Creditnet News Story

Prepaid credit cards won't boost credit score

Tuesday, March 16, 2010

By Thomas Astery

Prepaid credit cards don't give consumers the option of building a credit score.

Consumers may try a variety of ways to establish or build their credit score, though a prepaid credit card won't help them do that.

According to a report from Cincinnati.com, this type of prepaid card actually acts like a debit card. Consumers place a certain amount of money in an account, which they use for purchases made with the card.

"You need credit to get credit," the report said. "The only way to build credit is to open a line of credit that will report to the credit bureaus."

The site said that one way consumers can build their score is through having a number of credit card accounts. By paying off debts on time and keeping balances low, consumers can help increase their credit score.

However, not every consumer may find it as easy to build credit, especially if they've damaged their rating through missing payments. One option suggested by experts is to use a secured credit card. A deposit put in an account acts as a guarantee and credit line for the account.

When deciding between these types of cards, consumer should make sure they compare fees, as they can be rather expensive.