When I was growing up, my dad liked to tell a story from when he first went out on his own. He used a credit card to buy a TV, and when the bill arrived, he paid the balance off in full. That, he’d proudly inform me, was the foundation of his excellent credit history.
I was lucky to have good role models when it came to building credit, because my dad knew what he was talking about. Judicious use of credit cards is an excellent way to build credit, and most of us need credit to do things like buy a house.
According to one expert,
Paying on time each month and lightly spending on your new credit card will help you build credit. You can even pay your balance in full each month and still improve your credit score. Your score won’t reward you for paying interest charges.
You should also start small with just one or two credit cards. Be sure they’re in your own name only (and not a parent’s or spouse’s) to ensure you’re building your credit history.
If you’re ready to start building or re-building your credit, there are credit building cards designed to help you do just that. They generally have higher interest rates, but I strongly urge you to pay off balances in full so the interest rate shouldn’t matter much. Look for a card that reports to the major credit bureaus to get the most mileage out of your credit building efforts.