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Do “Credit Builder” Features Work?

Here’s one of the catch 22’s of credit repair. Many people with really bad credit scores, or even no credit score (folks with “thin files” or “no files”) don’t have a chance to easily build or improve their credit score. So what can they do? One option is to use a prepaid debit card with a “credit builder” feature. Do these work?

To figure out if a prepaid debit card’s credit builder option actually builds your credit, let’s first look at how they work.

The main innovator in providing a credit builder feature to a prepaid debit card is AccountNow (they provide an excellent product in their AccountNow Prepaid Debit Visa Card). Here’s how AccountNow’s credit builder works. If you pay recurring bills (like your utility bill, or your rent) using your AccountNow debit card, AccountNow will report your regular monthly payments to an alternative credit bureau known as “PRBC” (which stands for Pay Rent, Build Credit).

PRBC, in turn, compiles a credit report for you based on these regular payments. If you pay the bills on time, you can build a decent credit history. PRBC then provides this alternative credit report to other companies.

Here’s what PRBC has to say about it’s service:

Pay Rent, Build Credit, Inc. (PRBC) is a subsidiary of MicroBilt Corporation. PRBC is an FCRA compliant credit repository established to serve the approximately 100 million US consumers lacking a traditional credit history. PRBC offers the PRBC Report with FICO® Expansion® Score, a consumer credit file and score based on a consumer’s history of making rent and other recurring bill payments. The PRBC report with FICO® Expansion® Score provides business with the credit file and score necessary to demonstrate a consumer’s creditworthiness when applying for housing, credit, insurance, and employment.

So, does this service work? We haven’t heard any specific evidence that it does work, however, if you are in a situation where you have no credit file (or a very thin file), almost ANY positive items in your record should help.