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A secured card is a tried-and-true method for building positive credit history and increasing your credit score. But it’s not a quick fix, unless you’re starting from scratch.
An hourglass set on top of a calendar measuring how long it takes to build credit with a secured card

How Long Does It Take To Build Credit With a Secured Card?

If you’re trying to build credit using a secured card, it’s natural to wonder how long it will take. The truth is, depending on your situation, it could take just a few months, or it could take several years. But the end result is worth the journey, and many people establish good credit using nothing but a secured credit card.

What Is a Secured Credit Card?

A secured credit card is like a regular credit card, except it’s backed by collateral. People with no credit history, or a poor credit score, often use a secured card to build or rebuild positive credit history.

The collateral is generally a refundable deposit in the same amount as your credit line. So to get a $250 limit on a credit card, you would give the creditor $250 to hang onto. For a $400 limit, you give them $400.

It might seem counterintuitive to put money into a secured card if you’re short on cash. But there are a few advantages:

  1. You’re not actually “spending” the money; you will get the deposit amount back eventually (and sometimes with interest).
  2. You can buy things with a credit card that you can’t buy with cash, such as online purchases or subscriptions.
  3. While the creditor is holding your money, you’re building your credit.

A secured credit card is a win-win scenario for the borrower and the creditor.

  • It allows the borrower to have a credit card and build positive credit history.
  • It protects the creditor from a high-risk cardholder not paying their bill.

How To Use a Secured Card To Build Credit

You can’t get credit without an established credit history, and you can’t build that credit history without getting credit first. Using a secured credit card to build credit is one of the best ways to overcome this paradox.

Once you get a secured credit card, treat it just like any normal credit line. You have a couple of separate goals here.

Goal #1: Establish payment history

The number one most important factor when it comes to your credit score is your payment history, so making regular on-time payments is the absolute best thing you can do for your credit score.

Late payments can stay in your credit report for up to seven years, which significantly reduces any forward motion you may have been making.

Goal #2: Keep credit charges low

Never use up your entire credit line, especially when you’re trying to build or establish credit. Creditors see maxed-out credit cards as irresponsible.

  • Experts recommend not using more than 30% of your limit. So if you have a secured card with a $500 limit, your balance should ideally be $150 or less.

This is your credit utilization ratio (CUR), calculated as the percentage of your revolving credit (credit cards and lines of credit) that you actually use. Your CUR is the second most important factor for your score.

How Long Does It Take To Improve a Credit Score?

The time it takes to rebuild credit and improve your score isn’t the same as establishing credit from nothing. And since either situation could have you looking at secured credit cards, we’ll examine both.

Starting with no credit history

If you’re starting from scratch, it won’t take as long to get a good credit score. This will be the situation if you’ve never had a card before, or if you recently immigrated from another country, because credit history doesn’t cross borders. But depending on who’s reporting what to whom, it could take a relatively short time period—one to six months—to build new history.

Starting with poor credit history

If your credit score is in the “poor” range, below 640, it will likely take 12 to 18 months of on-time payments to boost it into the “fair” to “good” credit score zone. However, if you have bankruptcies, foreclosures, collections, or a lot of late payments on your credit report, you could be looking at seven to 10 years before they drop off.

How Does the Bureau Treat Secured Cards vs. Unsecured Cards?

The three credit bureaus—Equifax, Experian and TransUnion—treat secured credit cards exactly the same as unsecured cards. Secured credit card issuers report your payments and other account activity to the credit bureaus the same way they report activity on unsecured cards.

While creditors aren’t required to report anything to the bureaus, they know the main purpose of a secured card is to build credit. So they will usually report your positive account history to help you achieve that goal. However, they will also report negative activity like missed or late payments.

When Does It Make Sense To Upgrade to an Unsecured Card?

Eventually you’re going to build your credit to the point where you can get approved for an unsecured card. Then you can get that deposit back from the secured card (plus interest, if the creditor offers it) and graduate to a card with a higher credit limit, lower interest rate, and fewer fees. It usually takes at least 12 months of making those on-time payments before you’re ready.

Make sure your credit score has reached at least 650 before you start applying, and check if you pre-qualify for a card first so you’re only triggering a soft inquiry. These don’t impact your credit score, while hard inquiries do.

How To Get a Secured Credit Card

Now that you know how to use secured credit cards to build your credit score, and how long it takes to get results, it’s time to choose a card. Lots of creditors offer secured cards, so you can shop around.

For example, Credit One Bank has a secured card if you apply for a Credit One Bank credit card and get declined for an unsecured option, you’ll automatically be offered the secured card instead.

About the author:

Jim Holborow

Jim Holborow is a researcher, writer, and editor specializing in SaaS and financial services. As a contributor to the Credit One Bank knowledge base, Jim combines his communications expertise with a knack for managing credit to create informative, engaging content for readers. He holds a BS in Marketing from the University of Nevada-Reno, with continuing studies in marketing analytics.

This material is for informational purposes only and is not intended to replace the advice of a qualified tax advisor, attorney or financial advisor. Readers should consult with their own tax advisor, attorney or financial advisor with regard to their personal situations.