitor and Manage Your Credit Utilization Ratio

Your credit utilization (or debt-to-available credit) ratio is defined by how much of your available credit is currently being used.

To figure out your credit utilization ratio on any credit card, you need to know your credit limit on that account. Typically it’s listed on your statement or in your online account. Divide your current credit card balance by your credit limit and multiply that number by 100. The resulting number is your credit utilization as a percentage. Credit companies will calculate this number across all of your open loans accounts.

In general, a lower number is better.

6. Check Your Credit Report

Everyone (including students) is entitled to a free copy of their credit report from the three major credit reporting agencies (Equifax, Experian and TransUnion) once per year. Students can request a copy of their credit report at the FTC-sponsored website, During the COVID-19 Pandemic, Equifax, Experian, and TransUnion are offering free weekly credit reports.

When you receive your credit report, ensure your personally identifiable information is correct, including names, addresses, Social Security Number, accounts and loans. You’ll also want to look for things like inaccuracies of balances, payment history, charge-offs, etc. If you find any information that you believe to be incorrect, contact the business that issued the account or the credit reporting company that issued the report.

7. Have a Diverse Mix of Credit

Credit cards, bank loans, retail accounts and mortgage loans can all be considered when your credit scores are calculated. While it’s great to have a mix of several types of accounts, it’s also important not to open too many at once.

Even if you’re new to credit, as many students are, length of credit history will impact your score, so closing your earliest credit card can have a negative impact on your score. Keep the accounts you have open and active for as long as possible, and shop around to make sure your credit card gives you the best interest rate.

Like a smartphone or social media, a credit score is a reality of modern life. Supplied with the knowledge on how to build credit, a little attention to detail every month may be all you need to stay on top of your credit score and help build good credit.

Originally published February 13, 2015.

Updated June 22, 2021.

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