Credit Cards Blog

Finance Blogs » Credit Cards Blog » Credit scores & prepaid cards

Credit scores & prepaid cards

By Janna Herron ·
Tuesday, January 31, 2012
Posted: 3 pm ET

In Monday's blog, I wanted to clear up the relationship between credit scores and Suze Orman's new prepaid card. (The short of it: There's no connection.)

But while I trekked the credit score universe, I came across a few other nuggets about prepaid cards and credit scores that are worth thinking about, especially if you're considering one for your wallet.

You already know FICO's traditional credit scores don't count prepaid cards in their calculation. But here's something new: Even the FICO Expansion Score, which uses nontraditional data such as purchase payment plans and checking account information, doesn't take prepaid card payments into account, says Jason Sprenger, a spokesman for FICO.

The only way a prepaid card will show up on an alternative credit report -- such as one provided by PRBC and not the conventional ones from the big three credit bureaus -- is as a method of payment, says Sprenger. That means if you pay your cellphone bill or water bill with a prepaid card, it's recorded as such. Just like if you pay with cash, check or EFT.

But prepaid cards don't show up as a separate tradeline account like credit cards do, he says.

"By extension of that, getting a prepaid credit isn't the best way to improve one's credit score," Sprenger says. "There are other more impactful ways of doing that, most notably paying your bills on time."

That's how the credit score rules are written, folks. And while Suze is on a mission with credit reporting agency TransUnion to create a way to include prepaid card data in credit scoring, the results of that experiment are at least a year and a half away.

So, in the meantime, you're left with the traditional ways to start building credit: a secured credit card or being an authorized user on your mom or pop's credit card.

How did you start building credit? Tell me your story.

Follow me on Twitter: @JannaHerron.

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
March 20, 2012 at 12:39 am

All prepaid cards allow you to add money and shop at sortes or online. You can buy prepaid debit cards at walmart, target, really large supermarkets, check cashing places and online. greendot is a good one because you can load money on the card at walmart. Just about all prepaid debit cards also allow you to add money by sending funds via moneygram or western union. It cost 3.95 per load and you can add up to 1,000 bucks at a time. You get a pin number so you can actually take funds back off of it at the ATM. I have a wired plastic prepaid and also one from turbo from filing my taxes. If you have any other questions just email me. Here is the link to greendot if you wish to look it

William Case
March 08, 2012 at 11:29 pm

It’s a good thing to learn about this information. Credit and loans are really among hard ways to increase these days, but there is always ways. I am counting on that!

Hubert L. Fields
February 01, 2012 at 6:56 am

nice blog. all the information needed by a debtor are all found in this great article. the ways to improve credit score mentioned above can really help debtors like me.