Do prepaid cards build credit?
Written by
Emily Tye
Reviewed by
Amy LancashireNo. A standard prepaid card won't build your credit. You can only spend money you've already loaded onto it, so you're not borrowing anything and there's nothing for the provider to report to the credit reference agencies (Experian, Equifax and TransUnion). It won't harm your score either.
Some providers sell paid add-ons that report your monthly fee to the credit reference agencies, so it shows up like a loan repayment. The FCA reviewed products that work this way and found little evidence that they significantly improve credit scores for most people.
Prepaid cards are more common than they used to be. The FCA's Financial Lives survey found 8% of UK adults used a loadable prepaid card to pay for something in the 12 months to May 2024, up from 4% in 2022.
Why doesn't a prepaid card build credit?
Your credit file is mainly a record of how you handle borrowing. Lenders report your credit accounts, such as credit cards, loans, overdrafts and mobile phone contracts, to the agencies, including your balances, your limits and whether you pay on time. That's what other lenders check when you apply, as our guide to what affects your credit score explains.
A prepaid card gives the agencies nothing to record. There's no credit limit, no agreement to repay and no payment to miss, because you can only spend what's on the card.
Can a prepaid card hurt my credit score?
No. There's no credit check to get a standard prepaid card, and how you use it isn't recorded, so it can't pull your score down. If you try to spend more than your balance, the payment is usually declined rather than going into debt, so there's no bill to fall behind on.
The exception is a paid credit-building add-on. Because the fee is reported, a missed payment can harm your score. Before you sign up for one, ask whether the provider checks your credit and, if it does, whether that's a soft credit check or a hard search.
Is a prepaid 'credit card' actually a credit card?
No. Prepaid cards are sometimes called prepaid credit cards, and many run on the Visa or Mastercard networks, so they work in a lot of the same places. But there's no credit involved: no limit to borrow against, no interest and nothing to pay back. A prepaid card works more like a debit card, except it isn't linked to a bank account.
Read more on the difference between credit and debit cards.
What about prepaid cards that say they build credit?
A few providers sell a credit-building feature on top of a prepaid card or current account, usually for a monthly fee. For reporting purposes, the fee is set up as a small loan or credit agreement. Each month you pay it, the provider reports the payment to one or more credit reference agencies, so it appears on your file as a repayment record.
Before you sign up, check:
The total cost. At £6 a month, you'd pay £72 over a year. This is a simplified illustration, and prices vary.
How long you're tied in. At least one provider asks you to commit to 12 monthly payments.
What happens if you miss a payment. A missed payment can be reported and harm your score, so make sure you can afford every payment.
What did the FCA find?
In November 2025, the FCA published the results of its review of credit builder products. It focused on products that typically don’t involve regulated credit, where the provider simply reports your regular payments, like the monthly fees described above, to the credit reference agencies to help build your credit history. The FCA didn’t look at low-limit credit cards, which are often described as credit builder cards, or at rent reporting services.
For the products it did review, it found that:
for most people, there's little evidence these products significantly improve credit scores
most of the products it looked at were unregulated, and firms often didn't clearly explain their limits and risks
in some cases, reporting these payments can give lenders an inaccurate picture of someone's finances and help them get credit they can't afford
for people already in financial difficulty, the products are less likely to help and can take money needed for essentials
After the FCA's feedback, 5 firms stopped offering this type of product, and others changed their products and marketing.
What can I do instead to build credit?
These options add information that lenders can actually see on your credit file:
Use a credit builder credit card. These often start with a lower limit, and the provider reports your balance and payments to the agencies. Paying off a small amount in full each month builds a record of on-time payments without paying interest, but it's still borrowing, so missed payments will count against you. Read how to use a credit card to build credit.
Register on the electoral roll. It's free, and it helps lenders confirm your name and address. Here's how the electoral roll affects your credit score.
Add your rent to your credit file. If you rent, rent reporting can record your rent payments on your credit file.
One tip that doesn't work in the UK is being added as an additional cardholder on someone else's credit card. US guides often suggest it, but in the UK the main cardholder is responsible for the whole account, and an additional card won't build a credit history for you.
For more ways to strengthen your file, read our guide on how to increase your credit score.
FAQs
There are a range of financial products available that may suit your needs. We encourage you to research your options carefully and consider seeking independent financial advice before making any decisions. This blog is for informational purposes only and does not constitute financial advice.
