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From the Experts at Credit.com

How Secured Cards Can Help Your Credit Score

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A group of young people jump in the air excitedly when they learn how secured credit cards can help their credit scores.

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In 2019, the average FICO score among Americans was 703. That’s typically considered a good credit score and would qualify you for many potential credit card and loan options. But roughly 41% of people in the nation had a score below 700, with many falling below thresholds that might make credit cards and loans accessible.

If you’re one of those 41% and you want to improve your credit history and open more financial doors in the future, secured credit cards might be an option. Read on to find out how a secured credit card can help your credit score.

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    What Is a Secured Credit Card?

    A secured credit card requires a security deposit to act as collateral. When you apply, you provide a security deposit—and that becomes your starting credit limit. Because your credit line is secured by funds you deposit, lenders can afford to approve individuals who might not otherwise be approved for a credit card. That makes it possible to get approved with a thin credit file, no credit, or even bad credit.

    Most secured credit card companies require a minimum deposit of at least $200. Some let you make a deposit of several thousand dollars. After you show that you can manage the card responsibly—such as by paying your bill in a timely manner and not running up your credit balance—the lender may return your deposit or give you the option to upgrade to an unsecured credit card.

    How Do Secured Credit Cards Help Credit?

    Secured credit cards can help your credit because the lender typically reports to all three credit bureaus. If you make timely payments, those payments get reported as positive information in your credit file. Because timely payments are a huge part of your credit score—as much as 35% of it—this can be very important to building credit.

    Another way secured credit cards can build credit is by adding to your credit mix. Another factor in our score calculation is having more than one type of account. Creditors like to see that you can handle revolving and installment accounts. If all you have right now—or have ever had—is a car loan or a personal loan, a secured credit card might be an easy way to increase your credit mix.

    How to Build Credit with a Secured Credit Card

    But secured credit cards aren’t a magic elixir for your credit score. You have to manage these accounts appropriately to get the benefits. Here are some tips for building credit with a secured credit card.

    • Don’t apply randomly for credit cards. Every application could result in a hard inquiry on your credit report, bringing your score down further. Instead, do your research. Check your own credit, and consider what type of credit the lender is looking for before you apply. That increases your chances of getting approved the first time.
    • Make sure the cardholder reports your payments. Surprisingly, credit cards don’t actually have to report your payments at all—so some will not report to any bureaus, while others will report to just one, two, or all three. Ideally, you want them to report to all three credit bureaus. That way, your timely payments can help build your profile at each agency.
    • Make every payment on time. Failing to make a payment can result in a negative mark on your credit reports, which defeats the entire purpose of the card.
    • Don’t max out your credit limit. Try to keep your utilization below 30%. That means if you have a credit limit of $1,000, keep your balance at $300 or lower. Your credit utilization—how much of your credit limit you use—impacts your credit score.
    • Don’t expect your credit to improve immediately. It takes time to build your credit via any means.

    Tools like our free Credit Report Card and our new product ExtraCredit can help you keep track of your credit score and the factors affecting it.

    What Is the Best Secured Credit Card to Build Credit?

    The best secured credit card is the one that’s right for you. Consider looking for cards that do the following:

    • Have no annual fee or have a low annual fee of no more than $40. Otherwise, you might be paying a hefty cost to build your credit.
    • Report to all three credit bureaus to maximize the credit-building benefits.
    • Come with tools, such as payment reminders and apps, to help you manage your account and remember to make timely payments.

    One option you might consider is the OpenSky Secured Visa. This card has a $35 annual fee, and there’s no credit check required, which means you can qualify for it with no credit. The minimum required security deposit is $200, and it reports to all three credit bureaus. Plus, there is a Facebook community for cardholders to share experience and insights, as well as credit tips and credit education resources.

    OpenSky® Secured Visa® Credit Card

    Apply Now
    on Capital Bank's secure website
    Card Details
    Intro Apr:
    N/A

    Ongoing Apr:
    17.39% (variable)

    Balance Transfer:
    N/A

    Annual Fee:
    $35

    Credit Needed:
    Fair-Poor-Bad-No Credit
    Snapshot of Card Features
    • No credit check necessary to apply. OpenSky believes in giving an opportunity to everyone.
    • The refundable* deposit you provide becomes your credit line limit on your Visa card. Choose it yourself, from as low as $200.
    • Build credit quickly. OpenSky reports to all 3 major credit bureaus.
    • 99% of our customers who started without a credit score earned a credit score record with the credit bureaus in as little as 6 months.
    • We have a Facebook community of people just like you; there is a forum for shared experiences, and insights from others on our Facebook Fan page. (Search “OpenSky Card” in Facebook.)
    • OpenSky provides credit tips and a dedicated credit education page on our website to support you along the way.
    • *View our Cardholder Agreement located at the bottom of the application page for details of the card

    Card Details +

    But this might not be the best card for you. Check out the entire list of secured credit cards at Credit.com to compare options for yourself and find a card you’re confident in applying for.


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      • Shelby

        Thanks for the information! I had no idea that charging smaller purchases builds your credit score faster than the alternative.

      • Michelle

        This is wonderful information! Thank you so much for this!!

      • Quintin

        This information could help me decide whether to start a secured credit card account. I don’t have far to go with a score of 593.

      • SteveNSac

        Be advised that there is a big difference between a secured credit card and a “debit ” card. Debit cards do not report to the 3 credit bureaus and therefore will have no effect on your credit score.

        • http://www.credit.com/ Credit.com Credit Experts

          Exactly. (However it’s also useful to know that you want to keep your debt low relative to the credit limit on your secured card — and using not more than 30% of your available credit. (Using 10% or less is even better.) For some people trying to build credit, a combo can work — a debit card with which to access money for large purchases and a secured card, used lightly and paid in full every month, for purposes of boosting credit score.

      • studentX

        What if I do not charge at all, would I still receive credit?

        • http://www.credit.com/ Credit.com Credit Experts

          You would receive credit for having a card (diversity of credit, age of credit), but those do not count nearly as much as on-time payment and credit utilization (the percent of available credit you use). You could do as little as put a cup of coffee on the card and pay it on time.


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