How to Build Your Credit Score With a Credit Card

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By Cai Bradley
Updated on Thursday 17 August 2023

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Your credit report has a bearing on many important things, including what mortgages and loans you can take out, and even whether or not you're able to get a mobile phone contract.

People with a better credit score are considered to be what’s known as ‘creditworthy’, which essentially means that they are more likely to pay bills on time and are therefore eligible to take out credit with more competitive interest rates when they’re looking to borrow money.

Having a good credit score is therefore highly beneficial.

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One of the best ways to improve your credit score is by using a credit card sensibly, as the two are directly connected, but how exactly should you go about doing so?

Here’s a straightforward guide to using a credit card to improve your credit rating.

Remember to always use your credit card responsibly, paying on-time and in-full consistently.

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Improve your credit score with a credit card

Taking out a credit card and making small, regular payments on it responsibly is one of the most efficient and straightforward ways to build up your credit score in the UK.

When you use a credit card for the purpose of improving your credit score, you should always remember to:

  • Pay in-full and on-time

  • Beware of the potential dangers of using a credit card

  • Maintain a budget

  • Keep your balance low

Try to take out your credit card as early as you can afford to, because building a credit history takes time.

Having little or no credit history makes it difficult for lenders to assess your creditworthiness, and your credit score may then become lower as a result, despite the fact that you don’t necessarily have any negative factors on your report.

As a rule of thumb, using your credit card ‘little and often’ is the best way to build a positive credit history.

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Pay your credit card in-full and on-time

Being reliable and consistent with payments should be your priority when using a credit card to build up a credit history.

By paying your accounts on-time and in-full every month, lenders will be able to see that you’re a reliable borrower and can manage your credit responsibly.

Read more: The Lure of Credit

Credit utilisation

Credit utilisation refers to the percentage of your credit limit that you have used. For example, if you’ve got a credit limit of £3,500 and have used £1,750 of that, your credit utilisation would be 50%.

You should try to keep your percentage relatively low, as this is often seen as a positive to credit companies, which means that your credit rating will therefore increase.

One of the biggest credit reference agencies in the UK, Experian, suggest that you keep your credit utilisation at 25% for optimum results.

Why you should improve your credit score

Building a better credit score can benefit you in a number of ways, including:

  • You will be offered lower interest rates

  • You will get access to better offers

  • Your credit limit will increase

How long does it take to improve your credit score? It depends on a variety of factors, but it certainly isn’t something that happens overnight. For example, information about a new credit card can take up to three months to reach Experian, so you must be patient when attempting to build a better credit score.

Because it can take some time to improve your credit rating, you should start doing so as early as possible, but try to avoid applying for a loan or mortgage until your credit score is healthy.

If you apply for credit too soon and are rejected, your credit score will only be damaged further and you will find yourself in a difficult cycle to break.

The best ways to improve your credit score

There are many ways to improve your credit score, including:

  • Limit your credit applications

  • Close any unused accounts

  • Only borrow what you can afford

  • Register on the electoral roll

  • Cut ties with negative financial associates

Remember to stick to a budget when using a credit card and only ever borrow what you can comfortably afford to pay back – credit cards can lead to debt if not used sensibly, so be careful and understand what type of contract you’re agreeing to before taking one out.

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For more information on personal finance, credit or debt, be sure to browse our website and take a look at our related guides:

credit cards credit score credit history build credit score credit rating credit report

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