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Using a credit card to build your credit score

How a credit card can build your credit score

Victoria Russell
Written by  Victoria Russell
5 min read
Updated: 28 Feb 2024

Looking to improve your credit score but not sure where to start? This guide explains how finding the right credit card can help increase your credit rating

Key takeaways

  • A higher credit score leads to better loan terms and lower interest rates

  • There are cards specifically designed to help build your credit score

  • Irresponsible use (missed payments, maxing out) can lower your score so be sure to manage your credit card responsibly

  • Check linked accounts (joint accounts affect your score)

Lady using a credit card

The importance of a strong credit score

A good credit score is the cornerstone of your financial profile. It influences not only the likelihood of being approved for borrowing money but also the amount you can borrow and the interest rate you'll be charged. A higher credit score signals to lenders that you're a responsible borrower, which can lead to more favourable loan terms and lower interest rates. This can save you significant amounts of money over time, especially on long-term loans like mortgages.

The role of financial service providers

Providers of mortgages, loans, credit cards and even mobile phone contracts will all check your credit score before offering you a deal. Bad credit can also effect your car finance deal, so the better you handle your finances (and the higher your credit score), the easier and cheaper it is to function in day-to-day life in the UK. 

Building your credit score with a credit card

One of the most effective tools for building your credit score is a credit card. When used wisely, it can significantly enhance your creditworthiness. Here are some best practices for using a credit card to build your score:

  • Paying off the balance on time: Ensure you never miss a payment by setting up a direct debit for at least the minimum payment due each month.

  • Paying off the balance in full: If possible, clear the entire balance monthly to avoid paying interest.

  • Not exceeding your credit limit: Stay well within your credit limit to avoid fees and negative impacts on your credit score.

  • Only using a portion of your available credit: Aim to use less than 30% of your credit limit to show lenders you're not overly reliant on credit.

Choosing the right credit card for building credit

Any credit card can be a vehicle for improving your credit score, provided it's used responsibly. However, there are cards specifically designed for this purpose:

  • Credit builder cards: These typically have low credit limits and high APRs, encouraging you to borrow small amounts each month and pay back in full.

  • Credit cards for bad credit: These are aimed at those with poor or no credit history who need quick lending access.

  • Balance transfer credit cards: Allow you to consolidate debts and give you breathing room through extended interest-free periods.

Before applying for a card, it's wise to use our credit card eligibility checker to see your likelihood of approval and where you're pre-approved, which can prevent unnecessary hard inquiries on your credit report.

Can a credit card reduce my credit score?

Simply having a credit card does not reduce your credit score. However, lenders do take into account your existing debt when considering new credit applications. Irresponsible use, such as missing payments or maxing out your card, can certainly lower your score. It's crucial to manage your credit card responsibly to avoid these pitfalls.

Additional ways to build your credit score

Beyond credit card use, there are other strategies to improve your credit score:

  • Check any linked accounts: Your credit score could be impacted by joint accounts with someone who has poor credit.

  • Register to vote: Your credit approval chances are better if you're on the electoral roll. Registration is simple on the GOV.UK website.

  • Paying bills on time: This demonstrates to lenders that you're a reliable borrower.

  • Check for errors: Ensure your credit report is accurate by updating personal information and disputing any inaccuracies.

  • Existing debt: Focus on paying down current debts before taking on new credit.

The timeline for credit score improvement

Improving your credit score is a marathon, not a sprint. Responsible financial behaviour will gradually enhance your score. You can monitor your progress with our free credit reporting service Credit Monitor, which also offers tips for improvement. Remember, it's the consistent, disciplined approach that will yield results.

Other useful guides

For more insights into credit cards, explore our additional guides:

Compare credit cards with MoneySuperMarket

Finding the right credit card is easy when you compare with MoneySuperMarket. First, you’ll need to tell us a little about yourself and your financial situation, including information on your employment, income and what you’ll be using your new credit card for.

From there, you’ll receive a list of credit cards that match your needs. We’ll even show you which cards you’re most likely to be accepted for if you apply with our credit card eligibility checker. This way you reduce the risk of being rejected and keep your credit rating in good shape. Searching and comparing in this way won’t affect your credit score in any way.

Once you’ve found the card you want, just click through to the provider to finalise your application. At this point, the lender will conduct a ‘hard credit check’ on you.

Once you’re accepted for a card deal you’ll be told your credit limit. As soon as your card arrives in the post you just need to activate it – then it will be ready to use.

MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead, we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.

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