How Do I Build Credit with a $500 Credit Card? (2024)

FAQs

How Do I Build Credit with a $500 Credit Card? ›

$500 — When you have a credit limit of $500, ideally your balance is $150 or less. $1,000 —If your credit line is $1,000, this means you should aim for a balance of $300 or less to maintain your credit utilization.

$500 — When you have a credit limit of $500, ideally your balance is $150 or less. $1,000 —If your credit line is $1,000, this means you should aim for a balance of $300 or less to maintain your credit utilization.

To improve your credit score using a credit card, make on-time payments, pay off your balance in full each month if possible, keep your card utilization under 30%, avoid applying for too many cards in a short period and don't close accounts that cost nothing to keep open.

For instance, going from a poor credit score of around 500 to a fair credit score (in the 580-669 range) takes around 12 to 18 months of responsible credit use. Once you've made it to the good credit zone (670-739), don't expect your credit to continue rising as steadily.

Some of the easiest unsecured cards to get approved for are the Indigo® Mastercard®, Mission Lane Visa® Credit Card and Milestone® Mastercard®. While these cards are geared toward people with bad credit and have easy approval odds, they tend to charge high fees and interest, which can make building credit costly.

Make small purchases and pay them off quickly

Credit bureaus look most favorably on on-time and early payments, even if they're for relatively small amounts. If you're building credit from scratch and are on a tight budget, this could be an effective approach to get some momentum on your card.

When should I pay my credit card bill to increase my credit score? ›

Credit card companies report your balance to the credit bureaus every month, typically at the end of each billing cycle. If you make your payment shortly before your statement date, it could help reduce your credit utilization, which can help you increase your credit score or maintain good credit.

Credit scores can drop due to a variety of reasons, including late or missed payments, changes to your credit utilization rate, a change in your credit mix, closing older accounts (which may shorten your length of credit history overall), or applying for new credit accounts.

There isn't a set credit score that each person starts out with. Instead, if you don't have any credit history, you likely don't have a score at all.

For unSecured Credit Cards, your options are limited with a 500 Credit Score, and approval is less likely. However, you might explore Credit Cards specifically designed for rebuilding credit, such as the Capital One Platinum Credit Card or the Indigo Platinum Mastercard.

You can contact your issuer to request a credit line increase. It's also not unusual for issuers to increase credit limits automatically. Be deliberate about your choice to request a credit increase. Too many requests for credit over a short period could imperil your credit score.

It depends on your personal history. For example, if you have never used a credit card before, an initial credit limit of $500 or $1,000 isn't a bad starting point. However, if you have an excellent credit score and a six-figure income, the definition of a good credit limit will be higher.