How Much Will a Secured Credit Card Raise My Score?

Using a secured credit card to build credit is a path that several Americans follow. However, the effect this might have on your credit score depends on different factors. For example, people with no credit history can expect better results than those with poor credit because of previous blemishes on their credit reports. Moreover, how you decide to use your newly acquired secured card also affects your credit score.

If you have no credit history, getting your first credit score with a secured card may take up to six months. If you have poor credit, you can usually expect to see the effect of your new secured card on your credit score in a month or two.

• How Much Will a Secured Credit Card Raise My Score?
• How to Build Credit Fast Using a Secured Credit Card
• Best Secured Credit Cards to Build Credit
• Other Questions You May Have About Secured Credit Cards

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Just how much a secured credit card might raise your credit score depends on how you use the card and whether you already have a credit score. People with no credit histories may look forward to an average credit score in around six months, provided they maintain responsible credit habits. If you have an existing credit history, you may see the effect of your new card’s usage in a month or two, although it might not be very pronounced.

To open a secured credit card, you will need to pay a security deposit, which distinguishes it from regular unsecured credit cards. Given the need for a security deposit, they are typically easy to get. Depending on the card you select, you might need to pay an annual fee. Some cards from this segment let you earn cash back/rewards.

One of the biggest benefits of secured credit cards is that they enable you to build your credit score even if you don’t qualify for a conventional credit card.

A secured credit card can help you build credit, provided you use it responsibly. For example, making all your payments on time and not using too much of your credit line typically helps improve your credit score. However, a maxed-out secured card or making late payments can hurt your credit score.

People who wish to rebuild their credit need to remember that applying for a new secured card results in a hard credit inquiry, which can cause their credit score to drop. However, this slight dent is usually temporary and easy to fix if you establish good habits around using your new card.

How quickly your credit score increases and by how many points depends on the starting point and how you use your new card. Credit bureaus typically need three to six months of account activity to generate your starting credit score. So if you do not yet have a credit score, a secured card might help you get to a "fair" score in around six months.

But if you have poor credit, improving your score might take longer since you have already established a baseline credit history and will need to prove you can manage your new credit line responsibly over time.

The best way to improve your credit score with credit cards is to pay off your balances in full each month. By doing this, you can fully enjoy the benefits your card has to offer without paying any interest charges.

• Make payments on time. Ensure that you are making all your payments on time. Your payment history is the most influential factor in your credit score, accounting for 35%.
• Keep your outstanding balance low. If you cannot pay off your balances in full each month, keep your outstanding balance below 30% of the card’s credit limit. The amount you owe also referred to as your credit utilization ratio accounts for 30% of your credit score.
• Don’t apply for multiple cards in quick succession. Every time you apply for a credit card, your credit score drops by a few points. As a result, it’s best to wait at least six months between each new credit application. New credit accounts for 10% of your credit score.
• Get a credit-builder loan. The types of credit you have in your mix account for 10% of your credit score. With a credit-builder loan, you make payments to the lender until you repay the loan entirely, and only then do you get access to the funds.

Some credit card issuers conduct automatic account reviews to determine if secured cardholders may qualify for unsecured variants based on their payment histories and other factors. This might happen after the first six months. If your card provider does not offer automatic reviews, you may request an upgrade on your own.

If you have a secured card that charges an annual fee, you might be able to upgrade to a no-annual-fee card. Depending on your card, you might also be able to upgrade to one that offers cash back/rewards and other benefits.

We’ve selected the best secured credit cards to help you build credit based on parameters such as annual fees, APRs, minimum security deposit amounts, rewards and the ability to upgrade to unsecured cards.

Chime Credit Builder Secured Visa Credit Card – Ideal for people who wish to avoid hard credit pulls
The Chime Credit Builder Secured Visa Credit Card comes with no annual fees. You need to add at least $200 to your Credit Builder secured account, and the same works as your card’s credit line. You may use the money from this account to pay off your balances. You don’t have to worry about a hard credit inquiry when you apply for this card. It reports payment history to the credit bureaus TransUnion, Equifax and Experian. You pay no foreign transaction fees when you use this card outside of the U.S.

Citi Secured Mastercard – Ideal for people who need higher credit limits
You pay no annual fees to use the Citi Secured Mastercard. The security deposit you will need to provide may vary from $200 to $2,500. This card reports payment history to Equifax, Experian and TransUnion. You can also choose your due date. Using this card when traveling outside the U.S. or with international merchants requires that you pay foreign transaction fees.

Navy Federal Credit Union nRewards Secured Card – Good for earning rewards
The no-annual-fee Navy Federal Credit Union nRewards Secured Card lets you earn rewards while you’re on the path to building/rebuilding your credit. It offers 1X points per dollar on all purchases. You may redeem the points you earn as a statement credit or cash or for gift cards and merchandise. You might qualify for a higher credit limit after three months and an unsecured card after six months. It reports payment history to the top three credit bureaus. Using it outside of the U.S. comes with no foreign transaction fees.

Looking at other commonly asked questions about secured credit cards can help you determine if getting one is worth your while.