Deciphering Your Credit Report

It’s advisable to check your credit report at least once a year to gain an understanding of how your credit score appears to your creditors. The thing is, when we do check our reports, we have trouble making sense of it. So how do you read a credit report?

There are four main parts to a credit report. Your personal profile, credit history, public records and inquiries. Read over each section of the report and scan it for errors.

1. Personal Profile – Your personal profile contains all your basic information such as your name, address, birth date, social security numbers, and previous addresses and employers. Misspelling of your name can be common when creditors record your name wrong. However, it is important to check if there is any discrepancy in address as this can alert you of a possible identity theft.

2. Credit History – This is where you can find an itemized list of your current and past accounts, including balances and arrears. You will find the name of the creditor and account number for each bill. There will also be a column that identifies the nature of the account such as individual, joint, authorized user, terminated, and others. Other information such as the history of the account may also be seen.

This part of the report will show whether you have a high credit limit and it also indicates the number of installments you have left for any loan. The balance remaining on the account, any due amounts, and the status of accounts will be noted.

Creditors will also check whether you have more revolving accounts than installment accounts. Revolving accounts is one wherein there is no fixed ending date to the debt. Installment accounts are when there are fixed payment and a specific ending date. Revolving debts are less attractive to creditors and will not help build your credit.

3. Public Records – This report contains records that will also be seen in local, state and federal courts. This shows whether you have declared bankruptcy, have tax liens and other monetary cases. Even overdue child support records may be included. Public records will remain with your credit score for seven to ten years and can be a negative blow against your credit score.

4. Inquiry – Inquiries are classified between hard or soft. Hard inquiries are those initiated by you, while soft inquiries may come from companies that wish to offer promotions on credit and current creditors that are monitoring your account. It is generally not advisable to have too many creditors view your credit report as the frequency of inquiries can appear as a negative to some lenders.

Finally, your credit score may be seen in your report. This score will determine whether an individual will qualify for a loan or not. High credit scores will mean better rates for the borrower, while lower rates can also leave the borrower subject to loan denial. Credit scores can range from 300 to 850.

Using Prepaid Credit Cards to Build Credit

First of all the question needs to be asked, does using prepaid credit cards build credit?

The answer is yes and no.  Prepaid credit cards are simply cards you use to spend money you already have.  They are exactly like a checking account debit card except without the checking account.

Because of the nature of prepaid cards some of them do not report to the credit bureaus. You do not actually borrow money with prepaid cards like you do with a standard credit card.  You essentially “load” money onto the card, say $200, and you cannot spend more than the amount you placed on the card.

So you may ask, why use prepaid cards at all?

Good question, there are a few reasons including the security.  Prepaid cards are much safer than cash and if you are unable to qualify for a checking account a prepaid card is an excellent alternative.

In some cases they do report to the credit bureaus and help your credit.

Some cards have what is called a credit builder feature.  Even though the credit builder feature typically costs money on a prepaid card, sometimes it is worth the cost to help rebuild your credit.  If you have a history of maxing out credit cards, missing payments or your credit is to low to qualify for any credit cards this could be the best option for you.

Credit cards can be a trap for irresponsible borrowers, but a prepaid credit card is an alternative that eliminates the ability for you to spend money that you do not have. Plus you will not lose money paying the interest on credit cards.

See this example of a prepaid card: You can click the card or Apply Now to get more information on that offer.


SilverCard Prepaid MasterCard®
SilverCard Prepaid MasterCard®
  • Perfect for Gov./Benefits Checks recipients
  • $0 activation with rebate*
  • 100% guaranteed approval*/no credit check
  • Free direct deposit of your pay or gov check
  • Anywhere MasterCard Debit card is accepted
  • No overdraft fees or minimum balances
  • Online Checking - Electronic or paper checks

Apply Now!

Better options for building credit.

If a prepaid card is all you can qualify for or feel comfortable with then let that be your option, but there are other choices for building credit even if you have a low credit score.

  • Store Credit Cards – Getting approved for a store credit card, like at department stores or Walmart type stores,  is often times easier than qualifying for a credit card.  This is a good place to start building credit.
  • Entry Level Credit Cards – Companies offer entry level cards that pretty much anyone can qualify for.  (Click here to see a list of these cards).
  • Read our Building Credit Guide so you do not make your situation worse.

Whether you are trying to start building credit or rebuild your credit it is important that you do it correctly and wisely.  Good credit will save you thousands of dollars the same way bad credit will cost you thousands of dollars.

If you have any experience, good or bad, with prepaid credit cards please share with us in the comments.

How to Build Credit or Repair Poor Credit

Learning how to build your credit properly is vital if you want strong credit.

Starting with no credit at all or trying to repair very bad credit both rely on the same basic principles.   In each scenario you need to follow the same guidelines in order to build strong credit.  The big difference is that repairing your poor credit can and most likely will take much longer.

Delinquencies, collections, liens and other negative factors can take many years to fall off your credit.  That is why it can take much longer.

Here are a few tips when building your credit:

  • Take what you can get. – You cannot build credit if you have no credit.  I know it sounds a little funny but its true.  Without a credit card or line of credit you cannot start building credit.  You may only qualify for a credit card with a $500 credit limit, but that is okay.  Start there.
  • Check out the best credit cards to build credit.
  • Never miss a payment – One of the worst and the most simple negative effect on your credit  is missing a payment.  This not only will hurt your credit but the fine print in a credit card usually states if a payment is missed the rate can be increased.  It usually increases into the 20-30% range.  Always be sure you can at least pay the minimum payment.  Which brings us to our next point…
  • Only borrow what you already have saved in cash – This tip sounds funny but it is one you need to follow when building credit.  Do not go borrowing money when you do not have money saved in the bank to pay it off.  That is how you get into big time trouble with credit cards and rack up thousands of dollars that you cannot pay off.  This is a terrible trap that you need to avoid.
  • Keep your balance under 30% – Another huge factor that can negatively affect your credit is having high balances on your credit cards.  If you have a card with a $1000 limit, always keep the balance under 30% which in this case would be $300.  First of all this will insure you do not go crazy and max out your credit cards and secondly it will show the credit bureaus you are a responsible borrower who has no dependency on credit.
  • When your credit improves toss the old cards. – Introductory credit cards usually have low limits and bad interest rates.  As soon as you can qualify for better credit cards, cancel and toss the old cards.  You can try contacting the credit card and see if they will increase your limit and drop your credit, if not pay it off and cancel it.

Need to learn more info about credit cards?

Building credit can take time, but with good credit you will save thousands and thousands of dollars when you are ready to make large purchases like cars and homes.

Do it right and you will reap the rewards.