How to Improve Your Credit Score with Credit Cards

Applying for a loan, a credit card or any type of funding requires you to have a decent credit score. Unless you opt for non-traditional finance options, lenders will almost always have a look at your credit report. Not only will your score affect whether or not you can get approved, but it also has a major impact on the interest rates you will end up paying.

Improving your credit score is a constant battle that you should never stop working on. There are a few ways you can improve your score, but for this article, we’re going to cover how you can improve your credit score by using credit cards.

What is a Good Credit Score

Your financial health depends on your credit score. But first you must understand how the point system works. This will vary depending on your location (United States or Canada) and the credit bureau you are specifically looking at (there are a few credit bureaus including Equifax, TransUnion and Experian). Most lenders will look at one or multiple credit bureaus when evaluating your score, so it’s important to have a good rating on all 3 reporting credit bureaus.

Generally, a credit score will fall within a range of 300 to 900 points, with 900 being a perfect score and 300 being the lowest possible score you could achieve. Some credit bureaus stop at 850.

Here is a general breakdown of what each range means:

  • 300 – 580: Very Poor
  • 580 – 650: Poor
  • 650 – 700: Fair
  • 700 – 750: Good
  • 750 – 800: Very Good
  • 800 – 900: Excellent

The average credit score in the United States is currently 698 and in Canada, it’s 672. If you’re under 800, you should certainly be working on bringing your score up higher. Keep in mind that increasing your credit score is a lot easier to do when you’re at a lower number. The higher the number gets, the harder it is to experience quick, fast jumps in your score.

What is the Minimum Score for a Credit Card Approval

Simply put, there is no minimum credit rating that is set in stone. However, most lenders will not consider your application unless you’re at least at 650 or higher. Some lenders will consider you as low as 600, but this is quite rare.

Major banks will not normally provide approvals to people below 650 and some even prefer a score of 700 or higher.

However, if you have a score that falls in the Poor or Very Poor range, you can still get approved for a credit card. What you need to look for a is a secured credit card, such as the Neo Guaranteed Approval Secured Card. These types of secured cards allow you to get your hands on a credit card to rebuild your credit score and history even if you’ve been turned down by traditional financial institutions.

In most cases, you have to send funds on the card, which can then be used for purchases. This means the card provider is taking no risks, while allowing you to build up your score.


  • You get a secured credit card
  • You send an initial deposit of $500
  • You now have $500 available to use on your card

With time, the credit limit can increase, allowing you to gain access to larger amounts without having to actually send money onto the card.

How to Optimize Credit Card Usage

Whether you’re using a secured card or a traditional one, there are good practices that you will want to follow in order to make your credit score thrive. Ignoring these good habits can have an opposite affect and really damage your score quickly.

Here are a few tips to follow if you want to improve your score using credit cards:

  • 30% Rule: Your credit card usage should never exceed 30% of your credit limit. This means, if you have a credit limit of $1,000 on your card, you should never use over $300 in any given time frame. You can use up the entire balance, just make sure to repay it immediately. You need to make sure that your card is below 30% when the card issuer provides their monthly reporting to the major credit bureaus. This applies if you have multiple cards as well. If you have three cards with a $5,000 limit each, your total limit is $15,000 – never keep a balance above $4,500. Remaining below 30% will have a positive impact on your score, being above 30% will have a negative impact.
  • Get 3 Credit Cards: Once your score is above 650, apply for a real credit card (not a secured one). Build up your score a bit more and then get yourself a 2nd card. Try to get up to 3 real credit cards. With 3 credit cards that remain below a 30% utilization, your credit score will increase a lot faster. This also shows lenders and banks that you can easily have access to credit but do not need to use it.
  • Never Close Accounts: Never cut a credit card and throw it in the trash to prevent yourself from using it. Instead, use it for very small purchases every month and repay it immediately. A credit card that goes unused can get terminated after a while and credit bureaus look at account age when determining your score. The older an account, the better it is.

If you follow those three basic guidelines, you should notice a nice, steady increase in your score. This is especially true if you have a very low score to begin with. Remember, low scores are much easier to improve than scores that are already excellent.

Consider Getting a Personal Loan to Pay Off Credit Card Debt

If you already have numerous credit cards and they are all maxed, you should consider getting a personal loan to pay them off. This will achieve two things:

  1. The first thing this does is it brings all of your cards down to 0% utilization, which is very good for improving your score.
  2. The second thing this does is it provides you with a personal loan on your credit report. As long as you never miss a payment, this will also have a positive impact on your score.

This not only helps improve your score, but it also allows you to pay much less in interest fees. Credit card fees are often around 20%, whereas a personal loan will usually be much lower.

The bottom line is, when used properly, credit cards are a great way to work on your score and bring it up over time. If your score is correctly very poor, you could notice a huge increase in a matter of weeks.

David Lebrun
David Lebrun
David Lebrun is a trusted lending expert with over 12 years of experience in financial research & education. David educates readers on making smart financial decisions by writing about personal loans, business loans, home loans, car loans and credit cards.

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