The short answer is yes, anyone can build a good credit rating by using a single charge account. Many people are confused about the difference between a credit card and a bank card, more commonly called a debit card.
In general, a credit card lets you make purchases for which you are billed at a later date. Most credit card accounts allow you to carry a balance from one billing cycle to the next, so that you can pay off the balance over time. Be aware that you will pay interest on any remaining balance that carries over to the next month.
A debit card is the opposite of a credit card. A debit card allows you to make purchases using funds from the bank account associated with that card. A common misconception about debit cards is that they report history to the credit bureaus, and thus help your credit scores. Unfortunately, this is not true.
WHAT DOES THIS MEAN FOR YOUR CREDIT SCORE?
There are many ways to build your credit score over time. Credit cards have a strong influence on the credit score calculation. They can be just as effective as any other credit product in helping consumers establish a credit history.
Whether you have a credit card or any other type of credit account, the most important factor in building and improving your credit score is to use credit responsibly. If you can pay bills on time and use credit only when necessary, then you are on the right path to building a solid credit history.
You may run into financial difficulties that impact your credit score. Some scenarios may severely impact your score, whereas others may have a minimal impact on your credit scores. A common question we here is, “Why does one negative incident weigh more heavily on my scores than another?” This is a great question, and the answer is found in the scoring algorithms more commonly known as scoring models. Each model will treat a negative item differently, so the impact on your credit score may vary from one negative item to the next.
Here is a comparison of the impact that credit problems can have on the credit scores of two different people: Rob and Jessica. Note that their initial credit scores are 100 points apart. First, we will give you a snapshot of Rob’s and Jessica's credit profiles:
Notice that Jessica would lose more points for each negative scenario than Rob, even though her credit score was 100 points higher than his. This is because Rob’s lower score of 680 already reflects his riskier past behavior. So the addition of one more indicator of increased risk on his credit report is not quite as significant to his score.