How to build your credit score with a credit card

8 min Read Published: 08 Dec 2023

How to build your credit score with a credit cardA low credit score is usually a sign that you are not considered a reliable or trustworthy borrower. There could be a whole host of reasons for this, some of which can be quickly resolved and others which may take a bit more time. One way to build a credit score up from a low point is to spend responsibly with a credit card in order to show that you are a borrower who can be trusted to repay debts. In this article, we explain how to improve your credit score with a credit card and increase your borrowing options.

What is a credit score?

Your credit score is a rating of how good a borrower you are. If your credit score is low, it may suggest that you have a history of struggling to pay back debt or that you have not used credit very often in the past. Each credit reference agency (CRA) in the UK will calculate your score slightly differently. This means that you will not have one single credit score. There are three main CRAs in the UK Experian, Equifax and TransUnion. These companies collect data on your financial history and use it to form a score.

Find out how to check your score by reading our article 'The best way to check your credit score for free'.

When you apply for a credit card, loan or mortgage, the lender will check the information held by one or more of the CRAs, as well as applying its own eligibility criteria. The better your credit score, the more likely it is you will be able to successfully apply for credit and get the best possible terms and rates. Learn more about what makes a good credit score in our article ‘What is a good credit score – and how to improve yours’.

Can you build your credit score with a credit card?

Yes, you can improve your credit score with a credit card. There are specialist credit cards that are designed to help users with a low credit score or limited credit history build a solid credit record. These cards are usually referred to as ‘credit-builder’ cards or ‘bad credit’ credit cards and would suit you if you have never had a credit card or loan before, or if you have had financial problems in the past.

If you have had an application for a standard credit card declined or worry you don’t have the credit score for the card you want, then a credit-builder credit card could be the right option. The main reasons to be rejected for a credit card include:

  • History of missed debt payments
  • Current unpaid bills
  • Bankruptcy or an Individual Voluntary Arrangement (IVA) in the past six years
  • A County Court Judgement (CCJ) against your name in the past six years
  • No history of borrowing

If you are unsure what type of credit card you should be applying for, read our article ‘Which credit card is best for me?’.

How to find out which credit card is best for you

Money to the Masses uses Creditec*, an online comparison service that enables you to find credit card deals tailored to you without affecting your credit score. You will want to compare as many different options as possible before you get a new credit card, so it is a good idea to do a fast online comparison. With only a few basic details, the Creditec tool will build a personalised list of credit cards suited to your needs to help you navigate the huge number of options out there. You can then pick the result that suits you best. None of this will affect your credit score as the eligibility process uses a soft credit check. Click here to start your comparison*.

How to use a credit card to build credit

Your credit score is based on the information held by CRAs about your borrowing history. You may have a low score if your credit report features one or more of the following:

  • No previous history of borrowing
  • A history of unpaid bills or missed debt payments
  • Bankruptcy or an Individual Voluntary Arrangement (IVA) in the past six years and/or a County Court Judgement (CCJ) against your name in the past six years

To get a high score, you need to fill your credit report with positive examples of borrowing. One simple way to do this is to use a credit card regularly and responsibly. This means sticking to a few key credit card principles including:

  1. Clearing your balance in full - You need to pay at least the minimum payment every month, but if possible you should clear the full balance. This will show you are able to manage your spending and that you restrict your borrowing to what you can afford to repay, as well as helping you save on interest payments. You can find out why paying more than the minimum is so important in our article ‘What is the minimum payment on a credit card?’.
  2. Paying on time - Late payments will only damage your credit score, jeopardise any introductory offers you have on your card and lead to extra fees and charges. Paying on time is an important part of building a good credit score. The easiest way to do it is to set up a direct debit, so you won’t need to worry about forgetting to make a repayment.
  3. Sticking to your credit limit - Going over your credit limit will lead to extra charges and fees, as well as a mark on your credit file. Staying well within your limit will show that you are spending responsibly and you are consciously managing the credit that is available to you. Keeping your balance below 25% of your available credit limit is a good rule to stick to.

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Will a credit card reduce your credit score?

Using a credit card responsibly will boost your credit score in the long run, but making mistakes with a credit card can very quickly bring your score down. Financial difficulties such as missed payments or not meeting the minimum payment on the card will cause your credit score to drop. Going over your agreed credit limit will also drag your score down. This is because these are all examples of poor borrowing practices that will put off potential lenders and make it harder to get credit in the future. As your credit score is a reflection of your reliability as a borrower, it will go down if you run into these issues.

A credit card can also affect your credit score by providing you with too much credit. This is because your credit utilisation ratio (the amount of credit you have used compared to the credit you haven’t used) suggests to lenders how well you are managing your finances. For example, someone who has used up 90% of the credit available to them and not paid it off may struggle to take on more debt. This inability to increase your borrowing could be reflected in your credit score going down. Find out more in our article ‘Will cancelling an unused credit card affect my credit score?’.

What is the best card to build your credit score?

As with all credit cards, the best card for you will depend on what you want from the card. For some people, any credit card will improve their credit score if it adds variety to their borrowing. Having a credit card alongside a mortgage or loan can – if you keep up with all of the repayments – show that you are able to successfully manage multiple types of borrowing at once.

If there has been an incident in your recent past that has damaged your credit score – such as an IVA or CCJ – you will want a credit card for bad credit that you can use to rebuild your credit history. These cards will come with lower credit limits and higher interest rates than most other cards, but they can also be a great way to start heading back in the right direction and building up your future borrowing power.

We cover the best credit cards to rebuild your credit history in our article ‘Compare the best credit cards to build credit and improve bad credit’.

Alternatively, you may have a low credit score simply because you do not have a history of borrowing and have not used a credit card in the past. In this case, you may want to look at products aimed at first-time credit card users. These cards will also come with a low credit limit, but by starting out with small purchases and paying your bill in full and on time, you can build a strong credit history and access more types of borrowing going forward.

You can check out our article ‘Best first-time credit card’, if you are looking to build your credit history from scratch.

How to get a credit card with no or limited credit history

It is possible to get a credit card even if you have bad credit or a limited credit history. Lenders that offer products for customers without a strong credit record may charge a higher rate of interest to balance out the risk of lending to someone with a poor or limited borrowing record. You may also be set a lower credit limit compared to someone with a high credit score, in order to stop you spending beyond your means.

By using the card regularly and paying off the balance in full every month, your credit score will improve and the range of credit cards available to you will grow.

Other ways to boost your credit score

A credit-builder credit card or a credit card for bad credit are not the only tools at your disposal to boost your credit score. In fact, your first step should be to tick off any easy changes that can give your score a quick boost. You can start by:

  • Getting on the electoral roll - By registering to vote, you make it easier for CRAs to confirm your name and address.
  • Making prompt payments - Make sure you are paying any bills or debts on time. This includes phone and energy bills, as well as any existing credit card or loan debt.
  • Checking your credit report for mistakes - It is easy to check your credit report for free with each of the major CRAs. Any mistakes, including spelling errors or an old address, can be corrected by contacting the relevant CRA.
  • Avoiding people with bad credit - Applying for a joint account or loan with someone who has a poor credit history will affect your own credit score. You can find out who you are linked to from the main UK CRAs and ask to be disassociated from anyone you no longer have a relationship with, such as an ex-partner.
  • Clearing existing debt - Paying off any outstanding debt payments will usually improve your credit score. You will be less likely to get a credit card or a loan if you already owe a lender money and this will be reflected in a lower credit score.

We cover more ways to boost your credit score in our article ‘How to improve your credit score quickly’.

You can find the best credit-builder credit card deals in the UK in our article 'Compare the best credit cards to build credit and improve bad credit'.



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