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No Credit? Using a Debit Card Won’t Help

Banking, Credit Score
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If you’re looking to build credit, you should pay attention to what type of card you’re swiping at the register. Despite what you might think, debit cards won’t help you build, maintain or increase your FICO credit.

Debit vs. credit

Debit cards and credit cards are totally different forms of payment.

Debit cards are tied to your checking account. When you make a purchase, the money comes directly from your bank account to cover the amount owed. Thus, there’s no bill to pay at the end of the month.

With the other type of plastic—credit—you won’t see any money taken away immediately. Credit cards afford cardholders the ability to borrow, or “charge,” up to a certain amount. Charges are then paid back in monthly installments, which include interest.

So while each of these cards may be accepted as payment for what you’re buying, only one actually helps you build credit. Debit transactions (including using prepaid debit cards) aren’t factored into your credit score, but credit card habits are. As you begin building your credit score, it will be a reflection, in part, of the length of time you’ve had credit extended to you and how responsible you’ve been with that credit.

What should you do?

So, if you don’t have any credit currently, and using a debit card won’t help, what can you do to start building your credit history? Can you get a credit card with no credit? Yes—you just have to know where to look.

  • Consider a secured credit card. Secured credit cards are an ideal option for those who have no or low credit but are looking to get a credit card. These no-risk cards require you to make a deposit to open the account. This deposit determines your credit limit and will be given back to you in the event you close your account.
  • Use your student status. If you’re a student, consider one of the best student credit cards. Student cards may be easier to attain, as it’s assumed young people have less credit history.
  • Look around. Check out the best credit cards for first-time credit card applicants. Remember to research first and avoid applying for several credit cards at once, as this could be damaging to your score.
  • Start building. Once you’ve been approved for a credit card, how you use it will be the foundation for your credit score. Don’t charge more than you can pay off on time each month, and don’t max your card out.

But don’t ignore your debit

Focusing on building credit doesn’t mean you should disregard your checking account completely. Be vigilant with your use of your debit card. Poor management mistakes, such as overdrawing your account, won’t automatically hurt your credit score, but not paying a creditor or having a debt go into collections can.


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