A credit card can make or break your credit score.

If you ask 10 different financial experts about credit cards, you will hear 10 different opinions. Some people advise to not ever use a credit card for anything. Other people say it's okay to use a credit card and run up a balance as long as it's only for necessary living expenses.

I take the middle ground approach when it comes to credit cards. Used responsibly, a credit card can be a very powerful tool to build, improve, and maintain a good credit score. They do this in a couple different ways.

First, if you pay your credit card balance on time and in full every month, your credit report shows a positive payment history. This payment history is reported every month, so you can build a strong record of on-time payments. That is a very important factor for your credit score.

Second, the more available credit you have to spend, the more you demonstrate to lenders that you can be trusted with credit.

How does this work?

A good guideline to follow is to spend no more than 30% of your available credit. It's even better to keep your spending under 10% of your available credit, but 30% is viewed as acceptable.

So if you have a credit card with a $1000 credit limit, you should not charge more than $300 on it before making a payment. You do not ever want your balance to go over $300 if you are trying to build or improve your credit score. Lenders see high credit usage as a risk, and it can lower your score.

Over time, most credit card companies will increase your credit limit. Some do this automatically, and sometimes you have to call the company and ask for a credit line increase.

A credit line increase will help your credit score because it raises the dollar amount on your 30% credit usage limit. A credit card with a $10,000 credit limit will allow you to spend $3,000 before you exceed the acceptable 30% limit.

If you have more than one credit card, the available credit and balances on the cards are combined to calculate these numbers.

The danger of a credit card comes when it is used irresponsibly.

Do not make the mistake of thinking that a credit card is free money or that you can buy things with a credit card and then not have to pay the bill. Irresponsible credit card use will destroy your credit score.

So what is responsible credit card use?

If you follow some basic guidelines, you can use your credit card confidently and know that you are using it to build good credit.

Pay the balance in full every month. Do not just pay the minimum due. Pay the full balance on the bill before the due date.
Don't charge things on your credit card that you can't afford. If you can't afford to pay for something in cash, don't charge it on a card and hope the money magically appears later.
If you will exceed 30% of your credit limit, make several payments through the month. You can make as many payments as you need to. It is important to keep your total balance below 30% of your credit limit.

As long as you follow these guidelines, your credit card will be an effective tool for improving your credit score.

Some credit cards have an added bonus. Lots of companies offer rewards points, travel miles, or cash back. Often these cards are only available for credit scores in the good to excellent range. I am a fan of credit cards that pay cash back. Others find travel miles more enticing.

Whatever card you choose, just be sure to pay the balance in full every month.

Do you think credit cards are good or bad? Why? Please let me know in the comments.