Many of our applicants ask us if a prepaid card or prepaid debit card will improve their credit score. Unfortunately this is not a credit question that has an “it depends” answer. The short answer is NO it will not help improve your credit score.

Here is your why behind the what. In order for a credit account to have impact on your credit score, it has to actually show up on credit report. Although it is a simple concept, the marketing efforts behind prepaid cards lead consumers to believe that they will report just like a secured or revolving credit card. The name alone prepaid card would lead most anyone to believe that they are one in the same.

Now for the reality check. In order for an account to qualify as credit and legitimately post to your credit report, there has to be a minimum level of credit requirements and guidelines that must be met in order to be approved for that credit. Prepaid cards can be purchased and funded at many local gas stations, grocers and retails establishments. There is no credit check or requirement to obtain one. Which is why we consider them to be no more than glorified re-loadable gift cards. In fact you can typically find them on them with gift cards on the same point of purchase display in any store.

So beware of the temptation of obtaining one of these cards in the effort to improve your credit score. They are best served as great wedding gifts!!

Chad Kusner
Credit Repair Resources LLC