How Credit Cards Improve Credit Scores

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Last updated on August 22nd, 2022

Credit impacts nearly every facet of our lives. From buying a home or car to attending school, credit scores are a daily part of life that can cause significant stress for many Americans. Fortunately, there are practical ways to boost credit, with credit cards being one of the easiest – and best – options to consider. Here’s how credit cards can help improve your credit score:

What Factors Make Up a Credit Score?

Understanding how a credit card can help you build your credit score requires first knowing what the different credit reporting agencies look for when determining a person’s credit score.

There are two major credit scoring models: VantageScore and FICO Score. FICO Score is a private scoring model created by the Fair Issacs Corporation. On the other hand, VantageScore is a scoring model owned by the major credit reporting bureaus: Experian, Equifax, and TransUnion.

While the scoring models may differ, both FICO Score and VantageScore prioritize many of the same factors. For instance, both place the most significant weight on payment history (35% for FICO, 40% for VantageScore). Paying accounts on time is a good indicator to a lender that you will continue this behavior – which is why this is the single-largest contributor to a credit score.

Other critical factors in a credit score include:

  • Credit Utilization: the amount of your overall credit you use
  • Search for New Credit: the number of recent credit applications
  • Types of Credit: the types of credit you hold, like student loans, mortgages, and credit cards. Lenders prefer to see a variety of credit types.

Building Credit with a Credit Card

Now that you know what comprises a credit score, how can you use a credit card to build and improve your credit score? Credit cards are one of the best ways to improve credit because they offer easy accessibility, report to the major credit bureaus monthly, and are simple to use.

Credit Cards Are Easily Accessible

Many loan types come with significant hurdles to approval. Mortgages, for example, are very difficult to receive for those with a limited credit history, small down payments, and other disqualifying factors.

On the other hand, credit cards come in many forms, meaning there is a credit card product for every credit score. Secured cards are the most accessible credit cards, as they require a cash deposit that acts as the security for the loan and the credit limit. This deposit requirement makes secured credit cards available for people with no credit history, people with bad credit, and even people trying to bounce back financially after a bankruptcy.

Monthly Credit Reporting

Most credit card issuers report to the major credit bureaus monthly. This regular reporting can help you build up a strong payment history in as little as six months. Multiple credit cards really accelerate this process and help reduce previous late payments’ impact through the sheer volume of on-time payments.  Late payments remain on your credit report for up to seven years, so reducing their impact with dozens of on-time payments is critical to improving your credit score.

Monthly reporting can also help improve your credit score if you only use a small portion of your available credit. Credit utilization is the second-biggest credit score factor, meaning using only a small percentage of your credit can significantly boost your credit health. If possible, keep your credit use below 30% (and ideally below 10%) – this will supercharge your credit score growth.


Credit cards are an excellent way to establish a strong credit history and improve your credit score when used correctly. Because credit cards are much more accessible than many other loan types, they provide the perfect foundation for building credit. However, this foundation requires responsible use, including making payments on time every month and keeping credit use low.

Related Article: What’s the Fastest Way to Repair Bad Credit?

Featured image by ar130405 / PixaBay

About: Cory
Cory Santos

Cory is's "Jack of all trades" and resident credit expert, covering all facets of the credit card space. Cory holds academic degrees in both the U.S. and U.K. In addition to credit cards, Cory finds that jogging, cats, and memes are essential parts of a balanced day.

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