Credit cards with low limits still can build strong credit

Dear Experian,

Do small available balance credit cards, such as retail cards or gas cards with say $300 available balance, help or hurt credit scores, even if no balance is owed?



Dear IND,

Even accounts with small balances can help. The issue isn’t how much credit you have available, but rather how you manage the credit you have at your disposal.

You do need to be aware that some gas cards are charge cards, meaning you are required to pay the balance in full each month. Such accounts won’t hurt your credit history if they are paid on time, but they likely won’t be as positive as credit cards that are paid on time with low balances.

Credit cards allow you to revolve a balance, or carry a balance from one month to the next. Because you control how much you pay and whether or not you charge to the limit d, credit cards demonstrate even more clearly that you can responsibly manage credit. By charging a small amount on at least one card and paying the balance on time, you will show that you can handle larger amounts of available credit. Eventually you very likely will be offered accounts with larger balances.

In fact, one of the best ways to build a strong credit history is to start small and build up. That doesn’t mean you should go out and apply for a bunch of retail credit cards or gas cards. You only need a few accounts reported to the credit reporting companies.

As the positive history on those accounts grows, your creditworthiness will grow with it.

Thanks for asking.

- The “Ask Experian” 

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