Building credit is a crucial aspect of financial health while living in the United States, especially in the ever-evolving economic landscape of 2025. Credit cards, when used wisely, can be powerful tools for improving your credit score. Here are 17 best ways to use a credit card to build up your credit and have a robust credit profile.
1. Build Up Your Credit by Paying Credit Card Bills on Time
When you use your credit card it helps you build your credit but timely payment of your credit card bills is fundamental. It demonstrates to lenders that you are reliable and can manage debt responsibly. Payment history makes up 35% of your FICO Score (the credit scoring model typically used by lenders) and 41% of your VantageScore.
Set up reminders or automate payments to ensure you never miss a due date. Always send in or make your payments well before the payment due date.
We always recommend paying off your credit card in full each month, since this can help you avoid interest charges and prevent your balance from getting out of hand.
2. Use Your Card Regularly to Build Up Your Credit
While you’ll want to avoid spending more on your new account than you can afford to pay off, you should make regular purchases on your credit card. That’s because issuers like to see that you’re using your credit card and not leaving it dormant.
If in case the bank found out that you are not using your card for quite sometimes they may close your account due to inactivity – which will shorten the length of credit history of your credit card account.
One such way to use your credit to build up credit while keeping your balance under control is to charge a small, recurring transaction to your credit card, like a monthly subscription.
3. Use Only the Credit You Need
Avoid the temptation to spend more just because you have a credit limit. Use your credit card for planned purchases and budgeted expenses at all times to avoid unnecessary debt. It is always wise to keep in mind that credit cards should only be used to purchase things that you must buy.
4. Become an Authorized User on Family Member’s Credit Card
Being added as an authorized user on a family member’s or friend’s credit card can help you build up your credit and you will benefit from their good credit habits, provided they use their credit responsibly. In such situations monitor your and your family member’s spending habits and keep them in track.
5. Keep Credit Card Utilization Percentage Low to Build Up Your Credit
Similar to keeping balances low, maintaining low credit utilization (the ratio of your credit card balances to your credit limits) signals to creditors that you manage credit well. Another trick here is to make frequent payments, doing so can help to lower your credit utilization ratio because it reduces the amount you owe. The less you owe towards your credit card, the lower the credit utilization percentage.
6. Pay Down Your Credit Card Debt to Build Up Your Credit
To pay down debt, you can use a debt repayment strategy like the snowball or avalanche method, or consolidate your debts. Reducing the overall amount you owe, not just on your credit cards but across all debts, will improve your credit score and your debt-to-income ratio.
7. Keep a Mix of Different Credit Account Types
Having a variety of credit types (e.g., credit cards, auto loans, and mortgages) can positively impact your credit score and helps you build up your credit faster, showing you can handle different types of credit. An ideal credit mix for you would include a variety of both revolving accounts and installment accounts.
8. Request a Credit Limit Increase
Another way to lower your credit utilization is to request a credit limit increase from the issuer. A higher credit limit can reduce your credit utilization ratio, provided you do not increase your spending proportionately. If your credit score has improved since you got your credit card, your chances of being approved for a higher limit may be better. Sometimes it is automatically raised by the credit card issuer or sometimes it is raised after you speak with a customer service agent.
You’ll have a better chance of being approved for a higher credit limit if:
- You’ve had your credit card for more than six months
- Your account is in good standing
- Your income has increased
- Your credit score has improved
9. Keep Your Accounts Open to Build Up Your Credit
The length of your credit history impacts your credit score. Keeping older credit card accounts open—even if you don’t use them often—can benefit your credit score and in truth helps you build up your credit in the coming years.
10. Finance Large Purchases to Build Up Your Credit Fast
For large purchases that you can pay off quickly, using a credit card can be beneficial. It can help build up your credit history faster. But this method is only advisable as long as you manage repayments effectively.
11. Monitor Your Transaction History
Regularly checking your transaction history can help you spot any fraudulent activity and ensure that all information is accurate. Quick detection of discrepancies can protect your credit score.
12. Choose the Right Credit Card
Select a credit card that suits your financial situation and offers benefits you will use. First choice should be to consider cards with lower interest rates and no annual fees before moving to cards with higher interest rates and annual fees if possible for you to qualify for them when are new to credit.
13. Role of Credit Utilization
It’s a good rule of thumb to keep your credit utilization ratio — the amount of debt you’re carrying relative to how much you can borrow — below 30%. Understanding the role of credit utilization in your credit score is crucial. It makes up a significant part of your credit score calculation, emphasizing the importance of managing it wisely.
Here is how to calculate your credit utilization ratio
To determine your utilization ratio, divide the amount of your credit card balance by the credit limit.
Credit card balance / Credit card limit = Credit utilization ratio
For example, if you’re carrying a $3,000 balance on a credit card that has a $5,000 credit limit, your credit utilization ratio will be 60%. To keep your credit utilization within the recommended amount, you should keep that balance below $1,500.
14. Limit New Credit Card Applications to Build Up Your Credit
Length of credit history makes up 15% of your FICO Score. Part of this is the average age of all your credit accounts, which goes down every time you apply for a new one. Each time you apply for a credit card, it can cause a small, temporary drop in your credit score. This is categorized as a hard inquiry on your credit report. This can knock your credit score down by 5 to 10 points each time it occurs and remain on your credit report for two years.
Apply for new credit sparingly, especially if you are building your credit.
15. Check Your Credit Report
Regularly reviewing your credit report allows you to understand your credit status and identify areas for improvement. It also helps in catching and addressing any inaccuracies or fraudulent activities.
16. Dispute Credit Report Errors
If you find errors on your credit report, dispute them promptly with the credit bureau. Correcting errors can improve your credit score.
17. Take Out a Credit Builder Loan
A credit builder loan is designed to help people build credit. The money you borrow is held by the lender in a bank account while you make payments. Once the loan is fully paid, you get access to the funds.
Summary
Using a credit card wisely is key to building a good credit score in 2025. By implementing strategies such as paying bills on time, keeping balances low, and wisely managing credit applications, you can enhance your creditworthiness.
Frequently Asked Questions
Q1: How often should I use my credit card to build credit?
A1: Use your credit card regularly but sparingly. Small, manageable amounts that you can pay off in full each month are ideal.
Q2: Is it better to pay off my credit card balance in full or carry a small balance?
A2: It is generally better to pay off your balance in full each month to avoid interest charges and demonstrate good credit management.
Q3: How many credit cards should I have to build credit?
A3: The ideal number varies by individual. However, managing one to three cards effectively is often sufficient to build a good credit score without becoming overwhelming.
By following these strategies, you can use credit cards as effective tools to build and maintain a strong credit score in 2025.