One of the biggest advantages of using a credit card is the opportunity to build your credit, but it’s more complicated than simply using your card and paying your bill. What card you choose, your credit limit, how much you spend, and a host of other factors can all influence your credit.

Here’s what you need to know about how to build credit with your credit card:

If You Don’t Have a Credit Card, Apply for One

Choosing the right card can be difficult, considering how many options are available. While you’re researching and comparing cards, it’s important to think about how you’ll actually use the card.

• Is it a good fit for your typical monthly spending and financial needs?
• Does the card come with a bunch of hidden fees that you’ll have to pay?
• Do you need a card with a low interest rate?
• Does the rewards program include options you’ll actually use?
• Does the card come with security and fraud mitigation features?

If you’re too young to get a credit card right now, you can still start building credit by being added as an authorized user on someone else’s account. You’ll receive a credit card that’s connected to their account but has your name on it. You can use that card to make purchases, but the primary account holder is still the one who will be making payments. As long as that person has a good credit history and pays their bill on time every month, your credit will benefit. This won’t let you build credit as quickly as having your own card, but it’s a helpful starting point.

Use Your Credit Card Every Month

If you have a credit card but never use it, you’ll still slowly build your credit. So having a card you don’t use is still better for your credit than having no card at all.

Still, a much faster way to build your credit is to use your card regularly. The trick is to be purposeful about how you use it. Here are some tips:

• Keep your credit utilization ratio low by using less than 30% of your credit limit.
• Make sure you don’t spend more than you’ll be able to pay for when your credit card bill comes.
• Pay off your balance every month.

Pay Your Bill on Time Every Month

Your payment history is the single most important factor when it comes to your overall credit score. Not only that, but paying your full balance (and not just the minimum amount due) will save you from unnecessary interest expenses.

Some people prefer to set up automatic monthly payments from a bank account. As long as you know you’ll always have enough in that account to cover your payments, this can be a great way to avoid missing the due date and save yourself the hassle of remembering to pay every month.

Pay off Existing Credit Card Debt

If you currently have credit card debt, paying it off is one of the best ways to build your credit score.

If you only have a small amount of credit card debt, a well-planned budget and payment schedule might be all you need. If you have several types of debt, debt consolidation can be a straightforward and effective way to get back on track.

At Valley Credit Union, we’re always happy to help our members develop a plan for reducing and even eliminating credit card debt.

Check on Your Credit History Periodically

Even if you know you’re doing everything right, it’s still worthwhile to check on your credit history every now and then to make sure the information is accurate. Correcting inaccurate information can improve your credit.

Here’s how to do it:

• You can get a free credit report from each of the three major credit reporting agencies every 12 months by requesting one at www.annualcreditreport.com.
• Read over your report to make sure there are no errors.
• If you see any mistakes or fraudulent activity, file a dispute to get them removed.

Have you considered a credit union credit card?

Credit union credit cards often come with money-saving perks and features that other cards don’t have. If you’re not a member of a credit union, you may want to consider joining one in your area.

At Valley Credit Union in Salem, OR, our credit card is a great option that’s designed to help you save money and build your credit. We also offer great security benefits and an amazing rewards program.

If you have questions about building your credit or applying for a credit card with Valley Credit Union, we’re here to help. Contact us today!

About the Author

 Justin Roberts, Vice President of Lending

Justin Roberts is our Vice President of Lending and has been in the financial industry for over 18 years. He is an Oregon State University Graduate and has just completed Western CUNA Management School. When he is not focused on helping the members at Valley, you will find him coaching his two sons and volunteering his time to help develop the youth in our communities through sports.