Q) Will a Prepaid Credit Card Improve My Credit Score?
Answer: No. Since prepaid cards are not actually credit cards (they’re actually like VISA-branded debit cards), they’re not listed on your credit report. Therefore, they aren’t included in your credit score.
A secured credit card, on the other hand, requires a deposit similar to a prepaid credit card, but purchases don’t take away from your deposit. Instead, you’re required to make payments on your balance because it’s an actual credit card. Certain secured credit cards are listed on your credit report and can improve your credit score if they’re used correctly.
Q) How Does a Bad Credit Credit Card Work?
Apply for a Bad-Credit Credit Card
"Bad-credit credit cards" are designed to help those who have less-than-perfect credit. You can apply for one of these cards online. Not everyone will qualify for an unsecured bad-credit credit card, however those who don't qualify will likely be approved for a secured bad-credit credit card. A secured card requires a deposit equal to the limit, so the credit-card company is covered should you default
Make Payments on Time
Once approved for a bad-credit credit card, it's important to make all payments on time and never go over the credit limit. The goal of a credit card of this nature is to get your credit back on track, and the only way to do this is by following the rules. Paying the balance off every month is highly recommended, as it will show responsibility on your part as well as good money-management skills. A record of paying on time and managing your bad-credit credit card well will result in increased credit limits, lower interest rates and in time a higher credit score worthy of a traditional credit card.
Improve Your Credit Score
Compare bad-credit credit cards to find one that reports to all of the credit-reporting agencies on a monthly basis. Doing this will improve your credit with all of the agencies, which can help you get more credit in the future, reduce your auto-insurance rates and even help you buy a home. Try to avoid the many bad-credit credit cards that have high fees in addition to high interest rates. Instead, sign up with an established credit-card company that will offer a fair interest rate and few fees based on your creditworthiness.