How to Start Building Credit with a Credit Card

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.* 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. In the case of FICO® Scores, they 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.*

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. 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 is becoming an authorized user on someone else’s credit card. 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.*

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 keeping tabs on your credit score with a service like Discover’s Credit Scorecard*.

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.

Minimum Security Deposit: A minimum security deposit of $200 is required to open this account and your security deposit must equal your credit limit. Your maximum credit limit (up to $2500) will be determined by your income and ability to pay.

Builds 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 other credit card accounts and loans may impact your ability to build credit.

Authorized User: Primary account holder is responsible for all charges made by the Authorized User(s). Discover reports the account credit history to the three major credit bureaus as to you and the Authorized User. This can help build the Authorized User’s credit history if used responsibly. Late payments, delinquencies or other derogatory activity with your credit card accounts and loans may adversely impact yours and the Authorized User’s ability to build credit.