Are you looking for a prepaid card that reports to a credit bureau? The short answer is that most prepid cards do not help you improve your credit. That's because prepaid cards are not credit cards, and thus they do not extend credit to you. No credit, no credit bureau tie in.
However, there are are some cards that offer a credit reporting feature. Called the iAdvance Line of Credit by MetaBank, this is essentially a way to take out loans on a prepaid card account that when paid back get reported to one or more of the three major credit bureaus: Experian, TransUnion, or Equifax.
What Is a Prepaid Card?
First know how prepaid cards work. They are stand alone cards that look and act like a checking account debit card. They carry the Visa or MasterCard logo (typically) and run on the same debit card networks. They have an embossed 16-digit number on the front. This is your card's account. They have a magnetic strip on the back for card swipe machines to read your card account number. And they have a security code and signature line on the back as well. Unlike traditional debit cards (also known as check cards) prepaid cards are debit cards that are not attached to a checking or savings account.
You simply apply for a prepaid card from any number of prepaid card companies--such as MiCash MasterCard. There are no credit checks. You just have to verify your identity by providing your social security number and birth date (as required under the U.S. Patriot act to avoid terrorists or other criminals from obtaining a card). To use the card, you must "load" your card with money. You can do this through direct deposit, or through reloading networks. (See which networks apply to your prepaid card).
After you do that, you can use the card for purchases, and for each purchase, the purchase amount is deducted from your card's balance. When you reach zero dollars, you either need to put more money onto your card or it will become inactive. With prepaid cards, you'll pay either a monthly fee or a per-transaction fee (usually a dollar a transaction). So while these cards aren't free, for the unbanked (people who can't get a credit card or a checking account) they are an excellent alternative.
More About iAdvance
Here's how iAdvance works. You go to the iadvance website and sign up using your card account. You have to have direct deposit set upon your card as well. With the MiCash Card, you simply download a direct deposit form and, fill it out with your card's account number, and hand it in to your employer's payroll department.
Once you have set up direct deposit, you contact iAdvance online or by phone and take out a loan against your card balance (up to 50% of your balance). iAdvance does not recommend treating this program like a payday loan, and limits the number of iAdvances you can take out in a given calendar year.
Rather, it is meant for you to take out small loans--even as small as $20, which will then be automatically paid back the next time you have a direct deposit. This loan transaction and the fact that you paid it back on time (which happened automatically provided you didn't cancel direct deposit in the interim) is reported to one or more of the three major credit bureaus.
Over time, you will build up a history through iAdvance of paying loans back on time. This should help with your credit score, althought iAdvance makes no claims that it will.
Not a Credit Card
So, even though you don't have a credit card, this is a good method for generating some "credit" that will wind up in your credit report. Another method is to pay bills, although bear in mind that most bill pay programs do not report to the major credit bureaus and hence, their value is minimal.