Using a Credit Card to Raise Your Credit Score


Raising your credit score requires diligence, but we have a neat credit-building trick that requires little time and no upkeep. While it’s important to make punctual payments and stay below your limit, establishing credit doesn’t have to consume your life. Here’s a cost-free, time-efficient technique for increasing your FICO score.

Why your credit score is lower than it should be

First, you’ll need to understand two of the most influential factors impacting your credit score: amounts owed and length of credit history.

Simply enough, amounts owed means debt. High credit card debt has a negative impact on your credit score. That doesn’t mean stop using your credit card—making regular payments is one of the best ways to build creditworthiness. Just don’t let your spending get out of hand.

Everyone tells you to avoid credit card debt so you don’t earn interest. But even if you pay off your card every month, high spending can hurt your credit score. High spending raises your “debt utilization ratio,” or the ratio of your balance compared to your overall credit limit. It scares lenders if you’re consistently on the verge of exceeding your limit, and ideally you’ll want to stay below 30%. This gets tricky—and oftentimes impractical—if you have a low credit ceiling. With a $500 limit, you theoretically wouldn’t want to charge more than $150 at a time, even if you consistently pay it off.

The length of your credit history takes into consideration the age of your accounts. The older your accounts, the more reputable you seem. Account age demonstrates your experience and your fiscal responsibility. Much like people, old accounts are respected and rewarded, while young accounts are looked upon with a little trepidation.

A simple solution for better credit

The best way to lift a sagging credit score is to get a secured credit card, like the Capital One® Secured MasterCard®. Since you’re probably not going to get approved for a normal credit card, the most consumer friendly alternative is to put a deposit of $250-300 upfront to get a credit line via a secured card, and prove to the bank that you can pay down the new balances you rack up on a monthly basis.

Within 6-9 months of paying off your card regularly, you’ll see your credit score rise dramatically, and you can request a normal credit card and get your deposit back. The key here is to pick a card with the lowest annual fee possible – we think $29 from the Capital One® Secured MasterCard® is quite reasonable.

Capital One® Secured MasterCard®
Capital One Secured MasterCard Credit Card
Apply Now

on Capital One's
secure website

  • Build credit with responsible use with no processing or application fees
  • Regular reporting to the 3 major credit bureaus
  • Get free access to a credit score, credit report, and credit tips using Credit Tracker
  • Your security deposit can get you a line up to $3,000
  • You may qualify for a credit line increase based on your payment history and creditworthiness
  • Build a financial foundation you can stand on with a card that gets you started
  • Use it like any MasterCard credit card, accepted at millions of locations worldwide
  • Qualify with limited / bad credit
  • No foreign transaction fee
  • Has annual fee
  • No rewards
  • High APR
Annual Fee Signup Bonus APR , Variable* APR Promotions
$29 None 22.9% (V) Purchase: None
Transfer: None

If you already have fair credit

If your credit is average or fair, you may be able to stretch for a regular credit card.

Two options for people with average credit are the Barclaycard® Rewards MasterCard® and the Capital One® QuicksilverOneSM Cash Rewards Credit Card. We prefer the Barclaycard® Rewards MasterCard® even though the rewards program is less attractive (you get points instead of cash), because the card doest not have an annual fee.

Barclaycard® Rewards MasterCard®Capital One® QuicksilverOneSM Cash Rewards Credit Card
Barclays Rewards MasterCard - Average Credit Credit Card
Apply Now

on Barclays's
secure website

Capital One Cash Credit Card Rewards Average Credit Credit Card
Apply Now

on Capital One's
secure website

Signing Promo
Earn 2 points per $1 on gas, grocery, and utility purchasesEarn unlimited 1.5% cash back on every purchase, every day.
Intro APR Promo
Bal Trans:N/A
0% on purchases until January 2015
Annual fee
  • Earn 2 points per $1 on gas, grocery, and utility purchases
  • Earn 1 points per $1 everywhere else
  • No annual fee
  • Use the points you earn like cash to pay for almost any purchases you've made.
  • No blackout date, no redemption fees, no limit on the points you can earn and no complicated set up.
  • Reports to all 3 major credit bureaus monthly providing you the opportunity to rebuild your credit score
  • Complimentary FICO® Scores as a benefit to active cardmembers. Opt-in to have instant and convenient access to FICO® Scores from your Barclaycard online account.
  • Earn unlimited 1.5% cash back on every purchase, every day
  • No rotating categories and no sign ups needed to earn cash rewards
  • Redeem the cash back you earn for any amount, any time
  • No limit to the cash back you can earn
  • Your cash back doesn't expire
  • 0% intro APR on purchases until January 2015
  • Get access to a higher credit line after making your first 5 monthly payments on time
  • Fraud Coverage if your card is ever lost or stolen

No-fee credit cards require little time and little effort and can lower your debt ratio while lengthening your average account age. Before we proceed, a word of warning: Do NOT apply for a ton of credit cards all at once. Lenders find rapid expansion of your credit limit a little suspicious. Every time a lender asks about your credit history, your score gets dinged. Plus, a bunch of brand-new accounts will lower your average account age significantly, which is the exact opposite of what you’re trying to achieve. Get one card now, and wait awhile before you consider another.

Credit cards with no annual fees are great because they cost nothing to maintain. You can keep an account open even if you never actually use the card for purchases. Signing up boosts your overall credit limit, which in turn lowers your debt ratio (assuming you continue your regular spending habits). And once you have the card, you can keep it open indefinitely at no penalty, increasing the average age of your accounts.

There are a lot of free credit cards available for a variety of credit scores. If you already have a good rewards credit card and are looking for a supplement, you may want to make your decision based on the signing bonus. There’s no sense in looking at the rewards rate or APR if you’re not going to actually use your new no-fee card for an extended period of time. We recommend you find a high signing bonus, spend a couple months earning your cash and, bonus in pocket, revert back to your card of choice. Then you can stash away the new card and let it age.

When you apply, make sure that your debt utilization ratio is pretty low – for example, when you’ve just paid off your credit card bill.

Check out our list of no annual fee credit cards to get started, or check your credit score for free by signing up for GoFreeCredit’s PrivacyGuard and cancelling during the 30-day grace period.

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  • CSHopeful

    Hi Anisha / NerdWallet,

    I have a $500 limit unsecured credit card. I charge everything, I mean everything to it. Monthly charges total more than $700. However, I do pay my balances in full weekly or bi-weekly. Per your article above, is that going to be a problem?

    • NerdWallet

      Hey CSHopeful-

      You won’t hurt your credit if you pay your balance in full every month – in fact, they’ll want to see responsible credit card use. But when you try to apply for a new card or loan, make sure to pay off your balance completely so that it doesn’t look like you’re brushing up against your limit (even if you normally do).

      Hope this helps!

  • Joe

    Question I just got a Discover It card with a $0 annual fee and had previously been using a First Premier Bank card i got when my credit score was low and could not get a decent card before. Now that i have built my credit up a bit i got my discover card which I would like to keep as my current card of use since there is a 0 dollar annual fee. But my First Premier Bank card does have a hefty annual fee that i have already payed off at least until August this year before i got my new card. So my question is do i keep both accounts open and only use my Discover card? keeping my other card at a balance of $0 each month at least until before August when my next fee would roll around and then cancel it before i have to make the annul fee on it. Would this help my credit having 2 cards open and only using one of them? Do i have to use both cards to have the benefits for my credit? Or would my best option be use both cards when needed keeping both current balances far from reaching my total available credit for the month and then paying both cards current balance off in total before the next billing period so i would not have to pay any interest on the outstanding balance?…. I am new to this and would really like some quality advice thank you.