Can I Use My Credit Card To Improve My Credit Scores?

Can I Use My Credit Card To Improve My Credit Scores?

Written by Lisa Rennie
Fact-checked by Caitlin Wood
Last Updated September 9, 2022

If your credit scores could use some improvement, you’re not alone. Thousands of Canadians across the country have bad credit, which is preventing them from getting approved for loans, apartments, and even cell phone contracts.

With bad credit, you’re pretty limited as far as what you can do financially. But your credit scores don’t have to be sub-par forever. Luckily, there are several ways to improve your credit scores, including applying for and using your credit card.

Can A Credit Card Help Improve Your Credit Scores?

Credit cards are handy financial tools that allow you to easily and quickly make purchases without having to hit up the ATM for cash. Not only are credit cards convenient, many of them also allow you to collect “points” with every purchase you make which can be redeemed and put towards travel purchases, gas at the pump, groceries, or any other type of expenditure. 

But these powerful little pieces of plastic can be used for a lot more than just expenditures. If used properly, they can also help you improve your credit scores. 

How Can A Credit Card Affect Your Credit Scores?

While your credit scores can be calculated in a number of different ways, there are five common factors are that can affect it; payment history, debt-to-credit ratio, credit history, credit inquiries, and public records. When you use a credit card, it can impact all five of these factors. 

  • Payment History  Credit cards can affect your payment history in both a positive and negative manner. It simply depends on whether you make your payments on time or not. 
  • Debt-To-Credit Ratio –  Credit cards can also affect your debt-to-credit ratio. This ratio looks at your credit usage versus your available credit. In general, lenders like to see a ratio of 30% or lower. 
  • Credit History – The longer you keep your credit card, the longer your credit history will be. Moreover, it will increase the average age of your credit, which can positively impact your credit. 
  • Credit Inquiry  –  When you apply for a credit card, the creditor will typically pull your credit which can negatively impact your credit. In general, it’s recommended that you don’t apply for too many credit cards within a short period of time. 
  • Public Records – If you miss too many of your credit card payments, your creditor may sell your account to a debt collection agency which can severely hurt your credit.  
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How To Improve Your Credit Scores With Your Credit Card? 

Whether you’re just starting to build your credit or you’re trying to improve your bad credit, a credit card can help you in either situation. 

Choose The Right Credit Card For Your Financial Situation

If you don’t already have a credit card and are looking for one to apply for, be sure to do your homework and select the right one. You don’t want to apply for a bunch of different credit cards, as this will lead to multiple hard inquiries which can hurt your scores. 

What If You Can’t Qualify For a Regular Credit Card?

If you’re having difficulties getting approved for a traditional credit card you may want to consider applying for a secured credit card. These cards don’t have any credit requirements, you simply need to provide a certain amount of money upfront as collateral or security. The minimum requirement varies by provider but can be as low as $200.  Then like a regular credit card, you’ll get to make payments which will be reported to one or both credit bureaus. Do keep in mind, you’re credit limit is defined by the amount you put down as security. 

Depending on how responsible you are with the card, your credit scores may be positively impacted.

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Pay Your Bills On Time Every Month

Once you’ve been approved for a credit card or secured credit card, the best thing you can do is pay your bills on time every month. Your payment history typically accounts for around 35% of your credit scores. As such, your credit card payments can have a significant impact on your credit. Moreover, a positive payment history will show future lenders that you are responsible with your debts. 

Your credit score is based on several factors, your payment history generally carries the heaviest weight with ~35% of your scores being influenced by it. Rather than just making minimum payments every month, try your best to pay your bills on time and in full. 

Keep Your Outstanding Balance Low

As previously mentioned, your credit card can also affect your debt-to-credit ratio (aka credit utilization ratio). Your debt-to-credit ratio is a common factor when determining your credit scores and refers to the amount of money you spend relative to your credit limit. Generally, the higher this ratio is, the more likely it can negatively impact your scores.  

Ideally, lenders like to see a ratio of 30% or lower. Keeping it under this threshold will show that you are not overextending yourself more than what you’re comfortable with. You can achieve this by either limiting your spending or by making multiple bill payments within the same billing cycle. 

Don’t Cancel Your Card Unless You Need To

If you close a credit card, keep in mind that it can reduce the average age of your credit accounts. The longer you keep these credit card accounts open, the higher your average credit account age will be which can positively impact your credit scores.

So, if you’re opening up credit cards to take advantage of promotional deals only to close out your account soon after, you could be doing your credit scores more harm than good. By consistently using your credit cards over a long period of time, you’ll be able to build a long credit history. 

Credit Card Effect On Credit Scores FAQs

Can a secured credit card help build my credit? 

Using a secured credit card responsibly can help you build a favourable payment history which, in turn, can positively impact your credit scores. However, if you abuse your card and miss payments or rack up a ton of debt against your credit limit, it can also hurt your credit. 

What can good credit do for me? 

With good credit scores, you can open up many more doors in your financial life. You’ll have an easier time getting approved for traditional loans, be offered lower interest rates, and even increase the odds of getting an apartment or a cell phone contract, all of which depend in part on your credit scores.

Who is a secured credit card best for? 

Secured credit cards can be the perfect financial tool for consumers with bad credit scores to use to improve their scores. They can also be ideal for those who have no credit at all and are looking for a way to build credit from the ground up. Whether you’ve got bad credit or no credit, secured credit cards can be easier to get approved for and can be used to your advantage to build healthy credit scores.

Bottom Line

Your credit card can help improve your credit scores, but it solely depends on how responsibly you use it. That means making all of your payments on time, keeping your credit utilization ratio low, and not opening and closing multiple credit cards just for their introductory promotions. When used right, you may see improvements to your credit scores in as little as a few months.


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Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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