Maintaining Credit Cards Builds FICO Scores Fast

Building credit is a painstakingly slow process that involves providing consistent proof that you are a responsible borrower, no matter what accounts you have open at any one given time. Credit cards can be a super fast way to build up your FICO credit score, which is a number that is used by the major reporting bureaus to determine your worthiness for new credit. Scores can be as high as 850 for those in the top tier. Bad credit is thought to be 620 or below. Your credit score is assigned based on a variety of factors, but one of the most important is payment history, which makes up roughly 35% of the total score. Let’s take a deeper look at how credit cards can help you establish and maintain an eye-pleasing FICO score.

Credit Cards are Easy to Access

Credit cards are one of the most easily accessed lines of credit out there. Nearly everyone can qualify for a card in some form or fashion, and can apply simple rules to its use in order to get valuable points tacked on to their FICO scores each reporting period. Most card issuers will report your credit performance either monthly or quarterly (four times each year) to the major credit bureaus in the U.S. (Experian, Equifax and Trans Union) which are known as the Big Three. With excellent credit, there is no limit to the type of credit cards you can obtain, although it is best practice to stick with a couple of cards that are easy to manage. Those with mediocre credit can get traditional cards, too, but they may be assessed a higher annual percentage rate (APR) for the privilege. Folks with bad credit can usually not get a traditional card but they can easily obtain a prepaid credit card that works just as well for the purpose of building up a weak FICO score.

How it Works

Each month or quarter, the card issuer will indicate your payment history. This includes whether or not you paid on time by delivering the payment on or before the due date and as agreed (by paying the minimum amount due or any figure that is greater than the minimum payment amount). With each payment on your account that you make, you are adding valuable positive history and points to your FICO score. Other elements of your repayment behavior can raise your score (or lower it), so follow these general tips for maximizing your cards ability to elevate your credit score.

  • Run a balance. Potential creditors want to not only see that you have credit in your credit file, but that you know how to use it. While you can usually save money by not running a balance each month, maintaining a balance of about 10% of the total amount of available credit is a time-proven method of adding points and proving that you can handle your finances.
  • Never charge more than half of your available credit in one month. This shows potential creditors that even though the credit is available, you have enough self-control to avoid going overboard with your spending. This also affects your available credit to debt ratio, which is an important factor in determining your credit worthiness.