Building your credit through DNMs?

This probably would have been better for moronic mondays but I noticed on coinbase they have a a credit card option for instant bitcoin purchases. I would assume using a credit card in any fashion, as long as you pay it off on time, would help build your credit. Yes there's a small fee for using the credit card but If you have not so good credit, that could be a good way help boost it a bit? I figure it couldn't hurt because if anything, a credit company would care less than a bank where that money was going, which either way, wouldn't matter all that much as it's just going for bit coins which by itself doesn't mean anything. I'll still have my bank linked to my coin base account but I just don't see realistically how this could be any worse than just buying coins normally.


Comments


[9 Points] None:

It's the future.

You are building credit using a form of electronic credit that doesn't exist to pay for a form of currency that is issued via the use of software to pay for a physical item that can only be ordered in an underground market that you can only access through encryption.

If this isn't /r/cyberpunk, I don't know what is.


[6 Points] drimilr:

As I understand it, CB uses your CC as backup if your bank payment/debit card payment fails. Only upon a failure does it seek payment from your CC. In which your credit is dependent on you paying back those CB purchases.

Unless CB has changed, CCs are a failsafe method for them which allow them insta purchase.


[3 Points] samwhiskey:

Your logic is flawless but weird.


[2 Points] Theeconomist1:

Not sure what you are asking. But a CC in of itself that has low balance to max credit ratio and is paid off on time will increase your score. The CB part is inconsequential and it could be buying anything. So yes, using a CC regularly and paying it off on time will help your credit.


[2 Points] young_k:

pulling cash advances out on your credit card (how companies like circle bill your cc if you use that to fund) will not really improve ur score or anything, i mean if you pay it off immediately i dont think it would hurt, but generally, it would take alot of repeated payments/purchases of that type to affect your score in any way.


[2 Points] b1on1cgerb1l:

A few thoughts on this, I worked in the credit card department of a huge bank for 6yrs and then was a mortgage underwriter for a year after that.

So first and foremost you must figure out how to use your CC with CB as others have said: it's currently only backup with your checking as primary. No specific advice on that as I haven't tried it although I'm familiar with CB.

RE: Credit This will likely be treated as a cash advance as others have said. This means your interest rate will be high and compounded daily which can get ugly if you have other transactions on your account. Find out what the fee is, usually something like 3-5% or $xx.xx, whichever is greater.

The reason I say it depends on if you have another balance is that cash advances are paid last and some banks will add any interest accumulated by the cash advance to the cash advance amount itself which then goes on to continue this cycle until you zero your balance. You can receive a statement, pay in full, and STILL get another bill for the interest that had accumulated up until the date they received the payment if there was a cash balance. Make sense? Cash advances are paid LAST!! It goes to the bottom of the pile. I saw situations where someone had spent thousands of dollars on regular purchases and then did a $500 cash advance. The $500 just sat there untouched, generating interest, and growing while minimum payments were being made. Needless to say, it gets ugly.

As far as building credit: 1. Cash advances do not look good. 2. Paying balance in full every month is good but not the BEST way to build credit.

The best way to build credit is to make sure your balance at any given time doesn't exceed 50% of your limit. Limit of $300? Never let the balance exceed $150 Pay more than the minimum payment but less than the balance in full every month while still not exceeding 50% of your limit.

Think about it, banks want to make money. Paying your balance off every month ensures that they do not. While you won't be penalized for paying in full, and it is good for your credit, it's not the BEST way.

Hopefully that all makes sense. Lmk if not and I'll help where I can. Good luck!

TL;DR: Cash advances are expensive!


[1 Points] BurbankJoe:

If CB allows you to buy off of a credit card then that's not a bad idea. Buy a lot of btc from cb using your credit card, take 1% hit, sell on LBC for cash and pay it back.


[1 Points] Chronicpurple:

Once you obtain the credit card, it does not matter one single bit how often it's used. You can spend thousands a month with dozens of transactions and pay it all back; but that affects your credit score exactly the same as if you kept your card in your drawer and forgot about it. As long as you keep the balance low or at zero at the end of the statement, it'll improve your credit at the same rate, whether you used the card often or not.


[1 Points] za4h:

Some credit cards treat these sorts of transactions as cash advances, meaning you get nailed with interest right away on top of paying their fee, which could be as much as $30 per advance. I don't think cash advances look too great to the creditors, and it is a rip off regardless.