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The main reason that most people use reloadable credit cards is that they have a credit problem that prevents them from getting a regular credit card. A lot of these people hope to use these cards to improve their credit scores. The question is does this work and how do you go about doing it?

The first thing that you have to know about using reloadable credit cards to improve your credit score is that very few of them will do anything to help in this respect. The reason is that they are not really credit cards. Since you are paying up front to get the card you are not actually borrowing money which means you are not actually being extended credit. Since a credit score is used to determine how responsible you are with credit it is hard to improve your credit score unless you have borrowed money.

There are however some reloadable credit cards that may be able to help your credit score in a way. These are cards that offer a credit builder option; you will want to look for these cards if you are planning to use them to rebuild your credit. Before you decide to go down this road however you need to realize that these cards are of fairly limited value and can really only help if you have really bad credit. As long as you understand the limitations of using these cards it may be a way that you can start to see some improvement.

The reason that these cards are of limited value is that the major credit bureaus won't report on these cards because you aren't being granted credit. There is however another credit bureau that uses non-traditional sources to report on your credit. That means that you can help your credit with this bureau through things like paying your electric bill or phone bill on time or by using certain prepaid credit cards. The problem is that most banks don't use this credit score to determine your credit rating. There are a few lenders however who will look at this score along with the traditional credit scores. In these cases using a reloadable card may be helpful.

The bottom line when it comes to prepaid credit cards is that they are not really designed to help you to improve your credit; they are designed to be a substitute if you can't get a regular credit card. There are times when a prepaid card may be helpful but you probably shouldn't rely on it. If your goal is to rebuild your credit you will be far better off with a secured credit card. Just keep in mind that with a secured credit card you can damage your credit just as easily as help it if you are not careful.