How to Use Prepaid Credit Cards to Help Rebuild Credit

Whether through bankruptcy, foreclosure or other reasons, many people lose their good credit rating. Having a low credit score can make it hard to get a car or auto loan or a credit card. Though there are many options for rebuilding your credit, one fairly easy way is by using prepaid credit cards. This is an excellent way to rebuild your credit as well as retrain yourself to stick to a budget.

Instructions

1

Look for a prepaid credit card provider that reports to the three credit reporting agencies: Equifax, TransUnion, and Experian. Be very certain that the prepaid companies you consider clearly state that they report to the credit bureaus, which is necessary to help you rebuild your credit score.

2

Make a list of the companies you are considering and the fees associated with them, along with the applicable terms and the website address or phone number for each. Make sure that you are aware of whether or not overdraft fees may apply.

3

Review your list to determine which terms and fees meet your needs the best. As a final measure of security, call the companies that are in contention for the final pick and verify their terms by phone. Complete an application for the one you select and deposit any start-up money or set up direct deposit to recharge the card balance as needed.

4

Begin using your prepaid credit card as you need. Always keep track of the remaining balance available and use it responsibly. Take care, especially, not to go over the limit of the card.

5

After using the card for about 60 days, pull your credit report from one of the credit reporting agencies. Any of the free credit reporting companies will suffice. Just be very careful, as you usually have to sign up for a monthly fee and you will need to cancel the service before you get charged. Annualcreditreport.com does provide one free credit report per year without an ongoing obligation. Verify that the prepaid credit card company is actually reporting for you. If not, you will need to contact the prepaid credit card company by phone to resolve the matter.