Does a credit card build credit?

Yes, a credit card does build credit. Credit cards report account information to the major credit bureaus on a monthly basis, which will gradually build your credit history and improve your credit score if you pay the bills on time or just keep the account in good standing with a $0 balance.

Tips for Building Credit with a Credit Card

Pay Your Balance on Time and in Full

Paying your bills on time is the most important factor in building credit. Payment history makes up 35-40% of your credit score, and late payments can hurt your score for up to seven years. Fortunately, credit card companies don’t report late payments until you’re at least 30 days past-due. So if you miss a due date, make up the minimum payment as soon as possible.

You can set up autopay to avoid missing a due date. You can choose to pay the minimum amount due, the full balance or a custom amount. It’s best to pay off your balance in full every month if possible. This can help you avoid interest and keep your credit utilization low.

Keep Your Credit Utilization Low              

Keeping a low balance in relation to your credit limit is important to building credit, as your credit utilization ratio accounts for about 20% of your score. Low utilization is better for your credit, so try not to use your credit card more than you need to, especially if you have a lower limit. You should keep your utilization below 30%, and be sure to know what your credit limit is so that you can stay within this range.

One way to keep your balance low is to make payments more frequently than necessary. In addition to paying off your monthly statement in full, you can make another payment before your statement period ends to lower the balance that will appear on your report.

Limit Your Applications for Credit             

The length of your credit history and the number of credit lines you’ve opened recently affect your credit score. In fact, new credit makes up 5-10% of your score. If you submit lots of applications in a short period of time, this can negatively impact your score by making you seem overly reliant on credit. However, if you keep accounts open for longer, you’ll look more responsible to lenders.

You can determine if you’re likely to be approved for a credit card by getting pre-qualified. You should only apply for cards you’re likely to get, only apply for one card at a time, and wait at least six months between applications, regardless of whether you are approved or denied.

Monitor Your Statements and Credit Report

It can help to check your credit card statements regularly to ensure that you can pay off the balance and that you’re staying well below your limit. Plus, this is a good way to spot fraudulent transactions that can harm your credit.

You can also track your progress and look for errors by monitoring your credit and checking your credit report and score for free on WalletHub.

Find the Best Card for Your Needs

There are many cards designed to help consumers build credit. You can also build credit by becoming an authorized user on someone else’s credit card, though the benefits will depend on whether the primary cardholder pays on time.

Best Credit Cards for Building Credit in 2025