by Bridget Webber

Created on: September 26, 2010   Last Updated: April 14, 2011

If you have a poor credit rating score, or your score is non-existent due to lack of having used credit, you may be tempted to get a prepaid debit or credit card. Doing so isn't a terrible option. However, there may be better alternative methods you can use to get a high credit rating than by using a prepaid card.

With a prepaid card you deposit money for use. It won't really give you credit all. You have to have money before you can spend it. The only good reason to have one then, as opposed to putting money in an interest account for example, would be if the prepaid credit card company reports your good usage of the card to the credit bureau.

Most prepaid cards are aimed at people who have a bad credit score or no score. As the operation doesn't involve extending credit, there's no real reason for card companies to report to the credit bureau. While credit cards such as Aqua card, Varquis and Capital One Classic are favourable as a choice if you haven't got a good credit score, Cashplus Credit builder is perhaps, the only one which definitely helps card owners build a better credit rating by informing Equifax and Experian about client’s card usage.

If you change your poor credit rating into a good score any big future purchases you hope to make will be affected if you need credit. Buying a car or house could be an impossibility if your credit score isn't high enough. But you may not need a prepaid credit card after-all. Most companies benefit greatly by gaining new customers. They want you to get more cards as it's good for them. You won't get turned down for a prepaid card, but why gain another piece of plastic to worry about if you don't need one?

Owners of several existing credit cards who want to raise their credit score may benefit by adopting a balance transfer method. Having an agreement with the bank that all debt goes onto the card which adds the least interest for customers to pay back can benefit them by letting other cards they use become debt free. Any usage of such cards then becomes a tool to promote a client to the credit bureau and increase their score. Some credit card companies will also let customers put down a security deposit on a second credit card.

Changing your credit score to a more favourable one may seem complicated, but if you make an appointment with your bank or a financial adviser they will help you find the best solution for you, whether it turns out to be adopting a balance transfer method, gaining a second credit card by using a security deposit or by getting a Cashplus Credit builder card.

Sources

http://moneysavingsexpert.com

http://www.what-prepaid-card.co.uk

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