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Topics addressed on November 25, 2009:
Prepaid credit cards not reported to credit reporting companies
What prepaid credit cards report to Experian?
Prepaid credit cards are not reported to Experian at this time. They are part of a category of credit-like information that the industry refers to as alternative credit data.
Alternative credit data includes a number of things that resemble traditional credit in that you make regular payments over time, but they aren’t exactly the same. In addition to prepaid credit cards, alternative credit data includes utility bills, cellular telephone contracts, and even rent payment.
Experian and our industry counterparts believe that reporting positive payments for these types of relationships would be very beneficial to consumer trying to establish credit for the first time. However, there are a number of obstacles to including the information in credit reports.
In some cases, state laws prohibit reporting utility payments. In other instances, it is a matter of the company not having the ability to meet existing legal and technical reporting, updating and dispute resolution requirements. Also, because such payments are often for necessary services or are made prior to receiving the goods, they may not be as predictive as traditional credit accounts, and thus, won’t be able to effectively replace them in evaluating risk.
We think that in time we will be able to address those issues, but for the time being, the information isn’t a regular part of a credit report.
Thanks for asking.
- The "Ask Experian" team