If you have poor credit, a shallow credit history or no credit history at all, you may be able to boost your score through the (responsible) use of a credit card. When used properly, a credit card is a great tool for improving your credit, but when used without caution it can lead you down a sure path to debt.

Whether you have just filed for bankruptcy, are a student with no credit history or simply want to improve your credit profile before applying for a loan, a credit card can help your credit score in a variety of ways.

Prove That You Can Use Credit Responsibly

The good news about credit is that you are judged only on your ability to make your payments. Therefore, you can actually start building good credit just by buying $25 worth of gas each month and paying it off by the due date. This gives anyone the opportunity to establish their credit while paying for their daily expenses.

Knowing How to Read Your Credit Score

Your credit worthiness is calculated through your FICO score, which is a three-digit number that helps creditors determine which types of loans they should offer. When it comes to calculating your FICO score, ability to pay on time makes up 35 percent. Keeping your balances low can also help because the amount you owe on a given account is 30 percent of your credit score. That means paying on time and maintaining a low balance account for over half your score.

Establish a Longer Credit History

One thing that lenders look for when approving an individual for a loan is the average age of their credit history. Generally, you have a better chance of getting a loan if you have a credit history of at least five years. However, you don’t have to use your credit card for five years to get credit for having it. As long as the account has been open for five years or more and you have always made your payments on time, you can show lenders that you are worthy of a loan. A longer credit history is better for your credit score as it is 15 percent of your FICO score.

Credit Cards Can Improve Your Credit Mix

In addition to a long credit history, lenders also like to see that you have a good mix of both secured and unsecured loans. Having a variety of different types of loans that are in good standing helps creditors see that you’re both responsible and timely with your payments. However, staying in good standing with credit is sometimes easier said than done. If you’ve found yourself falling behind on your monthly credit card payments, nonprofit agencies like CreditGuard can help. They actually negotiate with your creditors on your behalf to lower your rates and consolidate your payments.

Opening a credit card can help you increase your credit score in many ways. It can improve your credit score, establish your credit history and show lenders that you are able to pay your debts on time. Just remember to use it with caution.