Which financial product does NOT help build credit history?

Which financial product does NOT help build credit history?

• A. Credit card
• B. Loan
• C. Mortgage
• D. Debit card

Answer: (D)

A debit card does not help build credit history because it is not a credit product; rather, it accesses the funds in your checking account. When you use a debit card, you are essentially spending your own money instead of borrowing. Consequently, transactions made with a debit card are not reported to credit bureaus, which is essential for establishing a credit history. In contrast, credit cards, loans, and mortgages involve borrowing funds, and the payment history on these accounts is reported to credit bureaus. This reporting contributes positively to an individual’s credit history when payments are made on time, ultimately influencing credit scores. Therefore, while credit cards, loans, and mortgages can help a person build and improve their credit history, debit cards do not have any effect in that regard.

A debit card does not help build credit history because it is not a credit product; rather, it accesses the funds in your checking account. When you use a debit card, you are essentially spending your own money instead of borrowing. Consequently, transactions made with a debit card are not reported to credit bureaus, which is essential for establishing a credit history.

In contrast, credit cards, loans, and mortgages involve borrowing funds, and the payment history on these accounts is reported to credit bureaus. This reporting contributes positively to an individual’s credit history when payments are made on time, ultimately influencing credit scores. Therefore, while credit cards, loans, and mortgages can help a person build and improve their credit history, debit cards do not have any effect in that regard.