Will Having a Debit Card Help Me At All With My Credit Score?
Posted by main on July 6th, 2015
Debit Card – What effect can a debit card have on my credit score ?
Most debit card accounts are attached to a United States checking account. This general rule excludes Pre-Paid Credit Cards.
The majority of US banks do not report debit cards and their activity to credit reports. So whether you use the debit card or not, the activity will not appear on your credit report. This means it will not affect your credit score in a positive or negative way.
The Good, The Bad and The Not so important
The method mentioned above, has it’s upsides and downsides. The upside is that if you ever let your checking account go into overdrawn status, the three major credit bureaus, Equifax, Experian and Transunion, will never know about it since it never “hits” your credit report. However, this is true as long as the account is paid and does not go into collection status. A lot of students assume that because their parents gave them a debit card to use, that this will help their credit score when they turn 18. This is not the case as described above.
So how can i improve or start building, fresh credit ?
There are ways for students to build their credit. One way is to apply for and fund a Secured Credit Card. This method is well known and proven to work for many people with bad credit or no credit history whatsoever. You can use your secured credit card just like a debit card in terms of funding it with your capital. The only major difference is that your secured card will report activity therefore it can increase or decrease your credit score depending on your financial responsibility. If you would like to learn more about secured credit cards and their benefits you can check our article about the best secured credit cards for 2015 or read the wiki page about secured credit cards.