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15 Credit Card Strategies You Can Use to Improve Your Credit

Author: Christy Bieber | September 25, 2021

Hands holding cell phone showing credit score of 752.

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Credit cards can help you earn a good credit score

Your credit score is crucially important to many aspects of your financial life. A good credit score shows landlords and other companies that you're someone they can trust, so they'll want to do business with you. It also makes it affordable to borrow for big purchases, such as cars or homes.

Credit cards can help you to earn a good credit score, but only if you use them wisely. Here are 15 strategies you can use to help you use your cards as a credit-building tool.

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Person lying on floor is looking at credit card while using laptop.

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1. Apply for a secured card

In order to build credit, you must find someone willing to give you access to credit. That's because you need to borrow money to show you can responsibly pay it back.

Often, it's difficult to get a creditor to make your very first loan to you when you have no credit history. Secured credit cards can be the answer to this dilemma. Secured cards require you to deposit collateral equal to your credit line, so there's no risk to the lender and almost anyone can get one.

Once you've been approved for a secured card, you can start using it to make small purchases you pay off. This enables you to build a positive payment history, which is the most important factor in determining your credit score.

ALSO READ: What Is a Secured Card?

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2. Make sure your card company reports to the credit reporting agencies

Your credit score is determined based on information found in your credit report. There are three major credit reporting agencies: Equifax, Experian, or TransUnion.

If you're trying to build credit using a credit card, make sure you ask the card issuer if they report to each of these agencies. If they don't, you won't get the benefits the card offers in terms of improving your score, so you should look for a different card.

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3. Get a cosigner to help you get a card

If you can't qualify for a credit card on your own, you could ask someone with a stronger credit history (or higher income) to cosign for the card for you.

This may be an especially effective strategy for college students trying to build credit, as the CARD Act makes it more difficult for young people to get approved for a card without a cosigner.

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4. Become an authorized user

One of the fastest ways to use credit cards as a tool to improve your credit score is to ask someone with great credit to add you as an authorized user to one of their cards.

If someone adds you as an authorized user, the credit card shows up on your credit history. You'll get credit for their positive payment history, and this can help you to quickly improve your score.

As an authorized user, you'd be allowed to make charges on the card but would have no legal responsibility for repayment. So make sure you don't abuse the trust of the person who does you this favor.

ALSO READ: How Authorized-User Status Can Help -- or Hurt -- Your Credit

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5. Limit what you charge on your cards

Credit utilization ratio is one of the most important determining factors in your credit score. It refers to the ratio of credit used versus credit available.

If this ratio is above 30%, this will hurt your credit score. And the higher the ratio, the more damage it does. If you're trying to use your cards as a credit building tool, avoid maxing them out and keep your utilization ratio as low as possible by limiting how much you charge.

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6. Request credit line increases

Limiting the amount you charge is one way to maintain a low credit utilization ratio. You can also aim to increase your credit line.

Many card companies allow you to request periodic credit line increases -- often without having to get your credit checked again. Whenever you have the opportunity, request one of these credit line increases.

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7. Know when your card company reports your balance

Credit card companies report your credit use to the reporting agencies at a specific time. Sometimes, this happens before you pay off your balance in full.

If that's the case, you may have a large amount of outstanding debt reported even if you pay your balance down to $0 each month. If you can find out when your company reports your balance, you can make sure you pay off the bill before that happens so you don't adversely impact your credit ratio.

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8. Avoid opening too many cards at one time

Having multiple credit cards open isn't a bad thing. In fact, if you have a lot of cards, you can help your credit utilization ratio because you'll have a lot of available credit.

However, you don't want to open too many cards at one time. When you open a new card, you will get a credit inquiry on your record and it will stay there for two years. Too many inquiries can reduce your credit score, so pace yourself in applying for new credit.

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9. Don't apply for credit cards right before getting a big loan

Opening a new credit card can cause a temporary drop in your score both because of the inquiry and because it reduces the average age of your credit. The length of your credit history is another factor that helps determine your score, and a longer history leads to a higher score.

As a result, be strategic about when you apply for new credit cards. If you're going to be getting a mortgage, car loan, or other large loan soon, don't apply for a new card within a year or two of the time you borrow a lot.

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10. Make regular small purchases

If you're nervous about using credit cards a lot, the good news is that you don't have to carry a large balance in order to use cards to build credit.

One simple strategy could involve simply charging one small, fixed item to your credit card each month (such as charging your streaming service).

You could set up autopay for that amount so your card would help you to effortlessly build a positive payment history without any intervention on your part.

ALSO READ: Want to Build Credit Using Cards but Worried About Getting Into Debt? Try This Trick

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11. Set up automatic payments

Missing even a single payment could do serious damage to your credit score -- which is definitely not what you want if you're trying to use credit cards to build credit.

To make sure you don't ever make this mistake, set up automatic payments to ensure you pay at least the minimum on all your cards.

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12. Never close old credit cards

If you have credit cards you're no longer using, keep them open anyway.

Closing them could mean losing the credit they have available, which damages your utilization ratio. And you'd lose the record of the account, thus shortening the average age of credit.

Make sure to charge something on them every once in a while to avoid having your card issuer close them for you.

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13. Take advantage of credit-building tools

Many card companies offer you free tools to help you build your credit, such as the ability to access your report and score. This is especially true of student cards or secured cards.

Take advantage of these tools so you can track your progress and see how your score is improving over time.

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14. Consider writing a goodwill letter to remove late payments

If one of your credit card companies is reporting a late payment, consider asking them if they would do you the favor of removing it from your credit record.

If you've been a good customer, they may be willing to do that for you. This step alone could make a huge difference in improving your credit score.

ALSO READ: How Writing a Goodwill Letter Could Help Improve Your Credit Score

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15. Make sure cards are one of several types of debt you take on

While credit cards are a good tool to build credit, they can't be the only one that you use. That's because your score is improved if you have a mix of different kinds of debt, such as revolving loans and installment loans like mortgages or personal loans.

Aim to have a good mix of different kinds of credit if you want the highest score possible.

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Smiling person sitting at laptop looking at camera and holding credit card.

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Start building credit today

Just like saving for retirement or other big financial goals, building credit is a process that takes time. Start following these 15 steps today, though, and you'll be well on your way to earning the credit score you deserve.

The Motley Fool has a disclosure policy.

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