Does Using a Check Card or Debit Card Help You Build Credit?

The primary measure of an individual's creditworthiness is his credit score. A credit score is calculated by credit reporting agencies using financial information found in a person's lending history. This includes information about loans that the person has taken out, as well as his record of repaying them. While the use of a check or debit card will not directly affect a credit score, it may affect the consumer's relationship with his bank, which may lead to being offered new lines of credit.

Check and Debit Cards

Both check and debit cards, when used to withdraw cash or make purchases, take money out of a checking account. While some lenders may look at the size of a person's bank account when deciding the terms under which to offer her a loan, the size or activity of a checking account is not reported on her credit report. Therefore, use of a check or debit card will not affect a person's credit score.

Credit Scores

Credit reports are composed only of information directly related to the issuance of loans. The more positive information that a person has on her credit report, the higher her credit score will be. Positive information can include a history of paying back outstanding loans on time, as well as a low ratio of debt to available credit. Transactions involving checking accounts are not included on this report.

Misconceptions

Sometimes when a person uses a debit card to make a purchase, the retailer will ask whether he would like to use the card as credit or debit. If the person chooses to use the card's credit function, the card will not be used to access a line of credit. Instead, the money will still be withdrawn from the individual's bank account, but the transaction will be routed through a credit card company. The person's credit score will not be affected.

Lending Institutions

Although using check or debit card will not directly affect a person's credit score, responsible use of a card may place an individual on good terms with the financial institution that manages his account. If this institution also issues credit cards or loans, the institution, based on the individual's use of his checking account, may be willing to extend him favorable terms on loans or a line of credit. The individual can then use this to help build his credit score.

Considerations

While using a check or debit card will not all by itself help an individual build credit, if the card is used to help pay off debt, it can help build credit. For example, if a debit card is used to pay off a credit card bill on time, then the person's credit score will likely improve. Similarly, if a credit card is secured using collateral held in a checking account and the card is paid on time, the person's credit score will improve.