EDIT: This question was based on a misunderstanding of how credit is built. However, the concept of moving money on a credit card without spending anything still has other potential benefits (such as gaming a rewards program), which are still appropriately addressed by many of the answers given.

I'm just starting to build credit. As I understand it, the more I charge my card (within a limit) and successfully pay off those charges, the faster my credit will be built. That's a broad generalization, but I've been told my best means of building credit are to put my rent and car payments on my credit card, as it generates safe but large activity.

Is it legal to generate an "artificial" repeated charge like this? For example, consider the application Venmo. It lets you connect a credit card to the app and make payments to other Venmo users through that card. If I send my friend $10 for lunch, the app charges my card $10 and adds it to my friend's Venmo account, where they can "cash out" and put it into their bank account.

That seems to let me do the following:

  1. Set up a Venmo account with my credit card
  2. Set up a second Venmo account with a checking account at the same bank
  3. Send $1000 from my first Venmo account to the second
  4. "Cash out" of the second account (moves the money into my checking account)
  5. Use the money in the checking account to pay off my card

It seems this way I could move a tremendous amount of money through my credit card, and from the card's perspective I'm simply making a large repeat payment; it doesn't know I'm paying myself, and it doesn't know it's getting the "same" money it just spent. If my understanding of credit it correct, this would be helpful.

Is something like this allowed? (It doesn't have to be Venmo, that's just the tool I thought this up with). I can't see any reasons why it wouldn't be, but I've typically found that when something works better than the system intended, it's probably illegal.

(Note: Venmo actually charges 3% on credit card transactions, so this particular example isn't perfect, but it illustrates my point)

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    Would that count as a purchase, or as cash advance? You get high interest rate and no grace period for the latter. And how is that better than paying for groceries, gas, etc. with your credit card? – void_ptr Aug 14 '18 at 16:35
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    I'm not aware of any services that will let you do this without charging a fee, so you effectively end up paying extra just for the improved score (and it still takes time to build it, this won't happen overnight). Instead, I would suggest putting some regular known, small amount on the card each month (cell phone bill, Netflix subscription, etc). This way there are no surprises and your utilization is always low. Your score will improve, and you were going to have to pay those bills anyway. There's no need to over-complicate things with extra transactions to/from yourself. – CactusCake Aug 14 '18 at 17:28
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    Unfortunately there isn't much you can do to accelerate the rate at which your score climbs (there are plenty of ways to make it tank, go figure) - about half of the score is determined by length of credit history and number of on-time payments. You can't really manipulate those two facets in any way, you just have to be a trustworthy borrower. The main thing you do have control over is utilization, as discussed in @PatrickN's answer. That's usually responsible for approximately 30% of your total score, depending on which scoring model your prospective lender prefers. – CactusCake Aug 14 '18 at 17:48
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    This would certainly raise eyebrows somewhere where you wouldn't want eyebrows raised, as it looks very very much like money laundering and fraud... cycling money through a third party to end up with cash from a credit source? Nope, that's not something you want to be seen to be doing. – Moo Aug 14 '18 at 23:41
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    You may be interested in checking out the term manufactured spending. – chrylis -on strike- Aug 15 '18 at 5:25

To answer the original question, this is against the TOS of Venmo, and likely prohibited from the card networks. Venmo transactions are treated as purchases, where charging money to yourself is providing a cash advance.

To be specific, the Venmo User Agreement says

  1. Restricted Activities

In connection with your use of our website, your account, or the Venmo Services, or in the course of your interactions with Company, a user or a third party, you will not:


  • allow your Venmo account to have a negative balance; provide yourself a cash advance from your credit card (or help others to do so);
  • Very good point. It's a violation of every financial service agreement - Visa's, Venmo's, PayPal you name it. – Harper - Reinstate Monica Aug 15 '18 at 4:36
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    Is this due to venmos rules or in general cash advance rules of the credit card companies? Still, how would they know if you bought a pen and sold it back - as long as the taxe, fees and so forth are are paid. The other side of the coin would be saying that it would be illegal(against the rules) to buy something with a credit card and sell it at a later date, be that date 1 day, 1 month or 1 year. I don't think it's going to make your credit score any better though. A better idea is maybe get a car loan and buy a car and pay it back. – Lassi Kinnunen Aug 15 '18 at 6:00
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    @LassiKinnunen At the time, they may not know that you've effectively made a cash advance... often, the point of rules like this is that if/when discovered there's a rule in place to say you shouldn't have done it. – TripeHound Aug 15 '18 at 14:43
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    @TripeHound yes, but my (not really important or that relevant) point was about the rule being probably unintentionally broken quite often by people who do a lot of buying and selling of things(possibly for higher value than bought). – Lassi Kinnunen Aug 16 '18 at 15:29
  • @LassiKinnunen If you are selling or buying a good or service, then you aren't using it as a cash advance, so you are not breaking the rule. A cash advance is obtaining a cash loan off your credit card. – user71659 Aug 16 '18 at 17:53

Based on my knowledge, consistently charging (and paying off) high balances will in fact have a negative effect on your credit score.

The factors that go into credit score may vary based on the provider, but these are generally the main ones:

  1. Payment history (i.e. not missing payments)
  2. Utilization (how much of your credit you're using)
  3. Length of credit history
  4. New credit (how many times you've applied for cards recently)
  5. Available credit

Utilization is the relevant one here. That refers to the percentage of your available credit that you are currently using. In this case lower is better. That is, if you have a $5,000 line of credit, spending and paying off a $4,000 balance monthly would give you a lower credit score than spending $1,000 monthly. I believe a general rule of thumb is to stay below 30% utilization, if possible. So this scheme would actually be counterproductive.

Outside of workarounds like authorized users, there's really not a lot you can do to raise your score other than charging (and paying off) a small balance each month, never missing a payment, and asking for credit line increases every so often. Think about it from the lender's perspective- they want a stable, reliable customer who is sure to pay them back. Someone who maxes out their cards each month is probably more likely to default if they ever run into hard times.

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    Utilization is based on whatever the balance is when they send you your monthly statement – Patrick N Aug 14 '18 at 17:14
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    That seems to be moot then; I could be sure to keep the payments below 30% of my credit line and immediately pay them off. That would avoid the "over-utilization" issue, right? – Lord Farquaad Aug 14 '18 at 17:22
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    Utilization is based on when the credit reporting bureau pulls the info, not when the statement is released. For best results, utilization should always be below 30% (if not lower than that). – BobbyScon Aug 14 '18 at 17:31
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    @CactusCake Unless a credit score is pulled, utilization is snapshot at time of inquiry. I've had to make mid-cycle payments to reduce DTI to an acceptable level before, and they re-pull days later, still mid-cycle and get a new number that reflects the payment just made. – Hart CO Aug 14 '18 at 17:34
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    @CactusCake It's both, they report at frequent intervals (statement ends) and also they report when an inquiry is made. – Hart CO Aug 14 '18 at 17:37


Your entire question hinges on a misunderstanding. The existence of a credit account, its age, and its current utilization (i.e. your current balance on the card at the time the score is recalculated) all impact your credit score. But your credit score will not be "built" any faster by spending/repaying more money on a given credit card. What's counted is the number of on-time payments you've made - the size of those payments each month has no bearing on your credit score, so there's no point in going anywhere with this train of thought.

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    Also, worrying about the age of lines of credit in your name is, I've found, futile. I'm 34 and have had a credit card since I turned 18, and I STILL get dinged for not having old enough credit. – ClairelyClaire Aug 15 '18 at 20:26
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    @ClairelyClaire I have to disagree, average age of credit lines is a pretty simple metric to optimize. Sounds like you keep opening new cards and/or closing old ones and having them disappear from your credit history. – iheanyi Aug 16 '18 at 20:44
  • It's not the "Number of on-time payments" either, but the amount of time you've avoided being late. Making 3 payments in a month instead of 1, or using the card only once every 3 months (and not making any payment when the balance is already zero) will not have an effect. – Ben Voigt Aug 17 '18 at 0:40



Merchant fees will always make this a losing game. Even if there weren't merchant fees, your described method is likely against the TOS of your card company and Venmo/Paypal/Square and could be considered credit card kiting which is illegal. If not, everyone would use their rewards credit cards to make gobs of cash and free vacations.

FHA loans cannot be denied solely for lack of a traditional credit history, they will construct an alternative credit history using things like rental payments to paint a picture of your credit-worthiness. You may have a harder time getting a traditional loan, but an FHA loan could be a good option.

I wouldn't spend more to try to build credit, ie don't pay interest on a car loan just to build credit, I'd focus on a big fat down payment that will help ease concerns from lenders. Talk to some lenders and see what they say.

Becoming an authorized user on someone's long-standing account has historically been the only good shortcut to quickly improving score. Otherwise it's just a matter of responsible credit usage over time.

  • Good call with getting on someone else's account. Not everyone has that option, but it's often overlooked and can be very beneficial. – CactusCake Aug 14 '18 at 18:05
  • @CactusCakd Keep in mind that this has some caveats. It is most useful when used to keep your utilization on your primary card low. The credit agencies obfuscate this a little. Utilization on authorized accounts doesn't count for your score but is reported as part of your total utilization . You may get a confusing report that shows a low total utilization but a lower score than expected if the utilization on your primary accounts is still high. Effectively authorized users accounts do not affect your score, but the extra spending buffer can simplify your financial life significantly – crasic Aug 15 '18 at 21:39

Although Venmo has many free options (eg, bank account or debit card), there is specifically a fee for using Venmo with a credit card:

Venmo Fees

If you want to send money using a credit card, a 3% credit card fee applies.

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    I included that in my question – Lord Farquaad Aug 14 '18 at 18:14
  • Missed that, but I think it really changes the nature of the question. Being able to send and receive $10 infinitely is a lot different than being able to send $10 and receive $9.70. People sometimes do this for credit card signup bonuses, where the bonus is worth more than the fee, but not for every day usage. – Magua Aug 14 '18 at 21:46

Would be much easier to take $1k to a credit union, get a 12 month CD, and then take out a $1k loan against the CD. I did this to buy my first car (only it was $5k) and my effective interest rate on the loan was close to 0. And when I was done paying it off 2 years later, I had just over $5k cash from the CD :).


It is perfectly legal to set up recurring payments onto a CC even if you manually charge them every month. A CC has no reason to stop you from charging your card unless you are trying to do something stupid like purchase cryptocurrencies or if the charge will put you over your credit limit.

I have no clue about your Venmo scheme but I doubt you want to pay a transaction fee in order to build your credit worthiness faster.

Additionally, I have yet to encounter rent, mortgage, or car payments which can be paid via credit card. The payee would not want to consistently incur CC fees for your convenience unless they already factored the fee into the payment.

My best advice is to sign up for a second credit card as soon as you can and start building your credit history for multiple cards. I have 1 CC which is 10 years old and 9 that are less than two years old so my average credit age has taken a hit. The only way to alleviate this is to cancel the youngest ones which I do about twice a year. A few years ago I let a 8 year old CC automatically cancel itself due to inactivity and I regret it because my credit score took a hit due to average age. I should have just kept it alive with a recurring internet, cell phone, or Netflix bill or something.

If a service offers CC payments without any additional fees then definitely charge those to your card but don't just go signing up for services which you don't need and make sure to stash away enough money to pay the CC in full every month.

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    Paying yourself isn't legal. It breaches cardholder agreements, and Venmo and Paypal etc. don't want any part of it either. Doing it recurring does not make it legaler. – Harper - Reinstate Monica Aug 15 '18 at 4:38
  • Customary law? If you do it often enough? – Aganju Aug 16 '18 at 2:43
  • @Harper I never said anything which encourages paying yourself. – MonkeyZeus Aug 16 '18 at 11:48
  • @Aganju What? Who said anything about customary law? – MonkeyZeus Aug 16 '18 at 11:49

Is something like this allowed? ... I can't see any reasons why it wouldn't be, but I've typically found that when something works better than the system intended, it's probably illegal.

You'll rarely find a case where you come out ahead playing these kind of games. I have a friend that plays the reward card deals effectively and even bank interest rate games with various credit unions and banks.

Someone else asks me if they should do it, I said, "No."
"Why not?" (She was shocked)

Two reasons really, first it is a lot of work. Now - full disclosure - it is a "game" to her (like a phone video game is to many people) so to her it isn't really work, but if you're doing it for the money it would be a lot of work.

The second reason is if you're wrong (and you will be wrong at some point) it can cost you more than you made the last few months of your 'game'. Miss a payment by a day $35; not enough charges on that bank card and you get the lower interest rate instead of the 5% they promised. If you choose to play with snakes (tigers, whatever) you will eventually get bitten bad enough that it will hurt.

She uses Quicken daily to track all of it... if you want to go to that much trouble, go for it.

It is less trouble to save up cash. I bought my first car on credit. When I was talking to the sales person he asked me what I intended to put down on the car. I told him and he said, "Financing won't be a problem." and never said another word about it. (The actual amount is irrelevant, it was almost 20% of the final price with tax, tags, and fees).

Hope that helps


Your question addresses two different issues, and you're pretty far off base on both.

First, for building your credit -- the primary way to build your credit is by having a high FICO score. Note I didn't say "credit score", but specifically FICO score. Lenders use your FICO score to determine your risk factor and creditworthiness. They do NOT look at the free "credit scores" you get from places like Credit Karma.

A separate issue is credit limit increases, and each credit issuer has their own policies on that. Some creditors do respond to heavy use of an account. But for most it's a combination of improving FICO scores, and passage of time.

I strongly advise that you go to creditboards dot com to learn more about building credit. You'll find a wealth of information and advice, including details on most lenders' credit limit increase policies.

Now to your original question - "artificial" bills. What you proposed is not illegal - but it's also not efficient - you're looking at 6% overhead, and Venmo and PayPal both close accounts that show cyclic behavior. Google "manufactured spending", and start reading. I personally know people who are doing in excess of a million dollars a year in MS to earn various airline and hotel loyalty rewards. I "only" do $300-400k/year

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