A credit card builds your credit when the issuer reports your payments to the three major credit bureaus
Not every card reports to Equifax, Experian, and TransUnion. Before you open an account, confirm the issuer reports to all three bureaus — this is what makes the card useful for building credit. Most mainstream issuers do this, but some smaller lenders and store cards do not.
The card itself matters less than what you do with it. A card that reports your on-time payments will raise your score over months. A card where you miss payments or carry a high balance will damage it, regardless of the card's name or rewards program. The goal is to use the card regularly, pay the full statement balance by the due date, and keep your credit utilization — the percentage of your limit you actually use — below 30 percent.
Key Takeaways
- Confirm the issuer reports to all three credit bureaus (Equifax, Experian, and TransUnion) before opening an account.
- Secured cards and cards for people rebuilding credit often have lower approval odds and higher fees, but they report to the bureaus just as well as premium cards.
- Your payment history makes up 35 percent of your credit score, so a card that lets you set up automatic payments is more valuable than one with cash-back rewards.
- Carrying a balance does not build credit faster — it costs you interest and raises your utilization ratio, both of which hurt your score.
- After six to twelve months of on-time payments, you can request a credit limit increase or move to a card with better terms.
Secured cards versus unsecured cards for building credit
A secured card requires you to deposit cash as collateral, usually $200 to $2,500. The issuer holds this deposit and gives you a credit line equal to it. You use the card like any other, but the deposit protects the bank if you do not pay. After twelve to eighteen months of on-time payments, many issuers convert the card to unsecured and return your deposit.
An unsecured card requires no deposit. If you have no credit history or a damaged one, approval odds are lower, but some issuers specialize in this market. These cards often carry annual fees ($39 to $99) and higher interest rates (18 to 36 percent) than cards for people with established credit.
For building credit, both types work equally well — the issuer reports your payments either way. Choose based on what you can afford upfront. If you have $300 to $500 available, a secured card is usually cheaper over time because the deposit is refundable and there is no annual fee. If you cannot lock up cash, an unsecured card with an annual fee is the trade-off.
What to look for in the card's terms
Annual fees range from $0 to $99. A card with no annual fee is better if you can get approved for one, but do not let a small fee ($39 or less) stop you if the card is otherwise a good fit. You will pay interest only if you carry a balance, so the interest rate matters less than your ability to pay in full each month — but lower is still better.
Look for a card that reports to all three bureaus and has a clear path to conversion or upgrade. Some issuers promise to review your account after six months of on-time payments; others wait longer. Read the cardholder agreement to see whether the issuer charges a fee to increase your credit limit or convert to an unsecured card.
A card with a mobile app or online portal where you can set up automatic payments is worth choosing. Automating your payment removes the risk of missing a due date, which is the single biggest factor in your credit score.
Cards designed for people rebuilding credit
Several issuers offer cards specifically for people with low scores or limited credit history. Capital One Secured Mastercard, Discover it Secured, and OpenSky Secured Visa Card are common examples. These cards have higher fees and interest rates than mainstream cards, but they report to all three bureaus and often convert to unsecured cards after consistent on-time payments.
Store cards and gas station cards sometimes report to the bureaus, but not always. Before opening a store card, call the issuer and ask whether they report to Equifax, Experian, and TransUnion. If they report to only one or two bureaus, the card will not build your credit as quickly.
How to use the card to actually build credit
Make a small purchase each month — a subscription, groceries, or a utility bill if the company accepts cards. Pay the full statement balance by the due date, every time. This shows lenders you can borrow and repay reliably. Your payment history accounts for 35 percent of your credit score, so this habit matters far more than any rewards or cash-back offer.
Keep your balance below 30 percent of your credit limit. If your limit is $500, do not carry more than $150 in charges at any time. This ratio, called utilization, makes up 30 percent of your score. Even if you pay in full each month, a high balance at the time your statement closes will be reported to the bureaus and will lower your score temporarily.
Do not close the card after your score improves. The length of your credit history accounts for 15 percent of your score. Keeping the card open, even if you stop using it, preserves that history and helps your score.
Timeline for seeing credit score improvement
Credit bureaus update your file monthly, usually around the same date your statement closes. You may see a small score increase after your first on-time payment is reported, but meaningful improvement takes three to six months. After twelve months of on-time payments, most people see a noticeable jump — often 50 to 100 points, depending on where they started.
Your score will not move if the issuer does not report to the bureaus. If you have been using a card for three months and your score has not budged, contact the issuer and confirm they report to all three bureaus. If they do not, close that card and move to one that does.
When to move to a better card
After six to twelve months of on-time payments, you become a better candidate for cards with lower fees, lower interest rates, or rewards. At this point, you can request a credit limit increase on your current card, which may happen without a hard inquiry into your credit. You can also open a second card to diversify your credit mix — having both a card and an installment loan (like a car payment) helps your score.
Do not close your first card when you move to a second one. Keep it open with a small balance or no balance, and use it occasionally. This preserves your credit history length and keeps your total available credit high, both of which support your score.
Frequently Asked Questions
Do I need to carry a balance to build credit?
No. Carrying a balance does not build credit faster — it costs you interest and raises your utilization ratio, both of which hurt your score. Pay the full statement balance each month. The card issuer reports that you borrowed and repaid, which is what builds credit.
What if I get denied for a secured card?
Some issuers have stricter approval standards than others. Try a different issuer — OpenSky, for example, does not check your credit score at all. You can also ask whether the issuer offers a second-chance checking account or savings account, which may make you may be able to access for their secured card later.
Can I use multiple cards to build credit faster?
Opening multiple cards in a short time will lower your score temporarily because each process triggers a hard inquiry. After six to twelve months of on-time payments on your first card, opening a second card can help by diversifying your credit mix. Space applications at least three months apart.
How long does it take to move from a secured card to an unsecured one?
Most issuers review your account after twelve to eighteen months of on-time payments. Some convert automatically; others require you to request conversion. Check your cardholder agreement or call the issuer to learn their timeline and whether you need to take action.
What happens to my credit if I miss a payment?
A single late payment (30 days or more past due) will lower your score significantly and stay on your credit report for seven years. If you miss a payment, pay it as soon as possible. Contact the issuer and ask whether they will remove the late mark if you bring the account current — some will, especially if it is your first miss.