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March 19th 2022

How you can use credit cards to build credit history

What's the deal with the credit card craze? They often offer rewards, have stronger fraud liability protections than debit cards and allow you to pay off large balances over time. Credit cards can also help establish and build your credit.

Nova Credit is a cross-border credit bureau that allows newcomers to apply for U.S. credit cards, phone plans, and loans using their foreign credit history.

Nova Credit receives compensation from third-party advertisers, but this content is not provided by them. Any opinions, analyses, reviews or recommendations expressed in this article are those of the authors alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

Louis DeNicola
Personal Finance Writer

What's the deal with the credit card craze? They often offer rewards, have stronger fraud liability protections than debit cards and allow you to pay off large balances over time. But did you know that you can use credit cards to help build your credit? It's true. Credit cards can also help establish and build your credit. Learn more about how you can use credit cards to build your credit.

Many Americans instinctively pull out a credit card to buy a $1 candy bar the same way that they would a $1,000 computer. And according to a 2019 Consumer Financial Protection Bureau (CFPB) report, nearly 170 million Americans (about 72% of adults) have at least one credit card—and many own more than one. 

Why the craze for credit cards in the U.S.? They often offer rewards, have stronger fraud liability protections than debit cards, and allow you to pay off large balances over time. Credit cards can also play an important role in helping you establish and build your credit.

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The U.S. credit system - How to use credit cards to build credit

Credit works differently in the U.S. than in many parts of the world, and a basic understanding of the system can help you start to build your credit score.

In short, here’s how it works:

  1. Credit card issuers, banks, credit unions and other financial institutions can choose to send information to the three major credit bureaus—Experian, Equifax and TransUnion. The bureaus also actively collect data such as bankruptcy records from public court systems.

  2. Credit bureaus create credit reports by matching the information in their database with personal identifiers such as your name and address. A Social Security number (SSN) can be one of these identifiers, but you do not need an SSN to build credit

  3. Credit scoring companies, namely FICO® and VantageScore®, create computer models that analyze a credit report and create a credit score. Creditors use these scores to quickly understand how risky lending money to the person could be. Many credit scores range from 300 to 850, and a higher credit score indicates to lenders that a person is less likely to miss a payment. On-time payments, a long credit history of different types of accounts, low credit card balances and a having a mix of credit cards can help build your credit, but missing payments and high credit card balances can hurt your scores. 

  4. When a company checks your credit, they’re requesting a copy of your credit report, and often a score based on that report, from one of the credit bureaus. If the bureau doesn’t have any information about you in its database, it can’t return a report a score. Some creditors won’t let you open a new account, or won’t offer you favorable terms, if they can’t see that you have good credit. 

A credit card can help you build credit because most major credit bureaus report your account and activity to all three credit bureaus. (Some smaller card issuers only send information to one or two bureaus, or may choose not to report your account at all.) 

You also don’t need to use your credit card all the time to build good credit. For example, you could use your card for one small monthly purchase (such as a subscription) and then set up automatic monthly payments to pay off the balance. Your on-time payment history will show responsible use of your credit card, and your creditworthiness may over time improve as a result. 

For people who move to the U.S. from countries that don’t have a similarly vast credit system, the importance of credit in the U.S. may come as a surprise. Even if you never take out a loan or open a credit card, having good credit can make life easier and save you money.

Why is credit so important in the U.S.?

Credit goes beyond borrowing and can impact many aspects of your life in the U.S.

  • In many states, your credit history can impact your auto and renters or homeowners insurance rates. Having good credit could lower your bills and help save you money.

  • Some employers check your credit history as part of their job application and review process. A poor credit history may prevent you from getting a new job, or keep you from moving up in your current company or field, so building credit is crucial.

  • Landlords may also review your credit history and score before agreeing to rent you an apartment or home. If you have bad credit, you may have to pay a higher security deposit. Or, you might not get approved at all. 

  • Mobile phone, internet and utility providers sometimes require new customers to send a security deposit if they don’t have good credit.

If you might borrow money in the future, having excellent credit can help you qualify for the best loan terms and lowest interest rates. Building credit is also important if you want access to the best credit card offers and higher credit lines, as those cards tend to have stricter minimum credit requirements.

Get a credit card to build credit with your foreign credit history

Through a partnership between Nova Credit and American Express, U.S. newcomers from Australia, Canada, India, Mexico, UK, Brazil, Dominican Republic, Kenya, Nigeria, Switzerland, South Korea, and the Philippines can use their credit history from their home country to apply for any U.S. Amex Personal Card (here’s a guide on how to do it). That can make it one of the best credit cards to help build credit since American Express will report your card account and activity to the credit bureaus, allowing you to use your previous credit card usage to help build credit in the U.S.

There are many American Express Personal Cards to choose from, but here are a few of our top picks:

Blue Cash Everyday® Card from American Express: 

  • Earn a $200 statement credit after you spend $2,000 in purchases on your new Card within the first 6 months.

  • No Annual Fee.

  • Balance Transfer is back! Enjoy 0% intro APR on purchases and balance transfers for 15 months from the date of account opening. After that, 19.24% to 29.99% variable APR.

  • 3% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases, then 1%.

  • 3% Cash Back on U.S. online retail purchases, on up to $6,000 per year, then 1%.

  • 3% Cash Back at U.S. gas stations, on up to $6,000 per year, then 1%.

  • Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit or at Amazon.com checkout.

  • Thinking about getting the Disney Bundle which can include Disney+, Hulu, and ESPN+? Your decision made easy with $7/month back in the form of a statement credit after you spend $9.99 or more each month on an eligible subscription (subject to auto renewal) with your Blue Cash Everyday® Card. Enrollment required.

  • Enjoy up to $15 back per month when you purchase a Home Chef meal kit subscription (subject to auto renewal) with your enrolled Blue Cash Everyday® Card.

Terms apply

Platinum Card® from American Express: 

  • $695 annual fee, terms apply.

  • Earn 80,000 Membership Rewards® Points after you spend $8,000 on eligible purchases on your new Card in your first 6 months of Card Membership. Apply and select your preferred metal Card design: classic Platinum, Platinum x Kehinde Wiley, or Platinum x Julie Mehretu.

  • Earn 5X Membership Rewards® Points for flights booked directly with airlines or with American Express Travel up to $500,000 on these purchases per calendar year and earn 5X Membership Rewards® Points on prepaid hotels booked with American Express Travel.

  • $200 Hotel Credit: Get up to $200 back in statement credits each year on prepaid Fine Hotels + Resorts® or The Hotel Collection bookings with American Express Travel when you pay with your Platinum Card®. The Hotel Collection requires a minimum two-night stay.

  • $240 Digital Entertainment Credit: Get up to $20 back in statement credits each month on eligible purchases made with your Platinum Card® on one or more of the following: Disney+, a Disney Bundle, ESPN+, Hulu, The New York Times, Peacock, and The Wall Street Journal. Enrollment required.

  • The American Express Global Lounge Collection® can provide an escape at the airport. With complimentary access to more than 1,400 airport lounges across 140 countries and counting, you have more airport lounge options than any other credit card issuer on the market. As of 03/2023.

  • $155 Walmart+ Credit: Save on eligible delivery fees, shipping, and more with a Walmart+ membership. Use your Platinum Card® to pay for a monthly Walmart+ membership and get up to $12.95 plus applicable taxes back on one membership (excluding Plus Ups) each month.

  • $200 Airline Fee Credit: Select one qualifying airline and then receive up to $200 in statement credits per calendar year when incidental fees are charged by the airline to your Platinum Card®.

  • $200 Uber Cash: Enjoy Uber VIP status and up to $200 in Uber savings on rides or eats orders in the US annually. Uber Cash and Uber VIP status is available to Basic Card Member only. Terms Apply.

  • $189 CLEAR® Plus Credit: CLEAR® Plus helps to get you to your gate faster at 50+ airports nationwide and get up to $189 back per calendar year on your Membership (subject to auto-renewal) when you use your Card. CLEARLanes are available at 100+ airports, stadiums, and entertainment venues.

  • Receive either a $100 statement credit every 4 years for a Global Entry application fee or a statement credit up to $85 every 4.5 year period for TSA PreCheck® application fee for a 5-year plan only (through a TSA PreCheck® official enrollment provider), when charged to your Platinum Card®. Card Members approved for Global Entry will also receive access to TSA PreCheck at no additional cost.

  • Shop Saks with Platinum: Get up to $100 in statement credits annually for purchases in Saks Fifth Avenue stores or at saks.com on your Platinum Card®. That's up to $50 in statement credits semi-annually. Enrollment required.

  • Unlock access to exclusive reservations and special dining experiences with Global Dining Access by Resy when you add your Platinum Card® to your Resy profile.

Terms Apply.

Blue Cash Preferred® Card from American Express: 

  • Earn a $250 statement credit after you spend $3,000 in purchases on your new Card within the first 6 months.

  • $0 intro annual fee for the first year, then $95.

  • Buy Now, Pay Later: Enjoy $0 intro plan fees when you use Plan It® to split up large purchases into monthly installments. Pay $0 intro plan fees on plans created during the first 12 months from the date of account opening. Plans created after that will have a monthly plan fee up to 1.33% of each eligible purchase amount moved into a plan based on the plan duration, the APR that would otherwise apply to the purchase, and other factors.

  • Low Intro APR: 0% on purchases and balance transfers for 12 months from the date of account opening. After that, your APR will be a variable APR of 19.24% - 29.99%. Variable APRs will not exceed 29.99%.

  • 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%).

  • 6% Cash Back on select U.S. streaming subscriptions.

  • 3% Cash Back at U.S. gas stations.

  • 3% Cash Back on transit (including taxis/rideshare, parking, tolls, trains, buses and more).

  • 1% Cash Back on other purchases.

  • Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit or at Amazon.com checkout.

  • Get up to $120 in statement credits annually when you pay for an auto-renewing subscription to Equinox+ at equinoxplus.com with your Blue Cash Preferred® Card. That’s $10 in statement credits each month. Enrollment required.

  • Thinking about getting the Disney Bundle which can include Disney+, Hulu, and ESPN+? Your decision made easy with $7/month back in the form of a statement credit after you spend $9.99 or more each month on an eligible subscription (subject to auto renewal) with your Blue Cash Preferred® Card. Enrollment required.

Terms Apply.

As a major issuer, American Express offers online access to your account and has a mobile app you can use to manage your account. You can also receive access to a free credit score and report, which you can use to monitor your credit building progress. 

Get a credit card to establish credit history in the U.S.

Many people born in the U.S. start building credit when they take out a student loan, open a student credit card or become an authorized user (a type of second cardholder) on a parent’s credit card account. Alternatively, the secured credit card is another popular option to help build credit. 

Secured cards are designed for people who are new to credit, or who made mistakes in the past and want to repair and build back their credit. To open a secured card, you’ll send the card issuer a refundable security deposit, which will usually determine your card’s credit limit (i.e., your total available credit before your card starts getting declined). The issuer can keep the deposit and close the account if the cardholder falls too far behind on payments. 

With responsible credit card use, cardholders can improve their credit and eventually build their credit to a point where they qualify for unsecured credit cards (which don’t require a deposit). They can then close the secured card and get their refundable deposit back, or some card issuers will proactively upgrade accounts and refund deposits. 

Because secured cards are generally offered to people with no, poor or fair credit, they can sometimes have annual fees, high interest rates and lack cardholder benefits, which can make them a poor decision if you're looking for the best credit cards to build credit fast. 

Fortunately, there are good credit cards to build credit for people who don’t already have a U.S. credit history. For example, Discover® and Capital One® offer secured cards that don’t have an annual fee and allow you to make additional deposits to increase your credit line. 

There are also a few unsecured cards that offer cash back rewards, no annual fees and don’t require a credit history.

Choosing the right credit card to build credit history

There are many types of credit cards to build credit available, and the right card will depend on your circumstances, lifestyle and goals. If you’re looking for the best card to build your credit while minimizing your expenses, you may want to choose a rewards credit card that doesn’t have an annual fee and reports to all three credit bureaus. Or, if you’re interested in earning lots of rewards and getting extra cardholder perks, a card with an annual fee might be worth it. 

Sometimes, card issuers waive the annual fee for the first year to let you try out a credit card while you build that credit history. But make sure you mark your calendar for the end of your first year so you can close or potentially downgrade to a no-fee card if you don’t feel like you got enough value. 

No matter which card you choose, try to track your spending and only make purchases that you can afford to pay in full by the due date. Credit card debt often has a much higher interest rate than other forms of consumer loans, and it’s best to avoid interest charges when possible. 

If you do wind up with a higher balance than you can afford to pay off, still make at least the minimum payment by the due date. Doing so will ensure you don’t wind up with a late payment on your credit report, which could hurt your credit scores. 

To learn more about managing credit cards and building credit in the U.S., check out Nova Credit’s many articles on the topic in our Newcomer Resource Center.

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Credit Cards for No Credit

Credit Cards for International Students

Credit Cards Without SSN

How to Build Credit

How to use your foreign credit history to get credit in the U.S.

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