How often do You have to use your Credit Card to Build Credit

The best way to build credit is to do it passively. That way, when you actually need it, the credit will be there. With that being said, use your credit card for as many transactions possible, to ensure you are using it enough to illustrate credit worthiness and gain a higher score. If you focus on building your credit passively, you’ll likely never have to worry about it again. Let’s dive deeper into how we can build credit passively.

Where these Answers are Coming from

Before going into more detail on how how often you need to use credit cards to build credit, I want to first tell you what experience these answers are coming from. I am someone who currently holds an average score of around 765. Following this further, you know just as well as I do, you do not start with a credit score that high.

Starting with low credit

I do not recall how low my credit score has ever been but I have definitely been in the 500’s before. With that being said, I will cover everything I’ve done to go from a credit score of the 400’s – 500’s range up to the 700’s. Moreover, I will tell you I’ve had a real battle with credit issues in the past.

Bad Credit History

This includes having dequent or late payments on student loans. Student loans going into collections then paying off the collection agencies. Dealing with identity theft, ruining my score. As a result, I had unknown accounts attached to my credit which were not getting paid, thus making my score worse. After all those things, I was still able to overcome the damage and achieve up to the 700’s. So, if I can recover from these types of negative actions on my account,  you can too. Let’s go into my practices on how to get your score up using credit cards.

Using Credit Daily

Is is probably my first most highly recommended tip which corresponds to the answer in the first paragraph. I use my credit cards as much as possible. Not sometimes, everytime. If you have a bill you can pay with a credit card, do it. However, I do not condone using credit if you do not have the cash available. With that being said, only charge credit on your card if you have the money available in your bank account.

Credit Card Daily Example

As an example, if you go out to eat, instead of paying cash, use your credit card to pay the bill. If you have to pay for gas, electric or anything that allows you to use a card, try using credit first. Not only will it show that you are a responsible credit user when you make the repayment in full, you will also take advantage of perks which we will talk about further down this list.

Making Credit Payments to Build Credit

Previously, I’ve stated I use my credit card as much as possible but unfortunately, we do not always learn how to manage the bills. It’s easy to charge the card up but, how do we make the payments correctly? This is what I do. First, you must learn your monthly statement’s closing date. This is the date where the bank will put all of your debt into one statement and post that your bill needs to be paid. Personally, I always pay the bill in full. I never make the minimum payment.

Remember, you were going to pay for these things in cash anyway so you should have the funds, just save any money you were going to spend for when you statement closes so you can pay the bill. I always pay my credit cards only after the statement closes that way, the record will post that I owed money. Then, I pay the balance in full as soon as possible prior to the minimum payment due date.

Credit Card Payment Example

Let’s use an example to explain making a payment. Let’s say on January 1st you paid $20 dollars for gas with your credit card. Next, you know after checking your account that your statement closes on the 15th of every month. So on the 16th of January, you confirm that you statebalance shows a total of $20.00 dollars spent for the current statement and you pay the full $20.00 on the 16th.

Although your minimum payment may be $3.00 by the 27th of January, if you do not pay the statement balance in full, you will be charged interest. If you only make the minimum payment, it will keep your account in good standing or status however, you are now paying interest on the remaining $17.00. To keep your payment plan simple and to avoid interest fees, always try to pay your statement balances in full before the minimum payment due date. 

Avoiding Debit Cards to Build Credit

The next thing I do to build my credit using credit cards is to almost never use my debit card. Before I started using credit, I absolutely always used my debit card to pay for everything. I could only buy what I had money in my bank account. Unfortunately, by spending your own money, this does nothing to prove your creditworthiness. As a result, I never use my debit card anymore unless a payment processor does not take credit.

Credit Rewards & Building Credit

Aside from building your credit, my next favorite thing about using credit cards are the rewards. For most if not all credit card companies, they will have perks for spending money with their branded credit cards. This is because most people are irresponsible and will not pay their accounts in full before the bank can gain interest on money they let you borrow. As a result, they give you benefits to using their card in hopes that they can one day gain interest payments from you. However, since you know to always pay your account in full, you will only receive perks for using your credit card and never have to pay interest if you manage your due dates effectively.

Points Rewards for Building Credit

Depending on the credit card company you go with, they may have a card that has reward points. Based on the credit cash to points conversion table, you will be rewarded points for every qualifying purchase. The points you gain from a credit card can be used to purchase a large number of items to include, gift cards, electronics and even flights with major airlines. For the most part, the reward options you have depends on the relationships your bank has created to offer  these perks for their customers.

Cash Rewards for Building Credit

Last but definitely not least, by using credit cards to build your credit, you can gain cash rewards by using cards like this one. Just like the rewards points description, depending on your banks cash spent to cash rewards conversion rate, you will gain rewards for every qualifying purchase. Not only are cash rewards basically the same as real money, this is always one of the easiest ways to start earning passive income. As long as you’re always pay your statement balance in full before every minimum payment due date, you will be left with cash rewards every month.

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