You may be trying to build your credit score for the first time or you may be trying to improve your credit rating after hitting hard times. Low limit credit cards may seem like the perfect opportunity to do this, and they do in fact help. However, low limit credit cards alone cannot be relied upon to improve your credit rating. They may improve it by a few points, but not significantly by themselves. This does not mean that they do not have a place in improving your credit.
When you are trying to establish good credit, you may find that you are best off starting with a low limit credit card. Although a low limit credit card will not significantly improve your credit rating by itself, it will help you to get in the habit of paying a bill each month. It does show up on your credit report as well, and will slowly improve your credit score, but this is going to take a very long time. If you are using low limit credit cards to improve your credit score, you will find that the easiest way to do this is to make sure that you work the payments for each card that you apply for before you even fill out the application. Keep less than a 50% balance on each card, and don’t even allow your payments to be late by a single day. Also keep in mind that a major card like Mastercard or Visa will help your credit rating more than a store card will.
It is better if you can use several different methods to improve your credit score. Keep a good rental history, making sure that you are not ever late on your rent or mortgage. Buying a car is also a good way to improve your credit score. Make sure that you buy your car from a reputable dealer, as that will have a better impact on your credit score than buying from many of the “last chance” companies. You may have to put down a significant amount, but your credit score will improve rapidly this way. Combine those with your revolving charge accounts, big or small, and you are well on your way to having good credit. If you want to keep your good credit score, however, make sure that you always have enough in the bank to pay your bills for many months in case of emergency.