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Building your credit score with a credit card is an effective and quick way to establish or improve your score. But the speed at which you can build your credit score depends on a few factors.
Building your credit score takes time. You need to show responsible credit behavior for months (or years) to see significant improvements in your credit score. That said, using a credit card wisely can speed up this process. Here’s how.
What goes into your credit score?
Credit scores range from 300 to 850. A FICO credit score between 670 and 739 is considered a good credit score, while any score between 740 and 799 is considered very good. Scores above 800 are considered excellent. The average FICO credit score in the U.S. is 716.
With a good score, you’ll likely qualify for loans and credit cards with favorable terms, such as lower interest rates and higher credit limits.
“To function in today’s society, one must have access to credit,” says Lamar Brabham, founder of Noel Taylor Agency Financial Services. “Otherwise, buying a house, a car, or attending a four-year college would be out of the reach of most people.”
If your score is lower, you may face higher interest rates or less favorable terms on loans or credit cards. Or, you may not qualify at all.
Here’s what goes into your credit score.
- Payment history plays a significant role in determining your credit score. It makes up as much as 30% of your score. Lenders want to see if you consistently make on-time payments on your credit cards or other loans. Late payments can negatively impact your score, so paying your bills promptly is vital.
- Credit utilization refers to the percentage of your available credit you’re currently using. Maintaining a low credit utilization ratio, ideally below 30%, demonstrates responsible credit management. Using too much available credit can signal financial stress and may lower your credit score.
- The length of your credit history is another factor. Lenders prefer borrowers with a long credit history, as it gives them more data to assess their creditworthiness. If you’re just starting, be patient and focus on building a positive credit history over time.
- Types of credit used also impact your credit score. Having a mix of credit accounts, such as credit cards, loans, or a mortgage, can be beneficial. It shows you can handle different types of credit responsibly. But it’s essential only to take on the credit you can manage comfortably.
- Credit inquiries, both hard and soft, contribute to your credit score. Hard inquiries occur when you apply for credit; too many within a short period can signal increased risk. Soft inquiries occur when you check your own credit or when lenders pre-approve you for offers.
How long does it take to build credit from scratch?
Building credit from scratch requires time and consistent credit behavior. While there is no fixed timeline, establishing a credit history and building a credit score typically takes around six months to a year.
If you’re starting entirely from ground zero, open a secured credit card.
A secured credit card works like a regular credit card, except it requires a cash deposit as collateral, which serves as your credit limit. Let’s say you get a secured card with a $500 deposit. That means your credit limit is $500. This deposit makes qualifying for a secured card easier, even if you don’t have a credit score. If you don’t make payments, your lender can take what you owe from your security deposit.
Using the card responsibly — i.e., making small purchases and paying off the balance in full each month — shows creditworthiness. This allows you to establish a positive payment history and build a credit foundation.
| Did you know? In the past year, tightening lending standards has made it harder to qualify for a credit card. But, there are still ways to improve your odds of getting approved. |
You can also become an authorized user on someone else’s credit card. You’ll get your own card connected to the primary cardholder’s account and be able to make purchases. The primary cardholder is responsible for making the payments each month, but those payments are also recorded on your credit report, helping you build a score.
Lastly, consider a credit builder loan. Unlike traditional loans, where you receive the funds upfront, with a credit builder loan, the borrowed amount is held in a separate account while you make regular payments towards the loan. These payments are reported to credit bureaus, helping to establish a positive payment history and build credit.
Secured credit cards to help you build credit
The best secured credit cards won’t charge your annual fees and make building or repairing your credit easier. In some cases, you’ll even be able to earn rewards. Keep in mind that secured credit cards often have higher interest rates.
Capital One Platinum Secured Credit Card: While you won’t earn rewards, you can build your score with a deposit as low as $49. After six months, you may be eligible for an increased credit limit, which can boost your score even more. You also may be able to earn your original deposit back as a statement credit after a period of regular, on-time payments.
Minimum security deposit: $49
Annual fee: None
APR: Above average
Capital One Quicksilver Secured Cash Rewards Card: This card offers some of the best cash back rewards for a secured credit card. You’ll earn 1.5% cash back on every purchase, including 5% unlimited cash back on hotels and rental cars booked through Capital One Travel. After six months of on-time card payments, you may be eligible to increase your credit limit. Like the Capital One secured card, you can earn your deposit back as a statement credit after responsible credit card use.
Minimum security deposit: $200
Annual fee: $0
APR: Above average
Chime® Credit Builder Secured Visa Credit Card: Unlike other secured cards, Chime doesn’t check your credit when you apply. You also won’t pay an annual fee or any interest. The catch? Your credit limit is the money you’ve deposited in a Chime checking account, with a minimum of $200. Because you can’t spend more than your deposit, you’ll never carry a balance on your card, and you’ll never pay interest.
Minimum security deposit: $200
Annual fee: $0
APR: None
Here’s how to pick the best first credit card for you.
How long does it take to increase your credit score?
You may already have a credit score, but it needs some work. How long will it take to improve it?
The short answer — it depends. It’s based on your current score, your credit history, and the steps you take to improve it. Improving your credit score is a gradual process that requires consistent effort and responsible behavior.
If you have a low credit score, seeing noticeable improvements may take several months to a year. Even if you have a bad score, you may still be able to qualify for a credit card and use it to build your credit.
The timeline may be shorter if you already have a good credit score and want to increase it further. You can build a better credit score by making on-time payments, keeping your credit utilization low, and maintaining a positive credit history.
How to boost your score quickly
While building a solid credit score takes time, there are some ways to boost your score quickly.
- Pay your monthly bills on time: Payment history is crucial in determining your credit score. Making timely payments on all your credit accounts, including credit cards, loans, and utilities, can have a positive impact. Set up reminders or automatic payments to ensure you don’t miss any due dates.
- Avoid late payments: Late payments can reduce your credit score by 100 points. A payment is considered late and reported to the credit bureaus if it’s 30 days past your due date. So even if your payment is two weeks late, pay that bill immediately. You might still get hit with a late fee from your lender or credit card provider, but your credit score won’t take a tumble.
- Keep your credit utilization ratio low: High card balances can negatively affect your credit utilization ratio. Aim to keep your credit utilization below 30% to show responsible credit management. Paying down your credit card balances can help improve your credit score.
- Avoid opening new credit accounts: Opening many new credit accounts within a short period is a red flag to lenders. Each new credit application results in a hard inquiry on your credit report, which can temporarily lower your score. Minimize new credit inquiries, especially if you’re actively working on improving your score.
The bottom line
Building credit is a long-term process, and there are no shortcuts to achieving a strong credit score. However, using a credit card responsibly can help you establish a positive credit history and improve your creditworthiness over time.
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