How to Build Credit | Capital One (2024)

March 12, 2024 |9 min read

    If you’re trying to build credit, things may seem a little backward to you. Because in most cases, you actually need credit to build credit.

    But understanding some credit basics can help you get started. Here are some ways you can build credit and use it responsibly.

    Key takeaways

    • Building credit takes time and effort.
    • To build credit, it’s important to practice good financial habits and monitor your credit routinely.
    • One way to build credit is by applying for and responsibly using a credit card.
    • In some cases, paying other bills, like rent or utilities, can help boost your credit scores.

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    Ways to build credit

    Credit cards can be a valuable tool to build credit. But you can build credit whether you have a credit card or not. One thing that’s universal, though, is the importance of practicing responsible credit habits.

    Take a closer look at what that means with these eight tips you can use to build your credit.

    1. Understand credit-scoring factors

    Credit can get complicated. But understanding a little about how it works can help you understand what’s making your credit scores go up or down. Here’s how the Consumer Financial Protection Bureau (CFPB) explains it:

    “A credit score is a number based on information contained in your credit report,” the agency says. “You don’t have just one credit score. There are many credit scoring formulas, and the score will also depend on the data used to calculate it.”

    That data can change based on when a credit score is calculated. But even though there are multiple credit-scoring formulas, the CFPB says they each use similar information to calculate a credit score. Those factors include:

    • Payment history
    • Credit age
    • Credit mix
    • Credit utilization
    • Recent credit accounts

    Learn more about what affects your credit scores.

    2. Develop and maintain good credit habits

    Whether you’re starting from scratch or well on your way to building credit, it’s important to practice responsible habits. Here are a few good habits to keep in mind:

    • Make payments on time. Credit-scoring companies FICO® and VantageScore® both say payment history can be a significant factor in determining your credit rating. You might consider setting up automatic payments or using email or calendar alerts to help ensure you don’t miss a payment due date.
    • Create a budget. Creating a budget to compare your income to expenses is a key step to reaching your financial goals. Seeing where your money goes each month could help you set aside loan or credit card payments before you start spending each month.
    • Consider more than minimum payments. It can be tempting to make only the minimum payment on your credit card statement. But that approach comes with a cost: interest. And interest charges can add up, costing you more in the long run and making it harder to pay off debt. Take it from the CFPB: “Paying off your balance each month can help you get the best scores.”
    • Stay under your credit limit. Maxing out your card’s credit limit could reflect negatively on you and your financial situation. Experts recommend using no more than 30% of the total credit you have available.
    • Be careful with credit applications. Applying for a bunch of credit close together isn’t likely to help you build credit any faster. In fact, it could make your financial situation look worse than it is. That’s because credit scoring takes into account recent activity. And multiple hard inquiries could hurt your score.
    • Monitor your credit scores and reports. One way to track your credit is by getting free copies of your credit reports from And there’s also CreditWise from Capital One. It’s free and easy to use, whether you’re a Capital One customer or not. And it won’t hurt your scores, so you can check it as often as you want.

    3. Apply for a credit card

    When you apply for credit cards, you’re asking for a type of open-ended loan from a lender. As your application is considered, the lender may take into account your credit history by looking at your credit report.

    If you have a thin credit file—meaning you haven’t used credit much yet—there may not be a lot for a lender to consider. And that could make it more difficult to secure access to credit.

    But some credit cards are designed with this in mind. Here are some common starter cards that, when used responsibly, could help you build or establish credit:

    • Student credit cards are exactly what they sound like: credit cards for college students and recent graduates. And some student credit cards offer cash back rewards and other perks.
    • Cards for fair to average credit are for people who’ve begun to build credit but whose scores aren’t quite where they want them to be. When used responsibly, a good starter card could help you build credit.
    • Secured credit cards are a lot like traditional cards, with one main difference: They require a deposit to open the account. That money acts as collateral, and it’s usually refundable. Beyond the deposit, secured cards look and function like traditional unsecured cards.

    4. Become an authorized user

    Another way to build credit is to become an authorized user on someone else’s credit card account. Authorized users have access to an existing credit card account and might even get their own card, but the primary account holder is ultimately responsible for payments.

    It’s important to know that credit card issuers aren’t required to report an authorized user’s activity to the credit bureaus. But if your issuer does, positive habits could benefit the authorized user.

    This means that if the authorized user and the primary account holder are using the card responsibly, both could see a positive impact on their credit. In the same way, any negative actions, such as missed payments, could reflect poorly.

    5. Examine your credit mix

    Payment history is only one of several factors that affect your credit scores. Your credit mix is another. It’s a measure of how you’ve handled different types of loans, including revolving credit and installment loans. Credit mix accounts for around 10% of what makes up credit scores. And it’s a reflection on your ability to handle different types of loans.

    Using the CreditWise Simulator could give you an idea about how adding new loans or credit cards could affect your scores. Remember, CreditWise is free for everyone. And using it won’t hurt your credit scores.

    6. Apply for a special kind of personal loan

    Credit-builder loans (CBLs) are a type of loan designed with a different goal in mind from that of traditional loans. Because of that, they work a little differently: Borrowers make payments before getting the money.

    Credit unions typically offer CBLs, according to the CFPB. But they may be available elsewhere, too. The loans start with the lender depositing a small amount—around $300 to $1,000—into a locked savings account. Borrowers then make small payments over a set period, known as a term. Terms might last anywhere from six to 24 months. When the term ends and all payments are made, the money is paid out.

    As payments on a CBL are made, progress is reported to credit bureaus. That’s how a CBL can help you build credit. But it’s important to take payment due dates seriously. Late or missed payments could end up hurting your credit, according to the CFPB.

    7. Make timely payments on other loans and accounts

    Your payment history is one of the most significant factors that go into calculating your credit scores. So you’ll want to ensure you’re making timely payments on any existing debt, such as mortgages, student loans and car loans.

    Having debt like this often means you’ve already established a credit history. So you can continue to build your credit by staying current on your loan and reducing debt.

    Keep in mind that falling behind on payments for secured loans—like car loans or mortgages—can do more than affect your credit. That’s because the vehicle or property is used as collateral. And if you fall behind on payments on a secured loan, you could risk losing the collateral.

    8. Look for ways to add rent or utility payments to your credit reports

    Bills for things like your cellphone, utilities and rent often aren’t reported to the credit bureaus. So they may not have any impact on your credit, even if you’ve never missed a payment.

    But there may be ways to have your rent or other bills added to your credit report. For example, Experian®, one of the three major credit bureaus, offers a service that can track these kinds of payments and add them to your credit report. So if you pay those bills on time each month and use the service, you may see a boost in your credit score.

    Building credit FAQ

    Still curious about building credit? Here are a few answers to frequently asked questions:

    Credit is an important financial indicator that shows lenders your ability to repay debts. Your credit will come into play when applying for things like credit cards, mortgages, auto loans and more. And improving your credit can help you qualify for better interest rates and loan terms in the future.

    Each credit model uses different factors to assess your credit. A good credit score can vary depending on the model. FICO says good scores fall between 670 and 739, while VantageScore says the range is from 661 to 780. But scores can be better than good: The most popular FICO and VantageScore credit score ranges go as high as 850.

    Building credit takes time. With patience and determination, you can typically expect to see your first credit scores appear somewhere between three and six months after you open a credit account, depending on the credit-scoring model being used to calculate your scores.

    How to build credit in a nutshell

    Building credit can take time, and it requires financial responsibility and consistency. By steadily making progress, you may set yourself up to one day reach bigger financial goals, like buying your own home.

    Ready to get started? Find a credit card from Capital One you can use to build credit. You can even find out if you’re pre-approved, with no harm to your credit score.

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    How to Build Credit | Capital One (2024)


    How do you build your credit with Capital One? ›

    Here are five tips that can help you get started.
    1. Apply for a starter credit card. One way to establish credit is to apply for a credit card. ...
    2. Become an authorized user. ...
    3. Take out a credit-builder loan. ...
    4. Set up a joint account or get a loan with a co-signer. ...
    5. See whether paying your bills could help.
    Jun 22, 2023

    How long does it take to build credit from 500 to 700? ›

    The time it takes to raise your credit score from 500 to 700 can vary widely depending on your individual financial situation. On average, it may take anywhere from 12 to 24 months of responsible credit management, including timely payments and reducing debt, to see a significant improvement in your credit score.

    What is the #1 way to build your credit? ›

    Make small purchases and pay them off quickly

    You don't need to rack up thousands of dollars on your credit card to start building your credit history. Credit bureaus look most favorably on on-time and early payments, even if they're for relatively small amounts.

    How much of a $500 credit limit should I use? ›

    You should use less than 30% of a $500 credit card limit each month in order to avoid damage to your credit score. Having a balance of $150 or less when your monthly statement closes will show that you are responsible about keeping your credit utilization low.

    How fast does Capital One increase credit? ›

    Cardholders in good standing (e.g. good credit score, consistent on-time payments) may also receive an automatic credit limit increase once or twice a year. If requesting an increase from Capital One, approval can happen immediately or could take up to 30 days to process.

    Is Capital One a good credit builder? ›

    Yes, Capital One credit cards help build credit if you pay your bill on time each month and use your card responsibly. Capital One reports your account information each month to all three major credit bureaus, and your credit score is based on the contents of your credit reports.

    Is 650 a good credit score? ›

    As someone with a 650 credit score, you are firmly in the “fair” territory of credit. You can usually qualify for financial products like a mortgage or car loan, but you will likely pay higher interest rates than someone with a better credit score. The "good" credit range starts at 690.

    Why did my credit score go from 524 to 0? ›

    Credit scores can drop due to a variety of reasons, including late or missed payments, changes to your credit utilization rate, a change in your credit mix, closing older accounts (which may shorten your length of credit history overall), or applying for new credit accounts.

    Is 580 a good credit score? ›

    Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.

    What bills build credit? ›

    Paying utilities, rent and cell phone bills can help build credit if they're reported to the credit bureaus. If certain bills aren't reported to the credit bureaus, you can consider using a third-party service to report your payments.

    What payments help build credit? ›

    If you're having difficulty getting approved for a credit card or you're looking for alternative methods, consider these ways to build credit:
    1. Make your rent and utility payments count. ...
    2. Take out a personal loan. ...
    3. Take out a car loan. ...
    4. Get a credit builder loan. ...
    5. Make payments on student loans.
    Dec 20, 2022

    What builds your credit score the most? ›

    Paying your bills on time Is one of the most important steps in improving your credit score. Pay down your credit card balances to keep your overall credit use low. You can also phone your credit card company and ask for a credit increase, and this shouldn't take more than an hour.

    Is it bad to have a lot of credit cards with zero balance? ›

    However, multiple accounts may be difficult to track, resulting in missed payments that lower your credit score. You must decide what you can manage and what will make you appear most desirable. Having too many cards with a zero balance will not improve your credit score. In fact, it can actually hurt it.

    Is having a zero balance on credit cards bad? ›

    Keeping a zero balance is a sign that you're being responsible with the credit extended to you. As long as you keep utilization low and continue on-time payments with a zero balance, there's a good chance you'll see your credit score rise, as well.

    Should I pay off my credit card in full or leave a small balance? ›

    It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.

    What's the highest credit limit you can get with Capital One? ›

    Capital One Venture Rewards Credit Card

    Highest reported credit limit: $58,000, according to a member on the myFICO forums. Sign-up bonus: Earn 75,000 bonus miles when you spend $4,000 on purchases in the first three months from account opening.

    How much credit will Capital One give you? ›

    Carmen Peters, Member. The Capital One Quicksilver credit limit depends on your income, creditworthiness and payment history, which are evaluated once you apply for the card. According to anecdotal reports, the card's credit limit can be as low as $750 and as high as $10,000.

    How to raise your credit score 200 points in 30 days? ›

    How to Raise your Credit Score by 200 Points in 30 Days?
    1. Be a Responsible Payer. ...
    2. Limit your Loan and Credit Card Applications. ...
    3. Lower your Credit Utilisation Rate. ...
    4. Raise Dispute for Inaccuracies in your Credit Report. ...
    5. Do not Close Old Accounts.
    Aug 1, 2022

    What credit card helps build credit the fastest? ›

    Best credit cards for building credit comparison chart
    Credit CardBest for
    Capital One Platinum Secured Credit CardLow security deposit
    Capital One QuicksilverOne Cash Rewards Credit CardFair credit
    First Progress Platinum Elite Mastercard® Secured Credit CardFast processing
    OpenSky® Secured Visa® Credit CardNo credit check
    4 more rows


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