Some credit cards do not report credit limits to credit bureaus, which can have a negative impact on your credit score; here's why -- and what to do about it.

Using a credit card responsibly has its perks, including helping you build your credit. But what happens when the card you use doesn’t report your activity to the three credit bureaus—or only reports to one or two?

Getting the wrong card when you’re trying to build credit can keep you from achieving your goal. Learn more about which cards to avoid and which cards are best.

Why it matters that you have a credit card that reports to the credit bureaus

You can establish a payment history

Credit cards can help you build credit in a few ways. For starters, you can establish a positive payment history— which is the most influential factor in your credit score—by simply using the card and paying at least the minimum amount due each month.

You can keep your credit utilization low

Your credit utilization—the percent of your credit limit you’re using at any given time—can also help establish a good credit history if you keep it low. Plus, your length of credit history will grow as you use the card over time.

Most credit cards report all of this information to the three national credit bureaus—Experian, Equifax and TransUnion—at least once a month. The credit bureaus maintain these records in your credit reports, which are then used to calculate your credit score.

What happens if you have a card that doesn’t report to all three?

If you have a card that doesn’t report your activity to any of the three credit bureaus, you’ll get no benefit from using it responsibly. And if it reports to only one or two, the credit benefit of using the card will be limited.

For example, let’s say you have a credit card that reports to Experian and TransUnion, but not to Equifax. Over time, you’ve used your card responsibly and established a good history on your credit reports with those bureaus.

But if you go to apply for a loan or a new credit card and the lender calculates your credit score based on your Equifax credit report, it will be as if you never had the credit card. Again, you’ll get no benefit.

What cards don’t help you build credit?

If you’re looking to build credit, the last thing you need is a card that won’t help you achieve your goal. Here are some cards to watch out for.

Prepaid debit cards

There are no prepaid debit cards that can help you establish good credit because they aren’t based on a credit line like credit cards.

If you want a prepaid debit card for other reasons, though, it may be worth having one in addition to a credit card, especially if you can’t qualify for a checking account.

The PayPal Prepaid Mastercard® is a solid choice that offers cardholders special offers and cash-back rewards on some of their purchases. Depending on the offers you take advantage of, you could easily make up for the card’s $4.95 monthly fee.

Another card worth considering is the MileagePlus® GO Visa® Prepaid Card. This one will give you up to one mile for every dollar you spend with the card, with a maximum of 2,500 miles per month. If you max that out every month, you won’t have a hard time getting more value than you’re paying with the card’s monthly or annual plan.

Check out some more of our favorite prepaid credit cards. 

Some credit cards for bad credit

Some credit card issuers take advantage of people with bad credit by offering them credit cards that charge outrageous fees and interest and don’t help them build credit.

In general, try to avoid credit cards that charge fees to process your application or open your account. Also, stay away from cards that charge APRs higher than 30%.

Finally, double check with a credit card issuer before you apply to make sure it reports your account activity to all three credit bureaus. Most issuers that do will list that on their website. But don’t be afraid to call if you can’t find it anywhere.

Credit cards that do help you build credit

Now that you know which cards to avoid, here are some that can help you establish a solid credit history.

Secured credit cards

Secured credit cards are designed for people with bad credit and people who have no credit at all. The main drawback is that they require a security deposit, which is usually equal to your credit limit. But otherwise, they function just like any other credit card.

Apply Now On the Secure Website

One option is the Capital One Platinum Secured Credit Card. This one doesn’t offer rewards, but it does charge no annual fee. Also, you could get a $200 initial credit limit with a security deposit of $49, $99 or $200.

Student credit cards

If you’re a college student who’s new to credit, you may not have to deal with a security deposit on a secured card. Instead, you could potentially qualify for an unsecured student credit card.

If you want a simple rewards structure, consider the Journey Student Rewards from Capital One. It offers 1% cash back on all purchases, plus an extra 0.25% cash back if you pay your bill on time each month.

Starter credit cards

If you’re new to credit but aren’t a student, you may still be able to avoid secured credit cards with an unsecured starter credit card. Keep in mind, though, that these cards may be tough to get if you don’t have a strong financial profile.

Apply Now On the Secure Website

One option is the Capital One QuicksilverOne Cash Rewards Credit Card, which offers 1.5% cash back on all your purchases. The only downside is that the card charges a $39 annual fee. But if you spend at least $2,600 per year or $217 per month, you’ll make up for it.

If you can’t get that one, the Capital One Platinum Credit Card is a decent runner-up. It doesn’t offer any rewards, but it has no annual fee.

Summary

If you’re trying to build credit, it can be devastating to find out that all of your hard work of responsible credit card use has gone unnoticed. The good news is that it isn’t too hard to find a good credit card that reports your activity to all three credit bureaus.

Check out the cards we’ve listed, as well as other top credit cards to make sure you get the best one for your needs. While the benefits and rewards may not be great to start, you’ll be able to apply for better credit cards as your credit improves.

Until then, find a card that reports to all three credit bureaus, use it regularly and pay it off each month. It won’t be long before you start seeing your credit score improve.

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About the author

Total Articles: 17
Ben Luthi is a personal finance and travel writer who covers credit cards, debt, credit, investing, and more. He's currently studying to become a CFP® and trying to keep up with his two young kids. You can connect with Ben on Twitter or his website.