Open and Use a Credit Card Account

To build credit, use a credit card only for items listed in your spending plan. That way, you can be sure you’ll have enough money to pay your credit card bill by the due date.

Always remember: When it comes to establishing or improving your credit, use your credit card as a way to prove that you can pay money back on time. Every time you pay with a credit card, you take out a loan with your credit card company. Your credit card company pays for the purchase immediately, and extends you credit until you can pay for the purchase at a later date. By paying your credit card bill on time, every month, you prove you can pay money that is loaned to you back on time. Lenders will consider you credit worthy.

Using a Credit Card to Establish Good Credit

Shop around for a credit card that serves your needs, then stick with that card. Establishing a long relationship with one credit card company will help you build good credit.
•	You have to use credit to build a credit history. While you’re building a history, charge small items listed on your spending plan. That way you can be sure you have enough money to pay your credit card bill in full by the due date.
•	Pay all your credit card bills on time, every month.
•	Pay the balance in full, every month.
•	If you use the card to pay for an emergency, adjust your spending plan to allow for the added expense. Reduce other expenses to free up cash. Plan to pay off the charge in three months.
•	If you must carry a balance, never use more than 30% of your credit limit.
•	Wait six months between credit applications to apply for more credit. That includes all types of credit you apply for: credit card, installment loan (car, student, personal), and mortgage loan.
Source: Your Credit Score by Liz Pulliam Weston