Is It True That Debit Cards Raise your Credit Score?

Debit cards are a convenient way to pay for purchases, but do they also help your credit score?

When you use your debit card to make a purchase, you’re spending money that’s already in your bank account. Using a credit card, on the other hand, entails borrowing money from the credit card lender. If you can’t pay off your credit card bill within the given timeframe, you’ll have to pay interest as well, just like if you took out a loan.

A debit card is only beneficial as you can never spend more money than what’s available in your account, so there’s no interest to pay since you’re not borrowing any funds.

Although using a debit card requires no debt, the credit agencies don’t received detailed information about your transactions. Therefore, it’s unlikely to improve your credit score. If you’re trying to build good credit, this may not be helpful as the agencies won’t have sufficient information on you from consistent use of a debit card .On the other hand if you’re able to pay off a credit card bill regularly and on time ,this action can act as positive reinforcement for  your credit history which will subsequently boost your score.

Before you close your debit card account, there are a few conditions that you should check. You may have supplied your debit card or bank account data for automatic payments like utilities and mobile bills. Before closing the previously linked bank account, you’ll need to change the payment information to a different account. Otherwise, the utility or mobile company may register a refused payment against you, which might harm your credit score.

Losing your bank card, as well as closing your debit card or bank account, has no direct impact on your credit score. You should report the loss immediately to the bank and request a new debit card. If you don’t report the loss, someone else may illegally use your debit card to make unauthorized purchases.

If you report the loss before any suspicious transactions have been made on your card, you can request the bank reverse those charges. If you can’t prove that you didn’t make the purchases, the bank may determine that you are responsible for the loss due to carelessness or security inadequacy, especially if you’re unable to provide documentation. In such cases, the bank will not reimburse any losses incurred due to unauthorized transactions. When your new debit card is provided, please change any automatic payments to reflect your new debit card information.

In general, your debit card transactions are not directly reported to a credit reporting agency, even if you end up overdrawing your bank account. As a result, using a debit card will not harm your credit score. However, it also implies that using a debit card will have no effect on your current credit score or help you obtain a better credit score.

We hope that this fix my credit article has been helpful. If you are struggling with bad credit, please do not hesitate to contact us for assistance. Our credit repair team of experts can help you clear your credit file and get on the path to good credit.