Credit Building > Is it worth getting a credit card just to improve credit score?

Is it worth getting a credit card just to improve credit score?

Wollit Team2 minute read · Updated 23rd September 2024

Credit cards can help you build your credit, but they also come with some real responsibilities and risks. Here are some pros and cons of using a credit card to improve your credit score, how it works, and what you should think about before getting one.

How can a credit card help improve my credit score?

Getting a credit card can be a decent way to build or improve your credit score. Here’s how this works:

Making purchases with your card and then paying off the balance on time helps create a good payment history. Since payment history is the most important thing for your credit score, this can really help improve it.
Your card can also improve your credit utilisation. This ratio is calculated by dividing how much you owe on your cards by your total credit limits. For example, if you have two cards with limits of £1,000 each and you owe £300 total, your utilisation rate is 15%. Keeping this ratio below 25% is ideal; below 10% is even better. A new card increases your overall limit, which can help lower this percentage if you manage it well.
Simply having a card can also help because it adds to the types of credit you have. Having multiple types of credit accounts shows lenders that you can handle different kinds of debt responsibly. This also helps your credit score.
Finally, if you’re new to credit or have limited history, getting a credit card (also called a “credit builder card”) can help you get started.

What are the risks of getting a credit card?

While there are many benefits to getting a credit card for improving your score, be prepared for some risk too:

Having access to credit can lead some people to spend more than they can afford. Be careful about ballooning debt.
If you don’t pay off your balance in full each month, interest charges can add up quickly, making it harder to pay off debt over time.
Forgetting to make payments can lead to late fees and damage your payment history, which can then damage your credit score and mean higher fees and worse options later on.

Will getting a credit card hurt my credit score?

When you apply for a new credit card, it may cause a small drop in your score because of a hard inquiry on your report. However, this impact is usually temporary and your score will recover within a few months if you manage payments well.

What if I don't use my credit card at all?

If you get a credit card but don’t use it or only use it occasionally, it won’t really help build your payment history. There won’t be much benefit to your credit score.

Plus, some credit card issuers might close your account entirely, sometimes with inactivity fees on top.

Also, lenders like to see active accounts. If you don’t use the card at all, consider making small purchases regularly with it and then paying them off immediately to at least keep the account active.

What other alternatives are there?

Building your credit history with a credit card requires you to first buy things on debt and then repay them as soon as possible.

However, you can find safer alternatives, such as specialised credit-building apps. One such app is Wollit.

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 for credit cards with higher credit limits, lower APRs, and much better rewards than the credit builder cards offer.