How do credit-building prepaid debit cards work?
Since the three major credit bureaus – Equifax, Experian and TransUnion – do not report on prepaid debit card transactions, the goal of credit-building prepaid programs is to establish some record of use for lenders. The goal is to “prove that transaction data from a prepaid card has predictive ability” when it comes to the dependability of a customer, Schneider said. As a result, prepaid companies aim to be tracked by a host of alternative data collection and reporting agencies, including PRBC and LexisNexis, that glean information from a host of sources, including telecom service and other utility bill payments. Ultimately, lenders have to be convinced that this data is worthwhile and can be predictive. That can only happen once PRBC and others have a very large body of data that has been collected, organized and reported systematically. “More and more prepaid companies are now reporting to PRBC, so their database is growing,” said Schneider. “Until you amass a critical amount of pre
