Credit cards can hurt your credit score—but they can also help rebuild it.
Although this seems contradictory, if you understand how credit scoring works and know the right kind of expenses to charge on your credit card, you can take a big step toward rebuilding your credit.
First, you have to understand a fundamental rule of improving your credit health:
You have to be in it to win it.
In other words, to rebuild your credit you must prove you can use it responsibly by practicing selective spending with your plastic.
Since 1998, we've been helping to educate consumers on financial issues while providing the tools and solutions they need to effectively manage these issues.
We wanted to create the most in-depth, detailed guide online to help you understand the different tactics you can use to rebuild your credit by using your credit cards.
Rebuildingyour credit and improving your credit score takes time, but using credit cards for the right kinds of purchases is one of the easiest, simplest ways to do it.
To help you rebuild your credit, we made a list of some expenses you already have that you can pay for with your credit card.
That way, you're not running up your credit bills on stuff you don't really need, and you'll already have money in your budget to pay for the expenses that you do charge.
Explore some of the best (and worst) things to pay for with credit cards, and if you stay on course, you'll start seeing your credit score climb.
Start with whichever purchases below matches your spending style, and stay motivated to continue your rebuilding efforts.
A Smart Credit Card Spending Guide
Strategize your spend and speed up credit score improvement
If you've just recently re-entered the credit game, you'll want to take the spend-low-and-grow-slow approach to rebuilding your credit.
That means using your credit cards for small monthly expenses in lieu of cash and paying off your balance in full at the end of the month.
The more rebuilding you have to do, the more cautious you should be about testing the credit waters.
Eventually, as your credit improves and your credit lines grow, you can use credit for a bigger variety of purchases.
Just remember: Paying for your everyday needs with credit makes sense so long as you don't use it to live beyond your means.
Here are some potential expenses you can put on plastic to demonstrate responsible credit use.
- See if you Pre-Qualify without harming your credit score
- Track your progress with free online access to your Experian credit score, terms apply
- Looking to rebuild credit? We report to the major credit bureaus monthly
- Receive opportunities for credit line increases, a fee may apply
- Make paying your bill easier with the ability to choose your payment due date, terms apply
- Stay in-the-know with customizable account alerts via email and text
- Intro APRN/A
- Regular APR17.49% - 25.49% Variable
- Annual fee$0 - $99
- Credit levelFair Credit or higher
Put gas on credit to fuel your credit rebuild.You need to fill up the tank anyway, so designating gas purchases as the only credit card spending for the month is a simple strategy to follow for beginners.
Set up a small recurring charge on your new card for big benefits. If you enjoy a streaming service, whether it's Netflix, Hulu, or Spotify, consider putting those $10–$20 monthly fees on your credit card.
Even though it's a small amount, having regular activity on your credit report demonstrates that you're using—but not abusing—credit.
Switch your monthly gym membership payment to pump up your credit score. Assuming you're actually using your membership and can afford it, this is another example of a recurring bill that you can add to your plastic to keep it active.
Feed your family and your credit score. Using your card to buy groceries is another smart move (so long as you're not splurging on Kobe beef and caviar!).
Rock those recurring bills with credit to maximize your usage. You can set up your monthly bills to be paid by your credit card automatically—from phone to cable bills, car insurance, utilities and more.
Keep budgeting for those bills the same way you did before since you are really just moving the expense to your credit card account.
The only caveat: Be careful you don't overload your credit line (we'll explain more about utilization below), or end up postponing your bill payments and accruing interest as a result.
Use credit cards for online shopping security. Whether you're an Amazon addict or an Etsy shopper, paying with a credit card online is the safest way to go when shopping online.
That's because you'll have zero-fraud liability, meaning you usually won't be held accountable for a single dollar if a fraudster hacks your information and uses your card to make a purchase.
With debit cards, the same situation can sometimes tie up your money during an investigation.
And if you don't catch a bogus debit card charge and report it right away, you can be on the hook for up to $500.
Book a trip (but pay it off right away). Using a credit card for airline tickets and hotel reservations can give you more recourse should something go wrong, and save you money.
That's because many cards offer perks like travel insurance and trip cancellation service at no additional charge.
The key, though, is to not use credit cards for extravagant vacations that you can't really afford—plastic is simply a payment tool to use as a stand-in for the cash you've already saved up.
Charge your next washing machine, stove, or other major appliance. There's nothing more frustrating than when an appliance or other big-ticket item malfunctions right after the manufacturer's warranty period ends.
Many credit cards offer free extended warranty programs and even purchase protection, which covers loss and theft, so consider paying for appliances and electronics with a swipe.
Use your credit card to back up PayPal purchases … just in case. Although you can pay sellers directly from your checking account, you will get better consumer protections if you use credit.
In other words, if you end up having to dispute a purchase, your credit card company will fight for you—your bank probably won't.
Rent a car with a credit card and save on insurance. A good portion of credit cards will provide additional insurance coverage on rental cars, so you don't have to pay extra on top of the rental price.
Choose credit over cash when paying service providers. Again, nothing beats credit cards when it comes to the ability to cancel payment if a job isn't done to your satisfaction.
If you're hiring a company to do work on your home, for instance, paying with credit gives you more leverage.
Swipe your medical co-pay and keep doctor bills in check. If you've ever had the hassle of getting billed for a co-payment that you know you made in cash, it can be frustrating.
With a credit card, proof of payment is a click away.
Charge expenses that may qualify as tax write-offs (your accountant will love you!). If you itemize your taxes and aren't great about keeping receipts, putting qualifying expenses on credit allows you to quickly calculate your monthly spending.
If you have a home office, for example, that means paying for everything from office supplies to printer ink to postal stamps with your card.
Work your credit card on those work expenses. The next time you travel for work, putting all of your purchases on one card can be your backup in case you lose any of those cab or airport snack receipts.
If the boss has to pay you back, printing out your credit card statement certainly makes it easy.
- Credit lines available from $200 to $5,000! Super Low Fixed 9.99% interest rate on purchases - with no penalty rate!
- No minimum credit score requirements! We invite all credit types to apply! No processing or application fees!
- Helps strengthen your credit with responsible card use. Reports to three national bureaus
- Fast, easy application process. Choose your credit line and open your Personal Savings Deposit Account to secure your line.
- Intro APRN/A
- Regular APR9.99% (Fixed)
- Annual fee$49
- Credit levelBad Credit/No Credit or higher
Knowing the best times to use your credit cards makes you a smarter consumer, and all of the above purchases qualify.
Rule of (plastic) thumb: The less expensive purchases listed above (i.e. Netflix, gas) are perfect for beginners with smaller credit limits.
The larger purchases (i.e., trips, monthly bills, appliances) are swipe-worthy once you have more credit available to you, provided you are paying your balance down to zero each month.
Once you establish that you can stay in control of the credit lines you have, your credit status will improve.
Some credit card purchases should be avoided to stay on credit improvement course
In addition to knowing which types of purchases can help you rebuild credit, you should know which ones have the potential to sabotage your success.
Here are a few charges that can cripple your credit rebuilding plan:
Taxes can tack on huge interest charges. If you end up with a large tax bill, you might feel pressure to just charge it to get Uncle Sam off your back.
This will not only tie up a good chunk of your available credit, but it can cost you additional money over time.
A better move is to work directly with the IRS to set up a payment plan, which will almost always have a much better interest rate.
Choose smarter options for tuition payments. You might go ahead and put a semester's tuition bill onto plastic, but the interest payments will be tough to swallow.
Consider looking into student loans or talking to the school about other financing options that won't put a strain on your credit cards.
Medical bills aren't good for credit health. If you've had a procedure or been to the hospital, those monster bills beyond your co-pay can be frightening.
But before you "infect" your credit score by maxing it out with medical bills, call the hospital or provider.
They can often work out a payment plan with you, typically with no interest.
Avoid keeping-up-with-the-Jones' charges. If there's a dream vacation or lavish party that you really can't afford, putting it on credit is unwise.
Do your research to find solutions that fit your budget, or put your plans on pause while you save up.
Otherwise, you'll end up paying for that trek to Hawaii or posh Sweet 16 for years.
Bottom line? Choose payment options that incur the least amount of interest, live within your means, and save up for splurges.
- Apply Now for a New Credit Card
- Compare Cards for All Credit Ranges
Credit Rebuilding 101
Get your hands on some credit, then start swiping
Depending on the severity of your credit history, you might have some trouble qualifying for a credit card.
That can feel overwhelming.
I was in the same boat when my wife and I sat down and assessed our credit.
It was simple: We needed to get our credit back under control.
She was working on a law degree and could not work.
That, coupled with a lower credit score, kept us from getting our new dream car.
I was so set on launching my own business that I didn't want to admit something like credit could stop me.
Thankfully, Sarah was so supportive and we sat down and worked out a budget plan together.
Our credit scores rose, our bills started to disappear, and we eventually got that dream car.
But not without some serious dedication and work.
Here's what worked for us.
See where you stand, and create a game plan. First, check your credit reports and get yourfree credit scores to see where you stand.
FICO and VantageScore, the two most popular scoring models, have scores that range from 300 to 850.
If things are "Bad," don't despair. If you're among those in the "Bad" tier of credit (typically defined as scores below 630), then you will likely have fewer options.
Luckily, there is such thing as credit cards for people with bad credit.
There are evensome cards that have a guaranteed approval, no matter how dismal your score.
Secure yourself a secured card, which can help you build credit. If you've had financial troubles, you'll have to earn back the trust of credit card issuers.
That's where secured cards come in.
These products function in the same way as regular credit cards, but you have to put up a cash security deposit as collateral in order to open the account.
So, to have a $300 line of credit, usually you'll have to leave a $300 deposit.
Since reported activity is needed to calculate your credit scores, you want to be sure you're getting "credit" for your good behavior.
Shop around for a store credit card—another lenient option. Some consumers with bad credit might still be able to qualify for a store retail card, which traditionally has less stringent qualifications.
Make sure you pay the card in full each month since store cards have much higher interest rates and less favorable terms and conditions than regular credit cards.
The point here is that you have to use credit in order to build credit.
- See if you Pre-Qualify without harming your credit score. Find the card that's right for you in less than 60 seconds.
- CreditOneBank.com and the Credit One Bank mobile app makes it easy to access and manage all your account information and make payments whether you're at home or on-the-go.
- Know you're protected from unauthorized charges with Zero Fraud Liability—included with every Credit One Bank account
- Take advantage of free online access to your Experian credit score and credit report summary so you can track the key factors impacting your credit health. Terms apply.
- Give your credit a boost with credit line increase opportunities, a fee may apply.
- Eligible purchases such as gas, groceries, mobile phone, internet, cable and satellite TV will automatically earn 1% cash back rewards. Terms apply.
- Intro APRN/A
- Regular APR17.49% - 25.49% Variable
- Annual fee$0 - $99
- Credit levelBad Credit or higher
If you're having trouble getting approved for regular credit cards with no annual fee, try adding one of these lenient products to your wallet so you can begin rebuilding.
Wield your plastic wisely
Getting approved for a credit card is just the start—next, you need to master the credit behaviors that can improve your credit score.
The last thing you want to do when you're rebuilding your credit is slip up by missing a payment or piling on debt.
Although there are some steps you can take to improve your credit score in as little as 24 hours, if you're descending into the depths of bad credit, proving that you are creditworthy will take a bit more time and a lot of diligence.
If you can nail down the top two factors affecting your credit score—making payments on time and keeping balances low—you're on your way to steady score improvement.
Use credit sparingly at first. You don't want to fall back on old habits by spending beyond your means.
Whatever you use it for, limit yourself to a couple of the smaller purchase options listed above, then tuck the card away until next month when the balance is zero again.
Automate your payments so you're never late. Late payments can send credit scores plummeting—a big no-no if you're trying to rebuild your credit.
Set up your credit card account so that the minimum payment is automatically deducted from your bank account.
That way you don't have to worry about a due date slipping through the cracks.
Then, sign on manually to pay any remaining balance.
Don't carry a balance. Your goal: However much you charge, you want to aim to pay off the full amount by or before the due date.
This will help you avoid expensive interest charges on top of what you owe and illustrate to credit issuers that you aren't spending beyond your means.
Watch the utilization ratio all month long. Even if you're paying the bill in full at the end of the month, using most or all of your available credit can still bite you.
That's because if a credit issuer reports your activity before your payment due date, it can appear that you're close to maxing out your card.
Even though you have the money set aside to pay it off in full, the credit scoring algorithms just go by the reported numbers without that context.
Your strategy: Figure out what 30% of your credit limit is, and self-impose that amount as the maximum you can owe at any given time.
So with a secured card that may only have a $300 limit to work with, you'd want your monthly purchases to stay below $100.
Nip lateness in the bud. If you do happen to miss a payment, get on the phone or go online to the issuer ASAP.
Late payments are not reported to the credit bureaus until you miss a full payment cycle (30 days), so there's a little leeway if you can get your payment in before that.
But don't make this a habit since you'll be hit with late fees and may end up with a high penalty APR.
By carefully reintroducing credit card spending into your life you can stay on top of payments and keep your utilization in the credit-score-friendly range.
With a proven track record of on-time payments, you will most likely be able to graduate to unsecured credit cards in 6–12 months.
Once your credit limit increases, you can start using your unsecured cards for a wider selection of everyday expenses (hence, some of the larger purchase suggestions above) since you'll have more utilization wiggle room.
Just keep following the basic rules: Keep your utilization low, and don't charge more than you can afford to pay back.
Once your credit has improved, take advantage of plastic purchase perks
If you're approaching "Good" credit score territory (around 690–720), there's no reason you shouldn't reap some great consumer benefits from your credit cards.
There are lots of great cards designed for people with "Fair" credit, with even more options as scores climb.
Still, the big caveat is to never lose sight of the fact that having more credit isn't freedom to overspend.
Remember the bad habits that caused your personal finance struggles in the first place and make sure to practice plastic willpower even as more credit becomes available to you.
Create a credit rebuilding plan and swipe responsibly
Now you know which expenses you can charge on your credit card to help you rebuild your credit.
We've seen thousands of CreditLoan.com readers get out of debt and rebuild their credit by using some of the tips and techniques we're sharing in this article
Whether you're building credit with a secured credit card or have advanced into unsecured cards like cash-back credit cards or rewards cards, just stick to responsible spending and consistent monthly payments.
Have you managed to rebuild your credit using credit cards in the past?
Which expenses do you think you can start charging on your credit card right now?
Tell us in the comments below!