How to use my credit card to build credit

How long does it take to build credit with a secured credit card?

You can build credit with a secured credit card in as little as 1 month, but it will take many months or even years to build a consistently good or excellent credit score. The length of time also depends on whether you're building credit from nothing or rebuilding damaged credit. If you have no credit, you could see a good score after just a few months of paying on time. You'll have a VantageScore after 1 month and a FICO Score after 6. With bad credit, though, it will probably take 12-18 months of responsible use for you to move up to the fair credit range. Secured credit cards are great for building credit because they are easy to get and report to the credit bureaus just like unsecured cards.

But it's hard to give you an accurate estimate of how long it will take to build credit with a secured credit card without knowing the details of your situation. That's where WalletHub can help. Just sign up for a free account, and we'll give you a personalized credit analysis that will tell you what to improve and give you a better sense of how long it will take.

Here's how long it takes to build credit with a secured credit card:

• If you have no credit, it will take 1 month to get a VantageScore and 6 to get a FICO score. Depending on how responsibly you use your card, your first score could be anywhere from bad to good.
• If you pay your bill on time and otherwise manage your finances responsibly, you can rebuild from a bad credit score (300-639) to a fair credit score (640-699) in approximately 12-18 months.
• A good credit score based on limited information could easily fall due to an increase in credit utilization or a single missed payment. Building and then keeping a good or excellent credit score requires consistency over time. This is a project measured in years.
• For people rebuilding credit, it will take 7-10 years for some negative information, like bankruptcies and late payments, to disappear from your credit report. But the older they are, the less impact they will have on your score.

If you're looking to rebuild your credit, secured credit cards are the best way to do it. They're easy to get and are indistinguishable from unsecured cards aside from the deposit requirement.

Rebuilding credit will take a while, so it's best to get started as soon as possible. Some good behaviors to practice are always paying on time and using less than 30% of your available credit.

Checking your credit reports regularly for errors and disputing any you find is also important.

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Do authorized users build credit?

John S Kiernan, Managing Editor

Yes, authorized users do build credit. You can actually build a good or excellent credit score just as an authorized user on a credit card. When you become an authorized user, the account is added to your credit report, which means on-time payments by the primary cardholder will help you build good credit history. But because authorized users are not responsible for paying the bills, credit scores don't give authorized user accounts as much weight. So you won't build credit as fast as an authorized as you would with your own credit card account.

Still, the fact that most credit card companies don't have a minimum age for authorized users, means becoming one is a great way to build credit before you can get your own account. But there are a few positives and negatives you should know about before becoming an authorized user.

Here's how authorized users build credit:

1. A friend or family member adds you to their credit card account as an authorized user.
2. The credit card account gets added to your credit reports, just like if it were your own account.
3. The issuer gives updated account information to the credit bureaus on a monthly basis.
4. Your credit standing improves if the account owner has on-time payments, low credit utilization and other signs of financial responsibility.
5. Your credit gets hurt if the account holder behaves irresponsibly.
6. You can get an account with negative information removed from your report, since you aren't responsible for making payments.

Authorized users do build credit, but that credit can be good or bad, depending on how the primary accountholder manages balances and bill payments. So you only want to become an authorized user on an account owned by someone responsible.

But in the event that an authorized user account does end up hurting your credit, you can dispute the account to get it removed from your credit report. That's because any mistakes made won't be your responsibility.

Finally, you'll build credit faster if you also have your own credit card account that you use responsibly. You can get a starter credit card once you turn 18 years old, as long as you have enough money to pay the bills.

If you have bad credit and are worried you won't get approved, try applying for a secured credit card. Secured cards require security deposits, but they have the highest approval odds of all credit cards and accept people with bad credit.

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How fast will a secured card build credit?

Chip Lupo, Credit Card Writer

A secured card can build credit in as little as 1-6 months if you have no prior credit history. For people with bad credit, meaning a credit score below 640, it could take around 12-18 months to build fair-to-good credit with a secured card. This is assuming that you maintain a history of on-time payments and manage your finances responsibly.

Technically, you build credit every month with a secured credit card, but pinpointing precisely how fast a secured card can get you to good credit is difficult, as every cardholder's situation is different. Nevertheless, you can check out WalletHub's free credit score simulator to see how various scenarios are likely to affect your credit score and gain a better understanding of how fast a secured card could build your credit.

Building Credit With a Secured Card

Using a secured credit card responsibly is the best way to build credit. Secured credit cards are cheaper and easier to get than unsecured cards for bad credit. Plus, secured cards report to the major credit bureaus the same way as unsecured cards.

How do you build credit with a secured credit card?

To build credit with a secured credit card, apply for a secured card and place a refundable security deposit to open an account, then use the account responsibly by paying the bill on time and in full every month and keeping your credit utilization low. Every month you have the secured credit card, the card issuer will report information about your account to major credit bureaus. And if you use your card responsibly, the information reported to the credit bureaus will build your credit history. In fact, you don't even have to use the card to get credit-boosting benefits. As long as you keep the account in good standing, your credit score should hike upward in time.

Secured credit cards build credit the same way as regular credit cards, so you don't have to do anything differently than you would with any other credit card to build credit with a secured card. The only difference between the two is that a secured card's credit line is secured by a refundable deposit, which is required to open the account. The deposit amount then becomes the card's credit limit, in most cases. In other words, a secured credit card won't get you very far if you need an emergency loan, but it can definitely help you build credit.

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How can I build credit without making a large purchase?

You can build credit without making a large purchase simply by having an open credit card account, becoming an authorized user, or adding utility payments to your credit report, among other methods. You do not have to make a large purchase to build credit because credit scores are calculated based on a variety of other factors, including your payment history for credit cards and loans, how much debt you owe, the length of your credit history, the types of credit you've used, and any new credit you've added. In fact, keeping a zero balance on your credit card can actually help your credit score. And you don't need to take out a loan to build a good credit score.

While it's true that using credit helps you build credit, this only works if you are keeping your accounts current and (ideally) paid in full. Any large purchase you make would contribute to the amounts owed portion of your credit score, which could cause your credit score to decrease, especially if it leads to high credit utilization.

8 Ways To Build Credit Without A Large Purchase

1. Use a credit card. One of the best ways to build credit is by using a credit card responsibly and paying the bill in full every month. Positive payment history will improve your credit score a bit each month and gradually bury any negative credit history you might have on your credit report. The best credit cards for building credit have low annual fees, often $0, and high approval odds for people with limited or bad credit.
2. Make payments on time. Using a credit card every month will only help your credit if you stay on top of your payments. Since payment history contributes to 35% to 40% of your overall credit score (depending on the model), positive payment history can help your credit score rebound. To help stay on track of your payments, you can set up your accounts for autopay and check out the tips for never missing a due date in our guide.
3. Become an authorized user. If a friend or family member is willing to add you to their account, you can see credit improvement as an authorized user (as long as they pay their bills on-time).
4. Add utility payments to your credit report. You can build your credit by adding rent and utility payments to your credit report. If your payments on these accounts are timely, your credit score could benefit from the inclusion of these payments under some credit score models. Not every lender will use the credit score models that may include these accounts, but you don't risk anything by reporting these payments.
5. Maintain credit utilization below 30%. Credit utilization contributes to the amounts owed portion of your credit score that's worth 20% to 30% of your score, depending on the model. As a result, it's best to limit your spending to essentials and show lenders that you won't charge up whatever credit limit you're given.
6. Get a credit limit increase. A higher credit limit can lower your credit utilization ratio in the long term. When your credit limit increases, your ratio of amounts owed to your total credit limit decreases (all else being equal), which helps increase your credit score. It's important to note that while a credit limit increase can ultimately improve your credit score, a request for one could trigger a hard inquiry, causing a temporary drop in your score to start. On the other hand, if your lender increases your credit limit without you asking, they will use a soft inquiry, which has no effect on your credit score.
7. Keep closed accounts open. If you pay off a credit card or a loan, you might be tempted to close it, but this should be avoided. Closing accounts can decrease your credit utilization, so it's best to let them remain on your credit report until they fall off.
8. Establish a good credit mix. Credit mix accounts for 10% to 21% of your overall credit score, depending on the model. As a result, diversifying the types of credit accounts in your portfolio can boost your credit score. You shouldn't take out credit unnecessarily, but if you see a good opportunity for a new credit account, it could help boost your credit.

You can consult our guide for more information on how to build your credit. For more personalized advice on improving your credit score, check the Credit Analysis page of your WalletHub account.

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How can I build credit at 18?

The best way to build credit at 18 is to get a credit card in your name and use it responsibly. All major credit cards report account information to the credit bureaus each month, allowing you to build credit history. As long as the information shows on-time payments and reasonable credit utilization, that credit history will be positive and you'll be on your way to building a good credit score.

There are two ways to get a credit card at 18: as an authorized user or by applying for your own account. If you have enough independent income to afford monthly bill payments, you can get your own credit card account when you turn 18. The best type of credit card to get at 18 is a student credit card, assuming you're in college. Credit cards for students tend to have better rewards as well as lower rates and fees than other starter credit cards for people with no credit.

How to Build Credit at 18 Years Old

1. Become an authorized user on a family member's credit card.
2. Apply for a starter credit card.
3. Set up automatic payments from a bank account for your starter card.
4. Make sure your card's monthly statement balance is much lower than the credit limit.
5. Work toward a high-paying job.
6. Save as much as possible and minimize debt.
7. Monitor your credit and make adjustments when needed.

Other Ways to Build Credit at 18

Using a credit card isn't the only way to build credit at 18. There are several alternatives worth at least considering.

Credit-builder loan

A credit-builder loan is essentially a loan that holds the borrowed money in a bank account while you make payments. This allows you to build credit easily, and doesn't require a good credit score. Once you've made all of the payments, the money is released to you. Credit builder loans are typically small (think around $1,000) and have short repayment times, usually just a year, so their sole intent is to help you build your credit.

Car loan

Financing a car using an auto loan can also help you build credit. Just like with any other loan, payments you make are reported to the credit bureaus. Getting an auto loan can also help your credit because a portion of your score is determined by your “credit mix,” and having an installment loan adds variety once you have a credit card.

Rental payments

You can arrange to have apartment rental payments reported to the credit bureaus. Some landlords report monthly rental payments to the credit bureaus automatically, but not all do. If your landlord doesn't, you can still have your rental payments reported through a third-party service. Some of the top ones are RentTrack and eRentPayment. Paying rent is something you'd have to do each month anyway, so you might as well use it to build your credit, too.

Final Thoughts

Getting a starter credit card and/or becoming an authorized user on a family member's or friend's account is the best approach to building credit at 18 years old. Just remember that having your own account requires more responsibility, as you'll be the one who has to pay the bills. If you don't, your credit score will suffer. When you're an authorized user, bill payments are the primary accountholder's responsibility. Because of that, authorized users can file a dispute with the credit bureaus to get negative information removed from their credit reports.

You can keep track of what's on your TransUnion credit report and check your latest credit score for free on WalletHub. You'll get personalized tips for how to build credit most efficiently, too.

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What is the best gas card to build credit?

Cameron DiGiovanni, Writer

The best gas card to build credit with is the Bank of America® Customized Cash Rewards Secured Credit Card. This card earns 3% cash back in a category of your choice, including gas. However, since this is a secured credit card, you'll need to put down a deposit of $200, at a minimum. The card accepts applicants even with bad credit.

Alternative Gas Card Option to Build Credit

If you have at least fair credit, you should consider the Shell Gas Card. The card has a $0 annual fee and it reports to the three major credit bureaus – TransUnion, Experian and Equifax – on a monthly basis. The Shell Gas Card also offers 10 ¢ per gallon every time you fill up. However, this card can only be used to make Shell purchases. 

Ultimately, there are a lot of great credit cards for gas on the market, so be sure to check out your options before applying.

How many credit cards should I have to build credit?

Milvionne Chery Copeland, Writer

You should have at least one credit card to build credit because owning a credit card is the easiest way to get a steady stream of positive information flowing into your credit reports each month, which will build your credit history. You don't even need to make purchases to benefit. Just having a credit card with no balance can allow you to build credit without the risk of accruing unmanageable debt.

As long as you have at least one credit card, the exact number of cards you have is not as important to your score as other factors such as credit utilization and on-time payments. However, having more than one card reporting good information like on-time payments to the credit bureaus can certainly help.

You can find out what adding more credit cards may do to your credit score by trying out WalletHub's credit score simulator. In addition, if you are having a tough time finding the right card, WalletHub's editors can help you out with their top picks for the best credit cards to build credit.

Best Credit Cards to Build Credit

• Best Overall: Capital One Platinum Credit Card
• Best Rewards: Capital One QuicksilverOne Cash Rewards Credit Card
• Best for Students: Bank of America® Unlimited Cash Rewards credit card for Students
• No Credit Check: OpenSky® Secured Visa® Credit Card

Once you have a credit card that you can use to build credit, you should keep track of how your credit score progresses. You can check your credit score for free on WalletHub.

How long does it take to build credit with a credit card?

Chip Lupo, Credit Card Writer

It can take as little as one to six months to build credit with a credit card, if you're building credit from scratch with a credit card that reports to the credit bureaus monthly. It will likely take more time to reach good or excellent credit, or to fully rebuild damaged credit.

Pinpointing how long it will take you to build credit with a credit card is not an exact science, as everyone's financial picture is different. But if you sign up for a free WalletHub account, you can use our credit score simulator to see how much your credit score is likely to change as a result of different actions. For a general timeline on how long that will take, refer to the examples below.

How Long It Takes to Build Credit with a Credit Card

• First Credit Score: It will likely take anywhere from one to six months to get a credit score for the first time after you open your first credit card account, depending on the scoring model and assuming you have no prior credit history.
• Good to Excellent Credit: Once you've received your first credit score, you will need to maintain a solid track record of responsible card use, typically for around three years to build a good credit score and five years for excellent credit.
• Rebuild Damaged Credit: It may take 18 months or more of sound account management to reverse credit damage due to things like missed payments.

What are the best credit cards for 18-year-olds to build credit?