Many think that their debit card does not affect their credit history – but that’s not entirely correct. Your debit cards can indirectly affect your credit history, in both good and bad ways. Depending on how you use your debit card, it can help improve your credit score, or severely hurt it.

Your debit card can help you boost your credit score if used in the right ways. Some good ones are to use your debit to pay your monthly bills. These include your cell phone bill, electric bill, gas bill, etc. Since you can usually pay for all of those on the web, the transaction goes through almost immediately, guaranteeing that your bill has been paid. If you keep up the habit of paying all of them off on time each month, your credit score will likley improve. Just make sure you have enough money to cover the costs each month though.

Another tip in improving your credit history with your debit card is to charge your purchases as credit instead of debit. Although you are not actually purchasing with credit, you can use the transaction as a credit charge, but without needing to pay it off later on. This is a good trick because you are technically paying off the charge immediately with your debit account, and therefore, it is seen as an on-time payment.

Now you know the good. Here’s the bad. Let’s say, three of your bills come at the same time this month and you’ve set up automatic payments through your debit card to pay for them. Thinking that they all went through, you don’t check up on them till next month, not realizing that you didn’t have enough money in your account to pay for all three of them. By next month, you will have already missed a payment because it didn’t go through. When this happens, it will affect your credit score. Missed payments, even if it’s just one, will hurt your credit.

Having overdraft protection can help to save you a couple times, but if you constantly over-withdraw you will soon have a pile of bills waiting to be paid. Always depending on overdraft protection is probably not a good idea.