Credit 101

Credit Card Q&A: Building a Credit History Using a Prepaid Debit Card

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CreditBuilding_John-Morgan_CCFlickrCredit Question: Is it possible to build a credit history by using a prepaid debit card responsibly? —Jennifer

Answer: Hi Jennifer, a lot of consumers have been wondering about this, partly because prepaid debit cards have become so popular. And since you don’t need a credit history to obtain one, it would be an easy way to build credit, wouldn’t it? Alas, prepaid debit cards are not reported to the major credit bureaus. When you use a prepaid debit card you aren’t buying items on credit. You’re using your own money that you loaded onto the card.

It’s not surprising that consumers are confused about this, though. There are a few prepaid debit cards on the market that claim to help consumers build a credit history because they report your payment history to PRBC, a specialized credit bureau. But when lenders evaluate you for credit, they look at your credit report from one (or more) of the three major credit bureaus: Equifax, Experian and TransUnion.

So if you’re trying to build a credit history and you don’t qualify for an unsecured credit card, take a look at secured credit cards. These credit cards are perfect for those who need to establish or rebuild their credit history. Choose one that reports to the major credit bureaus and if you use your card responsibly, you’ll be on your way to building your credit history. If you’re interested in learning more about your credit standing, try’s free Credit Report Card. It provides you with an easy-to-understand overview of your credit profile along with your free credit scores.

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