Could the Sesame Credit Builder Card Help Improve Your Credit Score?

If you have bad credit or are still trying to build a credit history, it can be hard to get approved for a credit card. Unfortunately, most debit cards don't help you build credit, since those cards have no lending and repayment history that gets reported to credit bureaus.

As a result, many people who are trying to build credit can't get "credit" for their everyday spending and on-time bill paying. Even if you're managing your money responsibly with your debit card, the credit bureaus don't see it -- and your credit score doesn't improve.

Now, there is some good news for people with lower credit scores. There is a new type of debit card that was recently launched by Credit Sesame, a credit monitoring platform, that is intended to help people build credit with everyday debit card purchases and monthly bills. It's called the Sesame Credit Builder debit card.

Let's see how the Sesame Credit Builder debit card works, and how it could help improve your credit score.

Sesame Credit Builder: Improve your credit with everyday purchases

Credit Sesame offers a prepaid debit card called Sesame Cash. If you sign up for Sesame Credit Builder, you get to upgrade your Sesame Cash debit card with a secured line of credit from Credit Sesame's partner bank, based on how much money you have in your Sesame Cash account. You don't have to take on any debt; it's all based on how much money is already in your debit card account.

After signing up for Sesame Credit Builder, your debit card still works like a regular debit card, but now you have that special secured line of credit or "virtual credit card" that's integrated with your account behind the scenes. When you make qualifying purchases with your Sesame Cash prepaid debit card, Credit Sesame attributes those purchases to the virtual credit card. And at the end of the month with autopay enabled, the virtual credit card gets paid off from the amount of cash in your Sesame Cash account, and that payment is reported to the three credit bureaus.

Sesame Credit Builder is a unique way to improve your credit because:

• You don't have to take on any debt
• You don't have to get pre-approved
• You don't need an upfront security deposit
• You don't have to worry about interest charges

This is an innovative product that makes your everyday debit card spending "visible" to the credit bureaus. It's like having a secured credit card combined with your debit card behind the scenes that rewards you for responsibly managing your finances. Many people with less-than-perfect credit work hard and pay their bills on time; they deserve a chance to get back in the credit system's good graces.

Why good credit matters -- how Credit Sesame helps

About 25% of Americans have a FICO® Score of less than 650, putting them in the fair-to-poor credit range. Having a credit score below 650 makes it harder to qualify for loans or credit cards with good terms. Your credit score can also affect how much you get charged for auto insurance. According to research from The Ascent, drivers with poor credit had to pay $1,128 more than the national average annual car insurance premium in 2023 -- about $94 extra per month.

"With the cost of living rising, people are more likely to need loans or credit cards to cover their expenses, which makes it even more important to have good credit," said Marcus Beisel, Chief Product Officer for Credit Sesame. "This explains why credit building products are growing in popularity and why we are seeing great adoption of the Sesame Credit Builder product among our members. We also see that it is a way to build credit with everyday habits. Customers who do not qualify for traditional credit are using debit cards, so we found an opportunity to help them get credit with those transactions."

Credit Sesame users with positive credit payment history have achieved an average credit score increase of 35 points; the Sesame Credit Builder debit card could help people accelerate their results even faster. Although Credit Sesame cannot guarantee specific results from the Sesame Credit Builder card, you could see a higher credit score as soon as the next month.

Bottom line

The Sesame Credit Builder debit card lets you build credit with everyday debit card spending and by paying monthly bills. Credit Sesame has created an innovative way to link your prepaid debit card to a secured line of credit behind the scenes, like a "virtual credit card" but without the debt. Sesame Credit Builder lets you spend with your debit card and get recognized by the credit bureaus. This could be the start of a winning strategy to improve your credit score, qualify for lower-interest personal loans, and save thousands of dollars on financial products in the future.