A very common question around here is whether the use of prepaid credit cards will boost a person’s credit score. It most certainly will, as long as the card company you use reports to credit bureaus. Some of them do, and some of them don’t. If they don’t say that they report, they probably don’t. Reporting obviously incurs an extra expense for them and that’s the reason that some of them don’t.

Generally speaking, it costs about $10 per month to use one of these cards. If you choose the right one, they will report all of your on-time payments and the cards will look like regular, revolving lines of credit on your credit report. This will of course help you to build credit, as long as you never make late payments. Even a single late payment can hit you hard, so make sure that it never happens.

Over the next few months, you will find that your score improves by quite a bit. Your credit history will also look better to a lender/card company because there are other companies you are offering you ‘credit. A long time ago I had to use secured credit cards to improve my credit and it really helped a lot. It took a few months to start getting offers for unsecured credit cards, but as soon as that started to happen I took out two of those. Over time I had really been able to build those cards up, in fact I now have a $17,000 limit on one of them. You could work towards the same goal with a prepaid card. It would put you on the right track towards getting bigger and better lines of credit.

It seems like most of the people I talk to want a quick fix for their credit issues. This technique won’t fix all of your issues overnight, in fact it will probably take quite a few months before you start to pull out of your rut.

Another factor that you need to consider is that this technique won’t erase derogatory items that are currently on your credit report. Most of those items will take years to drop off – many of them will take a full 7 years. However, you can improve your credit score a lot in the meantime, and most banks will lend to people that have derogatory items, as long as they start showing a track record of paying bills on time. I was able to get loans long before my derogatory items dropped off of my report.

Similar Content:

  1. Do Secured Credit Cards Raise Your Credit Score? Today we had a question come in from a reader that asked, “does a secured credit card immediately boost...
  2. Prepaid Credit Cards Use – the main reason that people use these credit cards is to build their credit. Secured credit cards...
  3. How To Get Credit Cards With A 550 Credit Score A few years ago, I had a terrible credit score. Since I had screwed up with credit lines that...
  4. Can Secured Credit Cards Help To Improve Credit Ratings? There are a lot of people out there who would like to improve their credit ratings. Some of them...
  5. What I Would Do If I Had A 550 Credit Score First, I would analyze my credit situation. What I would primarily need to know is whether I currently have...

Share this post on: