Prepaid Credit Cards Do Not Help in Rebuilding Credit History

Prepaid credit cards are not reported to the credit bureaus. Usage of a prepaid credit card does not fall under the category of credit at all. In fact the way a prepaid credit card works is more like a savings account. You are first required to deposit the money on the account and you are allowed to utilize only the amount that you have deposited. Once this amount is exhausted you had to replenish it with further deposits. This is primary reason why prepaid credit card providers to not report the transactions to the credit bureau as they are not an indicator of the creditworthiness of an individual. It is the same reason why savings accounts and checking accounts are not reported to the credit bureaus.

If you wish to use a credit card in order to build a credit history and cannot qualify for a regular credit card then secured credit card is likely to be a better option for you. Even though you are required to make a deposit for a secured credit card as well, this deposit is only used as a security and for bill payment purpose in the event that you default on your credit card payment. Apart from making the security deposit a secured credit card works pretty much like a regular credit card. You can make charges on the credit card as per the credit limit and pay the bill every month. The usage of a secured credit card will get reported to the credit bureaus and to your credit history in most of the cases.