Suze Orman’s Prepaid Card Will Not Affect Your Credit Score

Our post on Suze Orman’s prepaid card generated quite a response on Twitter last week (by the way, links to our articles are immediately posted on our Twitter account). Most commenters were in general agreement with our position that the launch of the card is a non-event, but there were some interesting responses and quite a few simply wrong statements.

The biggest misunderstanding to which many of our Twitter friends seem to have fallen prey, unfortunately stoked up by Orman herself, seems to be the notion that the Approved Card, as it is called, can help users improve their credit scores. So let’s set the record straight: the Approved Card does not affect your credit score in any way. We’ve stated this general prepaid card fact several times before, but evidently it still needs repeating. But let’s go into some detail here.

Suze’s Credit Score Claim

Orman doesn’t actually directly state that any activity on her prepaid cards will affect their users’ credit scores, but she certainly doesn’t make it clear that it will not and she surely makes it sound that it could. Watch her interview with NewsChannel5’s Tracy Carloss below.

At around 1:01 min. she explains that no debit card activity affects your credit score (she presents her card as a “prepaid debit card”), which is correct, then proceeds to spell out the evils of not having a credit score and then, at around 1:32 min., makes the following statement about her product:

This is the first prepaid card in history, everybody, that is going to be sharing information with TransUnion, a major credit bureau. There are only three credit bureaus out there, this is one of them. Over the next 18 to 24 months, TransUnion is going to be evaluating information on this card and hopefully they will see that behavior on a debit card can predict future credit behavior and therefore a debit card will generate a FICO score. That is what I’m hoping for.

How does that statement sound to you? Well, what I’ve found, thanks in no small part to all these tweets, is that to many people out the message is that the Approved Card helps you build a credit score. Having watched this interview, I no longer wonder. But what are the facts?

TransUnion Makes It Clear: No Credit Score Effect

Thankfully, TransUnion comes to our aid and sets the record straight, making my job easier in the process. The credit bureau has indeed partnered with Orman and is giving users of her prepaid card access to their credit reports and scores. As far as the question of the effect of any card activities on a cardholder’s credit score is concerned, here is what Colleen Tunney-Ryan, a spokeswoman for TransUnion, had to say, as quoted on MainStreet.com:

Our goal is to help Suze understand whether including this data in a consumer’s credit report would impact access to credit products… It is important to understand that this data will not appear on any TransUnion credit report at this time.

That settles it, doesn’t it?

The Takeaway

Let me repeat the result of our evaluation of Orman’s new product: the Approved Card is a good prepaid card, as prepaid cards go, but is still just that: a prepaid card. There is no escaping that fact. Whatever its other pluses or minuses may be, this type of card does not have any impact on your credit score, either negative or positive. Its activity is simply not reflected in your credit file.

It is regrettable that an expert on personal finances should not tell you this in a clear and unambiguous way. But it is still a fact.

Image credit: Theapprovedcard.com.