I Have Bad Credit. Will Business Prepaid Cards Build My Credit?

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Question: I Have Bad Credit. Will Business Prepaid Cards Build My Credit?

Answer: Short answer. No.

 

Business Prepaid Cards will not help you rebuild or build credit because it is not a credit product.

“Credit” in one sense of the word as you know it, is a measure of risk in doing business with you. It is a measure of trust when a company provides a product, money or service in advance of you paying for all or some of it. An example would be when you purchase a new car, and while you may pay for a portion via a down payment, you’ll most likely drive the car off the lot with a heavy debt of money still owed. Businesses need to know how to gauge the risk of doing business with you and the likelihood that you will pay for your committed debt.

In the business prepaid card world, the card issuers are not extending you any credit and are only providing access to a payment platform (consisting of payment cards, a Master account tied to a bank, and a connection to one of the payment networks; Visa, MasterCard, AMEX or Discover). While they to take on a modicum of risk (chance that you may commit fraud) and expense (mailing you the card, configuration service, administration, etc.) this is not considered credit as there is no access to capital that is not your own.

If you are interested in building your credit, you should sign up for a credit card in addition to a business prepaid card as they serve different needs. The business prepaid card offers additional controls technology that many businesses find save them from losing money that they would otherwise lose when using other products, (such as cash, checks, credit cards and gift cards) that lack the sophisticated controls technology commonplace in the new world of business prepaid cards.

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