I am a poor/broke 20-something, I make minimum wage (or a few dollars above it.)

I've been trying to build up credit, in case I need it someday - the likely event my aging vehicle explodes, for example.

My current strategy is to use a credit card and simply pay it off on time. However, my question is thus: if I pay with my credit card, then pay it off immediately, am I actually building up credit? Why or why not?

What is the most efficient way to build up money with a card? What else can I do?

  • 2
    One thing that people aren't mentioning is that you should always keep your balance well under your credit limit. For example, if your card's credit limit is $1000, it is best to only charge a few hundred each month and pay it off in full. I've been told that the optimal balance is less than 20% of the line of credit. Oct 8, 2015 at 13:04
  • 1
    Another comment along the same lines, just because you can, doesn't mean you should. Having excessive credit lines compared to your income and ability to pay can count against you. When a lender looks at your situation in totality, they will see that you have potential obligations to others based upon your total line of credit. In other words, don't try to obtain more credit than you could realistically afford to pay off.
    – Joe
    Oct 8, 2015 at 13:33
  • Check this book out: Only a few $$$$ - amazon.com/From-Credit-Repair-Millionaire/dp/0971317895
    – Ross
    Oct 8, 2015 at 15:06

3 Answers 3


You aren't building up credit -- you're building up your credit rating. And yes, if you simply avoid doing anything stupid and pay your bills on time it will mostly take care of itself.

As your credit rating increases, the banks will be willing to consider raising your credit limit.


You are building a credit rating by paying on your credit card on time, whether you pay the minimum or full amount, you're demonstrating that you are able to both afford the minimum payment and are responsible in meeting obligations.

This strategy, however, can only go so far. Your ability to obtain credit is based also upon your ability to repay, which includes both your cash after taxes and other obligations and your tangible assets. Consider if you came to someone asking to borrow $10,000 yet you had no assets to back it up (that is, that I could legally take away from you if you didn't repay me) nor did you have an income stream that could meet the minimum payments.

My suggestion is three-fold:

  • Continue making solid payments on your existing obligations
  • Build tangible assets (a substantial savings account)
  • Increase your income

Yes, obviously the last one is somewhat out of your control, but it is one of the keys to obtaining larger lines of credit.

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    the last one is out of your control? hm.. nice way to view the world?
    – fersarr
    Oct 8, 2015 at 9:21
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    @fersarr: well, if it was in our control then nobody would have less income than they'd like, whereas in point of fact approximately everyone has less income than they'd ideally like, and doesn't have access to arbitrarily high income even by making some different decisions. Naturally most people have some influence on their income, but to say that it is not even "somewhat" out of your control is a bit strong :-) Oct 8, 2015 at 10:40
  • ok better :) you should have some influence
    – fersarr
    Oct 8, 2015 at 11:29

You're building your trustworthiness in lenders' eyes. This takes a lot of time, but the factors are:

35% on-time payments 30% balances on credit 15% length of credit history 10% new credit applied for 10% types of credit

Never be late, don't run up balances. Good luck to you.

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