5 Tips for Building Credit with a Credit Card

Open a credit card

Some Americans with poor credit assume they won’t qualify for a credit card and, therefore, don’t try. While it’s true that declined credit applications can ding your credit, all cards are not created equally.

As you’re here researching, we’ll take a moment to tell you about ours. Mercury® offers credit access to hard-working Americans who may be overlooked by traditional credit card companies. We’ve built a pre-approval process that helps us extend and offer credit efficiently to prospective customers. We are mission driven and proud to provide cardmembers with fair credit lines that let them build their credit.

Our cards come with no security deposit and with a mobile app experience that helps cardmembers set and achieve their goals – all with the convenience of managing their card on the go. We help cardmembers earn rewards and understand how to save money on interest, all while they build their credit. Plus, we recognize positive payment habits, report payment history to all three credit bureaus, and reward customers with credit line increases when they’re eligible.

Having a current credit card will establish credit and generate a FICO® score by reporting monthly payment information to the credit bureaus. Once you have your card, build your credit history by using your card a couple of times a month on essential purchases like groceries and gas. Then pay it off each month to build a positive credit history.

“After my bankruptcy, I didn’t think I would be able to get a credit card with a credit limit that would be useful in case of an emergency. Not only did your credit card not make me put money down, but it helped me feel secure knowing I had help if I needed it.”

– Rachel B., a Mercury Cardmember

Pay credit card bills on time

Your payment history is the most significant factor affecting your credit score. You cannot afford to have past due payments noted on your credit report when you’re rebuilding credit. Even if you can only pay the minimum due each month for a period of time, your account will stay in good standing.

Paying late also puts you at risk of getting hit with annoying late fees. Mercury provides personalized support, tools, and nudges to help cardmembers make on-time payments.

But if you can, pay more than your minimum each month and you’ll save on interest. You’ll also pay down your card faster, which can help raise your credit score. And don’t forget, past due payments stay on your credit report for seven years – another important reason for paying your bills on time.

Quick tips for on-time payments:

• Sign up for AutoPay
• Set up payment reminders via email and/or text
• Ask if you can adjust your due dates to align with your cash flow (Mercury cardmembers have this feature in the app)
• Download the mobile app and manage your account anytime, anywhere

Keep your credit utilization low

Credit utilization is the percentage of total credit you use and the second most significant factor in your credit score. A general rule of thumb is to reduce utilization on your credit line to under 30% when possible – if you are at higher utilization, set a lower utilization goal when you can and keep working towards your goal! Keeping your balance below half of your available credit line shows you’re on top of your spending, and you’ll save on interest, too. You’ll also have the confidence of knowing you have credit available for emergency expenses.

Become an authorized user

If you’re struggling to get approved, there’s another way to build credit using a credit card. Ask a family member with a credit card to add you as an authorized user on their card. Since the account information shows up on your credit report, too, your credit will benefit from being on the account. And if the card has a long account history with on-time payments and low credit utilization, that will also help your credit score.

But make sure you choose someone with healthy credit habits because if they make a late payment, it could also show up on your credit report.

Maintain good financial habits

If you follow these steps and maintain momentum, your credit score should start to rise. It’s essential to stay on top of your progress by regularly checking your FICO® score and credit reports. It will help you stay aware of your credit standing and keep you on the right path towards a healthy relationship with credit (not to mention a better life).

If you’re one of the more than one-quarter of Americans struggling with financial circumstances beyond your control, don’t worry. There are opportunities to let you get back on track so you can enjoy the benefits of better credit for a better life.

And without getting ahead of ourselves here, it’s inspirational to understand the ripple effect of building credit. After taking control to improve your credit, you could also help a family member improve their credit too. You may even decide to add them as an authorized user to your card someday.