How To Build Up Your Credit Rating With A Credit Card

Written by Jonathan Halloway on February 27, 2019

Updated March 24, 2021

Girl online using credit builder card

In today’s world, having a poor credit rating can feel disastrous. However, unlike in the past when it was almost impossible to improve it, you can do something about it. You can actually build your credit rating using a credit card. It’s most important to first understand your credit rating to understand where to begin.

Credit cards for people with bad credit may also be known as credit building and can really help to improve your financial outlook. They’re more like typical credit cards, but with a small difference, they are available to people with bad credit and can work to improve credit scores. Providers target people with a low credit rating or those who’ve missed payments somewhere in their credit history.

You can change your poor credit score by using a credit building credit card where positive history indicating repayments you’re making is shown. With time your credit rating will improve and soon enough you could access credit facilities. Check your credit score with a free credit report.

When building a credit rating with credit cards makes sense

As you might already know, poor or low credit score results from a variety of reasons. You might not even know about some while a number are very obvious. They include:

Lacking credit history – It might seem like a good idea not to take loans of any kind or use credit cards to avoid debts, but when it comes to credit rating this is counterproductive. Any lender or credit card provider wants to look at your history of successful repayments to be convinced you’re trustworthy and capable of repaying their credit.

Chaotic bill payments – Those who hardly pay bills on time or miss payments could see their credit rating dipping. Whether it’s a cell phone or credit card bill it always appears on credit reports and every lender out there will view it.

Being absent in electoral register – Lenders want to believe you’ve no reason to commit any type of fraud. If you don’t sign up in your local electoral register with your name and address, you’re less likely to be taken seriously by credit card providers or any lender.

Bankruptcies and County Court Judgements – If you had declared bankruptcy in the past for any reason or had county court judgements against you, receiving credit from anywhere will be an uphill task.

If your credit rating is poor due to any of these reasons or others, credit cards that build credit can really help get you back on track when used responsibly.

Do the basics first

Cards for improving your credit score

Of course, you shouldn’t go for credit building credit cards yet before you deal with the basics of improving your credit history and rating. Firstly, look into your incomes and finances to assess the amount you require and what you can pay back every month without a hitch.

If you can pay as much as possible (such as paying back in full), it’s much better. Ability to repay the full amount expected every month helps you avoid hefty interest, which then enhances your credit rating. If you realise you’re unable to repay on time, getting a credit card can be risky.

Do ensure you’re in the electoral register and the address you used matches with the billing address of your credit card. It helps your application for a credit building credit card to be approved fast.

Don’t have any credit history yet? Start there. Ensure your name is on utility bills and payments are being done using your details. Soon it’ll appear on credit reports and indicate to the lender that you have a repayment history and can be trusted with the credit you seek.

Priorities after receiving the credit card

Compare credit cards

Once you’ve received the credit card, pay attention to the terms of the card and what you can do to build your credit. This includes charges, maintaining repayments and never missing any.

You could actually create direct debits to always repay on time and never go below the expected limit. Keeping up with repayments will help you negotiate a better deal with the credit card provider, such as a great credit limit or a lower interest rate deal.

If you can keep up with payments and never miss any, the better the perks. Many credit cards for those who want to build credit ratings come with features enabling users to either reduce their APRs or raise their credit limit as far as repayments are done on time.

Make improving your credit rating your main motivation never to miss payments. It means in future you won’t have a problem accessing credit cards of any kind, energy deals, mortgages, loans and current accounts, among other financial facilities. Your credit report will always have a huge effect on many things you do as a consumer and purchaser. Once you receive a credit rating building credit card use it as agreed and efficiently with your credit-building goal always at the forefront of your mind.

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