Do rewards cards help you build credit?

There can be many benefits to using a rewards credit card responsibly. Who doesn’t want to earn something back on money you’re already spending? 

But have you ever wondered how using a rewards credit card might affect your credit score? Can you build credit with a rewards card? And if so, how does it work? Keep reading to learn more. 

There are many different types of rewards cards out there. And each one might have different requirements, terms and benefits. But here’s how rewards cards generally work.

When you make purchases with your rewards credit card, you earn rewards in the form of cash back, miles or points. Then, you can redeem those rewards in various ways, depending on the card. 

With some rewards cards, you earn the same rate of rewards on every purchase. With others, you might earn more rewards on certain categories of purchases. 

And when it comes to redeeming your rewards, that can vary too. Some cards might only let you redeem your rewards in specific ways, like paying for travel expenses. While others might give you more options, like putting your rewards toward your credit card statement balance or gift cards. Some Capital One cards even let you use your rewards at Amazon.com.

Before you decide what kind of rewards card is right for you, it’s always a good idea to read your card’s terms and conditions closely. That way, you’ll understand how you can earn and redeem your rewards, any fees associated with the card and more. 

Using a rewards card responsibly can be part of building credit and improving your credit score. And that’s true of any credit card, whether it offers rewards or not. 

And if you’re still working to improve your credit, you might consider a rewards card like Quicksilver Secured Rewards from Capital One. With Quicksilver Secured, you earn 1.5% cash back on every purchase, with a refundable $200 minimum deposit. And with responsible card use, which includes making on-time payments, you could earn your deposit back and upgrade to an unsecured Quicksilver card.*

But whether you build credit with any card comes down to a variety of factors, including how you use it and what shows up on your credit reports. 

Keep in mind that you may have multiple credit reports and multiple credit scores. And your scores can vary based on a variety of factors, including which credit bureau’s report supplied the information used to calculate the score. 

So what does responsible credit card use look like? Here are a few tips from the Consumer Financial Protection Bureau (CFPB) to help improve your credit.

Always paying your credit card bills and other loans on time is important—especially since a history of late or missed payments could cause a dip in your credit score.

If you’re concerned about missing a due date, features like automatic bill pay can help you stay on top of your account payments.

It’s a good idea to keep your credit utilization ratio low by not using all of your available credit. 

According to the CFPB, experts recommend keeping your credit utilization below 30% of your available credit across all accounts. 

So if your only line of credit is a credit card with a $2,000 limit, that would mean keeping your balance below $600.

The CFPB also recommends paying your full balance whenever you can. And if you can’t do that, it’s still a good idea to pay as much of it as possible. 

“Credit scores are based on experience over time,” says the CFPB. That means that the length of your credit history is another factor that can affect your credit scores. 

Closing an account could impact your credit age. So if it makes sense for your financial situation, keeping accounts open might be a good idea. 

Plus, closing a credit account can increase your credit utilization ratio, since it lowers the amount of available credit you have across all accounts. 

Keep in mind that a card issuer may also choose to close a credit card account for reasons like low usage.

Before you apply for a new credit card, it’s a good idea to pause and think about whether you really need it. Multiple credit applications in a short period of time could negatively impact your score.

If you’re unsure whether you’ll be approved for a card, some lenders offer a pre-approval option that you can use before you apply. That includes Capital One. You can see whether you’re pre-approved for some Capital One cards before you apply with no impact to your credit score. And it only takes a few minutes.

Thinking about applying for a rewards card, or wondering how using a rewards card is affecting your credit score? You might want to monitor your credit to see where you stand. 

You can get free credit reports from each of the three major credit reporting agencies—TransUnion®, Experian® and Equifax®—by visiting AnnualCreditReport.com. There may be a limit on how often you can obtain your report. Check the site for details.

You can also monitor your credit health with tools like CreditWise from Capital One, even if you’re not a Capital One cardholder. With the CreditWise app, you can access your free TransUnion credit report and weekly VantageScore® 3.0 credit score for free anytime—without hurting your score. 

And with the CreditWise Simulator, you can explore the potential impact of your financial decisions before you even make them.