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  1. #1
    la vache fantôme phantomcow2's Avatar
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    Am I building credit?

    A few weeks ago I got myself a Visa Classic credit card. So I have gotten into the habit of paying off a purchase as soon as I make it. Online bill payment works well for this .
    I got this card to establish some credit. Am I actually establishing credit if I just pay off my balance right away?
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  2. #2
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    Keeping the balance low and paying it off ASAP gives you a good credit rating.

  3. #3
    Chicago needs more hills. andychang's Avatar
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    Yes, you are.

    Yep, you are. Although, I think that with new credit card members (I might be wrong in assuming that you are one but it sounded like this was your first card?) it takes around 6 months to establish an actual rating. If you haven't done so already, see if you can pull up your current credit score, because even if this IS your first card, you might still have one. annualcreditreport.com should be able to give you a free one once a year. Your habit is great - I think most experts recommend that you charge no more than 30% of your total limit per month, and if you are paying it off every week or every two weeks it's even better. Credit institutions also look at your bank accounts, so having both a savings and a checkings account will be beneficial to your credit rating!

    Sorry for all this spouting. As someone who made POOR decisions in college regarding credit cards, and having to re-build my rating after college, it's true that with careful monitoring and a little discipline, building good credit is MUCH EASIER than going back and fixing mistakes.
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  4. #4
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    Savings accounts don't show up on credit report.

    Phantom: You're doing a great job. Within six months, apply for another credit card and/or some sort of loan, even if its secured. Variety and number of credit accounts plays a crucial role in establishing credit too. Try to keep your balances less than 10% of your total limit every month.

    Bankrate.com has some great articles about establishing good credit. Check it out.

  5. #5
    Senior Member skiahh's Avatar
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    Concur; your credit rating does not consider checking or savings accounts (unless possibly you write a bunch of bad checks and the bank sends you to collection, but that's pretty extreme).

    No need to pay off as soon as you buy something; wait until you get the bill, then pay in full. You do no better (or worse) by running home to pay the bill. Get in the habit of TRACKING your expenses and then paying in full. That way, you can use a card responsibly without over charging and then not being to pay off.
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  6. #6
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    And if you have a CC with rewards, all the better.
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    uh, why did you do that? be careful, one mistake and they own your ass.

  8. #8
    la vache fantôme phantomcow2's Avatar
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    Okay, well this is good. I guess I'll continue to use my credit card whenever possible and pay it in full each month. I'll be taking out a student loan either either in the fall or spring, hopefully this will earn me some credit as well.
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  9. #9
    la vache fantôme phantomcow2's Avatar
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    Quote Originally Posted by goldfishin View Post
    uh, why did you do that? be careful, one mistake and they own your ass.
    Because whatever some people say, I believe I need credit in this world. I just will avoid making mistakes (ie. not buying something I don't have money for unless it is a dire situation). Plus, I went through my credit union, so I got an interest rate of 13%. The offers I've received from Capital one have interest rates in excess of 25%! My parents, both of whom have well established credit, got a rate of just 11% from the credit union.
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  10. #10
    la vache fantôme phantomcow2's Avatar
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    Quote Originally Posted by JF1 View Post
    And if you have a CC with rewards, all the better.
    This is something to look into. My card has no rewards, it's just bare bones. Perhaps I can get a gas card.
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  11. #11
    Senior Member deraltekluge's Avatar
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    Quote Originally Posted by phantomcow2 View Post
    I got this card to establish some credit. Am I actually establishing credit if I just pay off my balance right away?
    No. The credit card companies HATE you. They call people like you "deadbeats" because you deprive them of the interest fees that they think they're entitled to.

  12. #12
    Cheers! 2wheeled's Avatar
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    Quote Originally Posted by phantomcow2 View Post
    This is something to look into. My card has no rewards, it's just bare bones. Perhaps I can get a gas card.
    Here's a great forum for anyone wanting answers on building a good credit rating. If you're planning on buying a house, car, etc you'll find some great pointers.

    http://www.creditboards.com/forums/

  13. #13
    Senior Member skiahh's Avatar
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    Quote Originally Posted by deraltekluge View Post
    No. The credit card companies HATE you. They call people like you "deadbeats" because you deprive them of the interest fees that they think they're entitled to.
    No? WTF are you talking about??

    You are correct in saying the credit card companies hate people that pay off their bills each month, but that does not mean you aren't establishing good credit. But, they will report you as a good customer for using and paying your bills.

    Can you imagine if credit card companies started reporting negative information to the credit bureaus for fulfilling your agreement with them??
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  14. #14
    J E R S E Y S B E S T Jerseysbest's Avatar
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    Set up automatic payments, notifications, etc and you'll never forget to pay the bill. And interest rates are pretty much irrelevant if you pay your bill every month. My one card is down to 5.9%, but since I've never been charged a dime of interest, its doesn't really matter, I actually use my discover card with a 12% rate more because of the rewards.

    And also look into getting the reward cards, like Discover.

    And obviously, lot of people fall into the trap of charging stuff they can't afford. I'm not talking about tv's or big stuff, but everyday stuff they wouldn't normally get, like eating out all the time, movies, and just other general stuff that you may think you need at the moment but if you're on a budget you certainly can go without.
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  15. #15
    My tank takes chocolate. FlowerBlossom's Avatar
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    I have a credit card through my credit union, and, I earn a point for each dollar I spend. These points can be redeemed to buy many items, as well as airline tickets on any airline. Check to see if your credit card has this point system, instead of something like Discovery. If so, use just the card you have. It's easier to keep track of your total-owed-balance, and, all your points are accumulated at one account---so they pile-up faster to an amount that is actually redeemable.
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  16. #16
    Senior Member deraltekluge's Avatar
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    Quote Originally Posted by skiahh View Post
    Can you imagine if credit card companies started reporting negative information to the credit bureaus for fulfilling your agreement with them??
    Yes. I really have no idea if they do that, but based on how they behave in other respects, I certainly can imagine it!

  17. #17
    OnTheRoad or AtTheBeach stonecrd's Avatar
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    The credit score takes into account the amount of credit you are authorized for and the amount of balance you carry. The downside of paying off quickly is that the CC company may not raise your limit. So someone with a $50,000 credit limit and a $2,000 balance may have a better score than someone with a $2,000 limit and no balance. But in all cases keeping your balance below the threshold (I think 10%) of the limit is the key and of course never get a late payment.
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  18. #18
    Kicked out of the Webelos bluebottle1's Avatar
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    The one thing I'd recommend is tracking your spending on the card very carefully. If you use Quicken or similar software, set up an account for your card, and every time you use it, enter the purchase into the account. Then enter your payment into the other side of the register, and you'll always know what your balance is. It sounds like the way you are using the card is very smart. It will build your rating, and that will be useful for the day you want to purchase a home or make some other large purchase.
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