Establishing Credit

Using Credit Cards to Establish Your Credit History

Dear Experian,

I have been approved for two credit cards with two different limits and interest rates. One offers cash back rewards. I am trying to build my credit. Should I just use the card with the better terms, or should I use both?


Dear BHK,

Since you are trying to establish your credit history, the best thing to do would be to keep both accounts open. Make small purchases with each and then pay the balance in full each month in order to avoid paying interest.

The most important factor in credit scores is making all of your payments on time, every time. The second most important factor in credit scores is called your utilization ratio, or balance-to-limit ratio.

Your utilization rate is calculated by dividing your total credit card balances by your total limits. You should keep your utilization rate at less than 30 percent, but the lower your balances, the better it is for your credit scores. Ideally, you would pay your balances in full each month.

By keeping both accounts open you will have the credit limits available for both. Paying the balances in full will demonstrate that you use credit wisely.

Paying your bills on time and keeping your balances low will help you build a strong credit history over time that will be reflected in good credit scores.

Thanks for asking.
The "Ask Experian" team

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