Credit Building > Will your credit score improve if you only use a credit card sporadically?

Will your credit score improve if you only use a credit card sporadically?

Wollit Team2 minute read · Updated 17th September 2024

Using a credit card sporadically is not the best way to build your credit score. Here is why, how you can actually use a credit card to improve your credit score, and what better alternatives you have.

How does using my credit card affect my credit score?

A credit card can have a significant impact on your credit score.

Using a credit card regularly and making timely payments can help build your credit score. This is because credit card activity, such as balance changes and repayments, is recorded on your credit report. On the other hand, late payments can have a severe negative impact on your credit score.

Regular and responsible use of your credit cards shows lenders that you can manage money and credit, a very important factor in calculating your credit score.

Also, how you use your credit card affects your credit utilisation, another credit score factor.

Credit utilisation refers to the amount of credit you use compared to the total credit available. Keeping your credit utilisation ratio low (ideally below 25%) is crucial for maintaining a good credit score. If you only use a credit card sporadically, you may not be utilising the available credit, which could hurt your credit score. However, if you use the card regularly and pay off the balance in full each month, your credit utilisation will remain low, improving your credit score.

Credit mix is also important for your score, and another area where credit cards help.

Having a mix of different types of credit, such as credit cards, loans, and mortgages, can also positively impact your credit score. This diversity shows that you can manage different types of credit responsibly, which is why credit agencies give you a bonus to your credit score.

How should I improve my credit score if I don’t want to use a credit card?

This is a great question. What you need to keep in mind are three things:

Credit cards are not the ideal credit-building tool anyway, as they make it very easy to get into debt, and they come with high interest too.
However, closing a credit card account is not the best option either. It can actually hurt your credit score. This is because it reduces the amount of available credit, which can increase your credit utilisation ratio.
Finally, there are many credit-building alternatives out there.

A better strategy is to keep your credit cards open but keep them safe and only used for essential purchases. Keeping them open increases the amount of credit you have available and also the average age of your credit accounts – both of which matter for your credit score.

However, the most important thing you can do for your credit score is to build a history of timely, on-time payments. One of the specialised credit-building tools you can use to do this is Wolit.

Building your credit history with a card requires you to first buy things on debt and then repay them as soon as possible. With Wollit, you only need to pay a fixed monthly subscription. Wollit then reports this subscription as a loan repayment to the credit reference agencies.

This directly builds your credit history and improves your credit score – while keeping you safe from high APR charges, maxed-out credit limits, or the risk of more debt.

More importantly, as your credit score increases, you’ll eventually become eligible not only for much better credit cards, but also for larger personal loans, cheaper insurance, and great mortgages.