Prepaid credit cards and gift cards are not considered traditional lines of credit and, in most cases, should not be reported to consumer reporting agencies (CRAs). Unlike credit cards or installment loans, prepaid products do not involve borrowing and therefore don’t impact a consumer’s credit history in the same way.
Let’s break down why this is the case and how to properly handle these accounts from a reporting standpoint.
Understanding Prepaid Products
✅ What Counts as a Prepaid Product?
- Prepaid Debit Cards
- General Purpose Reloadable Cards
- Retail Gift Cards
- Government Benefit Cards (e.g., unemployment or food assistance cards)
These are typically loaded with funds in advance and used like cash. They do not create debt, offer credit terms, or accrue interest.
❌ Not Reported to Credit Bureaus
Because they are not credit, prepaid cards:
- Do not report account status, balances, or payment activity.
- Are not subject to traditional FCRA furnishing requirements.
- Do not build or impact a credit score—positively or negatively.
Why They Are Excluded from Credit Reporting
The Fair Credit Reporting Act (FCRA) governs the accuracy and fairness of credit-related information—not general payment or banking data. Since prepaid cards are not extensions of credit:
- There is no risk assessment for lenders to evaluate.
- There is no repayment history to track.
- There is no legal obligation from the consumer to repay a debt.
Reporting such data would confuse lenders and possibly misrepresent a consumer’s financial status.
Common Misconceptions
❓ “If I use a prepaid card responsibly, won’t it help my credit score?”
No. Since prepaid cards do not report to the credit bureaus, they have no effect on your score—no matter how responsibly they’re used.
❓ “Can a prepaid card be upgraded to a reportable account?”
In some cases, secured credit cards (which are different from prepaid cards) can convert into unsecured credit lines over time and be reported. However, standard prepaid cards and gift cards cannot.
What to Report Instead
For credit-building and reporting purposes, furnishers should focus on accounts that meet reporting eligibility, including:
- Secured Credit Cards (backed by a deposit but extended as credit)
- Revolving Credit Accounts
- Installment Loans
- Buy Now, Pay Later (BNPL) accounts (if structured with credit terms)
Conclusion
Prepaid credit cards and gift cards should not be reported to credit bureaus. These products are not considered credit under FCRA guidelines and have no bearing on a consumer’s credit history or score. Instead, data furnishers should focus their credit reporting on accounts that involve a borrowing relationship, ensuring they stay compliant and contribute meaningfully to a consumer’s credit file.