Do Prepaid Cards Build Credit?

Short answer: most prepaid cards do not build credit.

They act more like debit—you load your own money and spend it.

So there’s no borrowing and usually nothing to report to the credit bureaus, which means no direct impact on your credit score.

Where KOHO Essential Fits In

KOHO Essential is a prepaid Mastercard® you load with your own money, so by itself it works like a smart spending and saving tool.

With KOHO Essential:

• It has a low monthly plan fee that can be waived when you set up direct deposit or add +$1,000.

• Use a prepaid Mastercard® for groceries, bills, subscriptions, and travel.

• Grow your savings with a 2% interest savings rate on your entire balance.

• Earn 1% cash back on groceries, eating & drinking, and transportation.

• You can subscribe to Credit Building for $10/month, it's an affordable way to build your credit history.

• Enjoy unlimited transactions and free e-transfers (never worry about fees when sending money to someone again).

Why Prepaid Cards Usually Don’t Build Credit

Most prepaid cards don’t build credit because:

• You’re not borrowing money—you’re spending funds you’ve already loaded.

• There’s no credit limit or traditional loan attached.

• Since there’s no lending decision or repayment schedule, there’s usually nothing for the lender to report to the credit bureaus.

From a credit bureau’s point of view, prepaid usage looks more like spending, not borrowing and repaying, which is what credit scores are built around.

How KOHO Can Help You Build Credit Anyway

To go beyond simple prepaid spending, you need a reported product or program.

That’s where KOHO comes in:

• Subscribing to Credit Building lets you add a structured, reported payment to your profile.

• Over time, those on time Credit Building payments can help strengthen your credit history, even though the card is prepaid.

So the pattern is:

Prepaid alone = great for budgeting, not for credit.

Prepaid + dedicated credit building features = better money habits and a path to a stronger credit file.