Do I Need to Have a Credit Card to Improve My Score?
If you do not have a credit card you may wonder is it important for your credit score that you get one. The fact is, that employing a credit card in your financial life directly impacts the most critical factors that make up your personal credit score. This includes a timely payment history (35 percent of the total) and credit card utilization (30 percent).
Obtaining a credit card to use routinely (but responsibly) is among the fastest and most efficient means of either building up or rebuilding your credit profile and score.
Keep in mind that credit scores quantify the way that you manage money which you borrow and repay. Having good credit requires that you possess a solid record of timely debt payments. Not making payments on something like a credit card means that you not only do not have good credit, but you also may have no credit. Making regular charges on a credit card allows you to build up credit without having to go into debt.
So long as you completely pay off your credit card balance every month on time, your issuer will report these credit card payments to each of the three main credit bureaus.
Treating your credit card like it is a debit card (charging only things that you can pay for each month) will keep you from paying interest on purchases and allow you to rapidly build up your credit.
Just remember that you need to keep your charges each month to less than 30 percent of your credit card total available balances so that you do not lose points in the critical credit card utilization category (the second most important consideration for FICO credit scores).
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