Skip to Content Top

How to use credit cards when rebuilding your credit score


The idea that you could possibly use credit cards for your benefit when recovering from overwhelming debt seems counterintuitive. However, if you use credit cards in responsible, intentioned ways, they may actually be able to help you rebuild some of the negative effects on credit scores that bankruptcy and various debt issues can inspire.

When you are attempting to rebuild your credit score, it is imperative that you pay your bills on time. Failure to do so will ultimately harm your credit score, no matter how much of any given bill you pay off each month. Therefore, if you cannot pay the minimum balance on your credit card each month and you cannot do so on time, aim to stop using credit cards until you can do so.

If you can pay at least the minimum balance each month on a credit card and can do so on time, it may benefit you to use a credit card as you are rebuilding your credit score. The kinds of data that are reported to credit bureaus vary from credit card company to credit card company. However, it seems that companies are increasingly opting to report the payment amount that you make each month. Therefore, it can be potentially beneficial for your credit score if you pay off your credit card balance in full each month.

It can also benefit your credit score if you use no more than 30 percent of your credit card’s available credit each month. This intentioned spending will help to signal to creditors that you aim to live within your means on a consistent basis.

Source: New York Times, “ For Better Credit Score, Max Out Payments, Not the Card,” Ann Carrns, May 9, 2014