How to Use a Credit Card to Build Credit

A credit card can be a powerful credit building tool—but only if you use it carefully.

The goal isn’t just to spend; it’s to prove you can borrow and repay on time.

KOHO Essential as Your Safe Base

Even if you’re using a traditional credit card, it helps to run your everyday money through something stable and low risk like KOHO Essential:

• It has a low monthly plan fee that can be waived when you set up direct deposit or add +$1,000.

• Use a prepaid Mastercard® for groceries, bills, subscriptions, and travel.

• Grow your savings with a 2% interest savings rate on your entire balance.

• Earn 1% cash back on groceries, eating & drinking, and transportation.

• You can subscribe to Credit Building for $10/month, it's an affordable way to build your credit history.

• Enjoy unlimited transactions and free e-transfers (never worry about fees when sending money to someone again).

1. Make Small, Predictable Purchases

Use your credit card for small, regular expenses you’d pay for anyway, like:

• A streaming subscription

• Your phone bill

• One grocery trip per month

This keeps the card active and useful without letting the balance get out of hand.

2. Always Pay On Time (And Ideally in Full)

To build credit, on-time payments are everything:

• Set up automatic payments from your bank account for at least the statement balance or the full amount.

• Never miss the due date—even one late payment can hurt.

Paying in full means you build credit without paying interest on purchases.

3. Keep Your Utilization Low

Credit utilization = how much of your limit you’re using.

• If your limit is $1,000, try to keep your balance well below that (a common guideline is under ~30%).

• Low utilization tells lenders you’re not maxing out your card or relying heavily on credit.

4. Don’t Open Too Many Cards at Once

More cards are not automatically better:

• Each new application can trigger a hard check.

• Too many checks in a short time can make you look credit-hungry.

Start with one simple card, use it well, and only add more if you truly need them.

5. Use Credit Building as Extra Support

On top of using a credit card responsibly, you can:

• Subscribe to Credit Building.

• Add a small, predictable monthly obligation that helps build history over time.

This gives you two good signals on your file: a well managed credit card and a structured credit-building program.

6. Be Patient—Credit Takes Time

Credit scores don’t jump overnight. What matters is:

• Months and years of on-time payments

• Balances staying under control

• No new bad marks like collections or repeated late payments