To build credit with a $500 credit card, pay the bill by the due date every month, as payment history is the most important factor in calculating your credit score. Keeping your credit utilization as low as possible will also help your credit score.
You can get personalized credit-improvement advice by signing up for a free WalletHub account. You can also check out general best practices below.
Tips for Building Credit with a $500 Credit Card Limit
Pay the bill on time every month. Late or missed payments can negatively impact your credit score, so it's important to always pay your bill by the due date. Try to pay in full, too, so you can avoid interest charges. Setting up automated monthly payments from a checking account is very helpful.
Keep your credit utilization low. Aim to keep your credit utilization ratio below 30%. This means that on a credit card with a $500 credit limit, you should try to keep your monthly statement balance below $150.
Use the card regularly. Consistently using your credit card for small purchases and paying off the balance in full each month will demonstrate that you can manage your credit line responsibly and avoid the temptation to overspend.
Monitor your credit. Regularly review your credit report for errors to ensure it accurately reflects your credit history. You can sign up for a free WalletHub account and get access to 24/7 credit monitoring, in addition to free credit scores and credit reports that are updated on a daily basis.
Request a credit limit increase. If your account has been open for several months and is in good standing, you may be eligible for a higher credit limit. Alternatively, if you have a secured credit card, the issuer may allow you to add funds to your security deposit, which in turn will raise your credit limit.
Apply for additional credit when your score improves. As you build a positive credit history, you may consider applying for additional credit cards or other credit accounts. However, avoid applying for multiple credit cards within a short period as it can negatively impact your credit score.
Remember, responsible credit practices over time can gradually improve your credit score and help you qualify for higher credit limits and better loan terms in the future. To learn more, refer to WalletHub’s guide on how to build credit.
This answer was first published on 08/29/23. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
