How often should you use a credit card to build credit?

Using a credit card is one of the fastest ways you can build credit. Growing your credit takes time and diligence, but by making on time payments, paying your bill in full, and keeping your credit utilization under 30%, you may boost your credit score within as little as a few months.

If you’re ready to start improving your credit score, here’s everything you need to know about how to use your credit card for your financial benefit.

Using Credit is Important for Your Credit Score

Although some financial advice is wary of credit cards, in order to build credit, you need to learn to use credit responsibly. That means paying your credit card bill on time every month. It also means never charging more than you can afford. This can lead to overspending and credit card debt, two factors that can hurt your credit score.

While there are other ways to build credit — car loans, student loans, personal loans, or even a mortgage — credit cards are generally the easiest and most accessible method. When you’re just starting out, you might consider a secured credit card which allows you to pay a security deposit in exchange for a line of credit. Or, you might be able to get approved for a credit building credit card, like the KOHO credit card.

How Many Credit Cards Should You Have?

There’s no set number of credit cards that will work for every person. The answer is more nuanced and will depend on your comfort level.

If you’re just beginning your credit building journey, starting off with one credit card is best until you get the hang of paying your bill in full each month. Once you’ve mastered your first credit card, it can be helpful to add one or two more credit cards into the mix. Not only can this help you earn more rewards and maximize your cash-back, but having more credit accounts with on-time payments can help grow your credit score.

Just be sure not to open too many credit cards at once. Wh en you apply for a new credit account, your score may drop temporarily, but should improve quickly with responsible use. You also don’t want to apply for more credit cards than you can handle. It’s better to gradually add cards to ensure you don’t miss payment due dates, rather than adding multiple cards and accidentally missing a payment.

How Credit Card Use Impacts Credit Scores

While adding a credit card can help improve your credit score, the way you use your credit card will determine if your score goes up or down.

To grow your credit score, first focus on never using your credit card for purchases you can’t pay back right away. This can help you avoid overspending which could lead to late payments and credit card debt.

Since your payment history makes up 35% of your credit score, enroll in autopay to pay off your balance on time, to ensure you never miss a payment. Be sure to check in as your due date approaches to make sure there are no surprises.

Once you’ve mastered these two skills, focus on charging less than 30% of your available credit to keep your credit utilization — the amount of credit used versus the credit available to you — low. For example, if your credit card has a limit of $1,000, aim to only charge $300 or less to the card before paying off the balance. Even if you pay the balance in full every month, charging more than this could indicate to a lender that you’re having financial troubles.