Use Pre-paid cards to build Credit

One simple and easy way to help boost your credit is a pre-paid card.  If you’re trying to give your credit score a boost,  then a pre-paid (“secured”) card can be a great way to jump start your credit profile.  These days, it’s basically impossible to buy anything without a credit card…and if you’re having trouble getting one, you might think you’re out of luck.  But lenders have started offering what’s called “Secured credit cards”.  These “pre-paid” cards look just like a regular credit card from Visa, Mastercard or American Express…and have all the same functionality as credit cards….but with one twist.

What is a Pre-Paid Card?

Pre-Paid cards work like this:  You put money into an account up-front that is associated with the card.  Then, you use it like you normally would at any place that accepts Visa, Mastercard or American Express.  Now, just like a credit card, there is a small transaction fee everytime you use it.  Also, depending on the card you purchased, there may be a small account set-up fee at the beginning.

How does this help me?

Now here’s the good part…a pre-paid card starts building a credit history just like a regular credit card does but because you’ve already paid for it up front – the credit history is guaranteed to be positive!  Each time you use the card, another record of responsible credit use gets recorded with the credit bureaus and you get one step closer to improving your credit score.

Remember, unless you’re going to hire a pro to aggressively engage the credit bureaus directly (which is actually often worth it), then improving your credit is a game of consistent small wins….and using a pre-paid card is a great way to start to build positive credit history immediately.

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