You know that there are a variety of benefits of using credit cards, from extra spending power to security and fraud protection. But there’s another aspect of credit cards that benefits a couple of specific consumer groups — the ability of credit cards to help you build a credit history.

Let’s talk about how credit cards can help you build a credit history (which you can check when you review your credit file), why it matters, and what consumer groups really stand to benefit most from this.

How Credit Cards Help You Build a Credit History

When you’re approved for a new credit card, that account is listed in your credit file where future creditors can see it. Those future potential lenders will also be able to see if you’ve become delinquent in paying your bills on that credit card account or if you’re abiding by your repayment terms.

Why Your Credit History Matters

When you show that you can responsibly handle credit, you increase your chances of being approved for future credit as well. Having a credit card is one of the easiest ways to begin demonstrating that kind of financial responsibility. That might make it easier to secure other lending down the road such as a car loan or mortgage.

On top of showing financial responsibility, the length of your credit history can also play a role in future lending decisions. Therefore, the longer your credit history is reflected in your credit file, the more creditworthy you can appear. This is where the “credit building” benefit of credit cards begins for some consumers — establishing an active start date for your credit history.

Who Benefits Most?

Not all consumers should think about applying for a new credit card to have it help them build a credit history. For example, if you already have one or more credit cards or other loans you may already have a solid credit history. If your credit file shows you have too much credit available, it can actually have the opposite effect and hurt your chances of securing future lending.

Instead, this benefit of credit cards is more for those with no credit history yet or those who are trying to rebuild their credit history after closing past accounts and getting out of their previous debt. It’s more about building a fresh start with a new lender and giving you a base to build upon with future credit cards and loans.

While not all cardholders will see this benefit, it’s a very real one for those who need to start somewhere. And that starting place might be with a credit card specifically for first-time cardholders, like the ANZ First Visa. These cards can be easier to secure than others, because the lender knows you won’t have a long credit history already built before applying.