How to Build Credit With Your Monthly Expenses

Published

May 30, 2018

Gerri Detweiler focuses on helping people understand their credit and debt, and writes about those issues, as well as financial legislation, budgeting, debt recovery and savings strategies. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of TalkCreditRadio.com.

If you play your cards right, small, recurring expenses can win you better credit scores.

Ever had a credit card you used to love but now feel “meh” about? You may now have a card that suits you better, so the old card just never gets used anymore. And if it doesn’t get used, your card issuer might cancel the card.

If you hardly used it anyway, why should you really care? The answer: because it could drop your credit score. While you may not bother to cancel a card you’ve stopped using, credit card issuers can and do cancel cards that show no activity. And yet the age of your accounts figures into your credit score, as does the available credit on revolving accounts (like credit cards). For the sake of your scores, it’s a good idea to keep older accounts open and active, and you don’t need to carry the cards in your wallet.

Automating regular (small) charges and payments can help you keep the card active. That doesn’t mean you don’t have to check your account, however; data breaches and identity theft mean we all must be vigilant and check our accounts regularly for unauthorized transactions.

Another bonus: using one credit card for one specific category of your budget can help you track your spending.

Have a pet, for example? Owning a pet can help you maintain your credit health if you use a credit card (one you might otherwise cancel) to pay veterinary or other pet-related costs that come up regularly. If you have pet insurance or a wellness plan, you can have monthly payments automatically charged to a credit card. You could also automate payments, which assures your payments will be made on time. And payment history makes up a big part of your credit score.

No pet? No problem. Regular charges for anything from refrigerator filters to subscriptions to your cellphone bill will keep your credit line open.

As your work on building good credit, you can track your progress by using a free tool like Credit.com’s Credit Report Card, which shows you two credit scores and grades your credit profile on payment history, debt utilization, credit age, account mix and inquiries related to extending credit.

You may discover the family pooch or kitty (or refrigerator!) can help you rebuild or keep good credit by keeping an old account active. Now that would be a good trick.