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The Best Way to Build Credit With a Credit Card

If used correctly, credit cards can be a useful tool to help build credit.

Justin Cupler

Contributing Writer at Tally

October 20, 2022

Credit cards often have a bad stigma surrounding them. Perhaps it's the fact that some have high annual percentage rates or that it can be challenging to get out of debt once you have a balance. 

But what if we told you that credit cards can be a good thing when used wisely, especially if you want to build credit? 

Let’s go over the best way to build credit with a credit card. We’ll start by outlining:

  • What credit is 

  • Why credit is important

  • The factors that go into your credit score 

  • How to build credit with a credit card 

By the end of this article, you’ll better understand how you can use cards to build good credit. 

What is credit? 

Credit is “the ability to borrow money or access goods or services with the understanding that you'll pay later," according to the credit bureau Experian. Essentially, when you apply to borrow money, your lender will review your credit report and score to determine whether you're worthy of lending money. 

Your creditworthiness is reflected in three different ways: 

  • Your credit report: a file containing your open financial accounts and the status of each

  • Your credit history: a synopsis of your old accounts, current accounts and payment history

  • Your credit score: a three-digit number that quickly conveys your creditworthiness to lenders

Lenders will evaluate your credit any time you plan to borrow money, including things like: 

  • Credit card accounts

  • Student loans 

  • Mortgages

  • Auto loans 

  • Other types of loans 

  • Lines of credit 

The way you treat your credit now will directly impact your personal finances in the future. 

Why is credit important? 

Credit impacts your ability to secure future loans. If you have a good credit score or history, lenders are more likely to trust you with their money. Though it's not an exact science, a strong credit score indicates your likelihood to make monthly payments on time and in full. 

Because of this, lenders may extend you better terms. You may have more time to repay a loan, or a loan may come with a lower interest rate.

The opposite is true for borrowers with bad credit scores. If you have a low score, lenders may be wary of loaning you money. In a lender's eyes, a low credit score means there’s a greater chance you’ll miss due dates or won’t make minimum payments. 

The higher your interest rate, the more you’re going to have to pay to borrow money from a lender. When applied to big-ticket items like a mortgage, interest rate quickly makes an impact. Depending on your interest rate, you could end up saving or having to pay thousands of dollars more. 

What goes into a credit score? 

Now that you have a better understanding of why credit is so important, let's look at how it works. There are two types of credit scores:

  • FICO® Score 

  • VantageScore 

To create a score, each will take the information provided by the three major credit bureaus:

When compiling a credit score, FICO Scores and VantageScores emphasize different things. FICO, for instance, assigns the following weights to your credit information: 

  • Payment history = 35% 

  • Amounts owed = 30% 

  • Length of credit history = 15% 

  • Credit mix = 10% 

  • New credit = 10% 

VantageScore doesn't necessarily assign percentages to its scores, but it does weigh certain things more than others: 

  • Extremely influential: Total credit usage, balance and available credit

  • Highly influential: Credit mix and usage

  • Moderately influential: Payment history 

  • Less influential: Age of credit history

  • Less influential: New accounts opened 

This means that one of the best ways to build credit is to pay your statement on time and in full. At the very least, make the minimum required payment by the due date. Missed payments or late payments can both wreak havoc on your credit score.

If you're able to pay your balance in full, you increase your available credit. This is a total sum of the amount that all of your issuers combined have allowed you to borrow, otherwise known as your credit limit. If you use less of your available credit, you’ll decrease your credit utilization ratio. This will ultimately help build your credit score.

Can you use a credit card to build credit? 

When you consider that the best way to build credit is to make payments in full on time, you realize that it’s entirely possible to build an excellent credit score with a credit card. 

You might see positive changes on your credit report if you:

  • Use the credit cards regularly.

  • Only use a small portion of your credit limit. 

  • Pay in full and on time.

Your credit card issuer reports this data back to the credit bureaus. Note that it takes roughly 30 days for information from your credit account to make it onto your credit report. Building credit requires patience and persistence, as you’ll likely not see drastic changes after the first 30 days. But, regularly practicing good habits and using your credit card responsibly can help you build your credit. 

This brings about one of the potential downsides of using credit cards to build credit. With a credit card, you have access to money that isn't yours. You’re borrowing money with the notion that you'll pay it back later. If you have a $10,000 credit limit on your card, you can make an extravagant purchase, even if you only have $100 in your bank account. 

So, it's important to practice fiscal responsibility when using a credit card. 


What are the best ways to build credit with a credit card? 

Now that we know it's possible to build credit with a credit card, let's take a closer look at some of the strategies you can use to do so. We've already stressed that you should repay your balance in full every month, but some other methods can accelerate how quickly your score grows. 

Paying off existing debt 

If you already have debt on a credit card, you may not be able to pay off your balance in full—and that's OK. But, chipping away at your credit card balance can help you build credit. Consider the debt avalanche and snowball strategies or look into a credit card payoff app like Tally†. You’ll increase your available credit and decrease your credit utilization ratio. 

Becoming an authorized user on a card 

If you haven’t opened a credit card account before or don't think you have good enough credit to do so, you can try to get yourself added as an authorized user on someone’s credit card. The primary cardholder will have to add you, at which point you'll receive a card. 

As an authorized user, you aren’t responsible for paying the bill. However, the card history links to your credit report. If the primary cardholder makes on-time payments, your credit can be positively affected. 

Because the primary cardholder is responsible for making the payments, it should be someone you trust, like a family member or spouse. If they miss payments, it’ll reflect negatively on your credit report and will harm your score. 

Opening a secured credit card 

A secured credit card allows you to put down a security deposit that essentially becomes the line of credit for the card. So, if you put down a $5,000 deposit, you’ll have a $5,000 spending limit on the card. Secured credit cards are designed specifically for those with little or no credit and are easier to obtain than unsecured credit cards. 

Monitoring your credit reports 

Your credit report may not always be completely accurate. Credit card companies may send incorrect information, or there may be fraudulent transactions or accounts opened in your name, which can bring down your score. 

Monitor your credit file to ensure the information is accurate. You can receive a free copy of your report from You can also use your report to receive free credit score updates as well. You should perform a credit check at least once a year, if not more. 

Start building your credit today 

If you’re looking to build credit, a credit card might help. If you use a credit card to build credit, you should manage it responsibly. Only spend what you can afford to pay off at the end of the month. Consistently doing this can demonstrate fiscal responsibility to creditors and help improve your score. 

If you have credit card debt and want to get your finances in order, check out the Tally credit card payoff app. Tally offers numerous perks, such as the ability to manage due dates so that you make payments on time. Using Tally can help you pay down existing debt quickly and efficiently.

To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 to $300.