How to Use A Credit Card to Build Credit Score

By Dave Nyam •  Updated: 01/21/24 •  4 min read

Weigh a credit grade/score like a monetary report card, mirroring your capability to clear debts promptly. A good score can unlock better interest rates, loan terms, and credit limits and even impact eligibility for services like cell phone contracts or insurance. But how will you ace that test, especially when you are new to credit or your score is on the low side? The secret weapon is a credit card. When used responsibly, the credit card is a revolving line of credit that lends you money, allows you to pay it back over time, and shows your worthy skills in managing debts. This article will guide you on using a credit card to build a score in South Africa and have certain common queries answered.

How to Use A Credit Card to Build Credit Score

To build a credit rating using a credit card, the initial move is picking the best one based on the consumer’s demands and budget. Some elements to weigh include monthly charges and interest rates incurred, the limits fixed by the lender, and the rewards accessible while utilizing the card. In South Africa, many card options are available depending on different banks and other providers.

Consider a secured or prepaid card if you’re new to credit or have a low score. These require a deposit or pre-loaded money acting as your credit limit. Regular use and timely payments can help build a credit history and score improvements.

Once you have that card, utilize it for minor, regular buys that you can manage to settle. Clear your arrears on time and at 100% every month. Keep low credit line utilization; ideally, aim to utilize less than 10% of the available credit. Paying off your balance, making multiple payments month-to-month, or requesting a higher credit limit may pull down this ratio, the percentage of your available credit in use.

How Often Should One Use A Credit Card In Building Credit?

There is no final answer on how frequently you should use a credit card to build credit because various credit cards may bear diverse terms and conditions regarding that usage. However, you must use your credit card for at least one month and very often to build the credit. This is because when you regularly use your credit card, it goes a long way in seeing that there is the establishment of a positive payment history, which is considered the single most significant factor affecting your credit score. It can also prevent inactivity fees from some credit card providers that may charge you if you fail to use your credit card over a given period.

Alternatively, making wide or irresponsible use of your credit card can lead to disadvantages such as increasing your credit utilization ratio, paying interest and fees from what you spend, encouraging accumulating debts, and some form of overspending. Therefore, you should use your credit card wisely and moderately only for purchases you can afford to repay. You should also monitor your credit card activity and balance periodically, comparing it with your credit card statement at the end of every month to ensure that you are using your credit card to build your credit and not affect it.

How To Build A Credit Fast Using A Credit Card?

Improving your credit grade with a credit card is similar to a sprint, not a marathon. However, there are approaches to accelerate this process.

What Happens If You Don’t Use Your Credit Card?

In SA, a credit card offers more than being a plastic rectangle. It’s a key to rewards and benefits, like cash back and discounts. But neglect it, and you might lose these perks. Forgotten balances from annual fees or subscriptions could pile up, denting your credit score. Infrequent use might slip fraudulent transactions under your radar, causing further damage. Your credit limit could shrink due to inactivity, indicating over-reliance on credit. Worst case scenario? Your account gets closed, reducing your credit limit, affecting your credit age, and decreasing your credit mix. So, keep your card active and reap its benefits.

Keep Reading

How to Pay Credit Card Bills to Increase Credit Score

How to Pay Credit Card Bills to Increase Credit Score

This article explores the steps you can take to pay your credit card to increase your credit score.  

Why Won’t My Credit Card Autofill Online Any More?

Why Won’t My Credit Card Autofill Online Any More?

Today we are here to help you understand the reasons behind this issue and how to resolve it. Soon you will be a master of the autofill option.

How to Check My Credit Card Statement Online

How to Check My Credit Card Statement Online

In this guide, we’ll give you details about how to check your credit card statement online. 

How To Cancel Credit Cards Without Impacting Credit Scores

How To Cancel Credit Cards Without Impacting Credit Scores

Similarly, if your gold card company is charging high annual fees, it may be prudent to cancel it. These points will be explained in great detail in the article.

How to Check If Someone Has Opened A Credit Card In Your Name

How to Check If Someone Has Opened A Credit Card In Your Name

This article will give you a better idea of how to spot an account being opened in your name, detect fraud

Does a Credit Card Cover U-Haul?

Does a Credit Card Cover U-Haul?

Many rental companies for this niche work on the same model, even in South Africa. Maybe one day we will even see U-Haul working in SA, too!

How to Check My Interest Rate on Credit Card?

How to Check My Interest Rate on Credit Card?

Understanding how credit card interest works can help you make an informed decision. Read on to learn how to check interest rates on your credit card.  

How Did Credit Cards Work Before The Internet?

How Did Credit Cards Work Before The Internet?

How Can I Check My Credit Card Account Balance? 

How Can I Check My Credit Card Account Balance? 

This article explains everything you need to know about checking your credit card balance.     

Credit Card Loan Repayment Calculator

Credit Card Loan Repayment Calculator

The article will touch on the deconstruction of the loan repayment calculators for loans taken on a credit card

How Is Credit Different From Debt?

How Is Credit Different From Debt?

This article dissects those ideas, makes clear the differences concerning the role of personal economic finance

How Can Thieves Make Credit Card Purchases Without OTP?

How Can Thieves Make Credit Card Purchases Without OTP?

We aim to provide South African cardholders with the information to shield their financial information as more and more aspects of life become digital.

How to Check If Your Credit Card Has Been Hacked

How to Check If Your Credit Card Has Been Hacked

You can easily fall victim and as such, it is important to read through this entire article to understand credit card theft, hacking and protection. 

What Can Damage A Credit Card?

What Can Damage A Credit Card?

In this paper, we are also going to enlighten the readers about the common mistakes made by users that result in the death of a card

How to Check Credit Card Details On Takealot

How to Check Credit Card Details On Takealot

How to Check Credit Card Details On Takealot. In this blog post, we will take you through some common questions on Takealot.