Other details, such as rewards, interest rates and your credit line, will vary depending on your card issuer and the card you apply for.
What are the pros of a secured credit card?
While secured credit cards may still consider your credit to qualify, you’re more likely to be approved for a secured card than an unsecured credit card if you have little or no credit history.
If you use a secured card responsibly, you may be able to improve your credit history and potentially graduate to an unsecured credit card.
How to build credit using a secured credit card
If you want to use a secured credit card to build credit, you’ll need to apply for a card, use it responsibly and make the payments on time. After that, you may start to see an impact to your credit score.
1. Apply for a secured credit card
Every secured credit card comes with its own terms, so it's important to familiarize yourself with those to pick the best option for you.
Make sure that your secured credit card reports credit activity to all three major credit bureaus if you want to use it to build credit.
Other factors you may consider here include:
- Applicable fees
- Interest rates
- Credit card protections
- Credit score tracking
After selecting your card, the issuer will likely check your credit and income and then require a cash deposit. Those funds may be returned to you after closing your card if it’s in good standing, or, if possible, when changing to an unsecured credit card through your credit card issuer.
2. Use your secured credit card, but not too much
Once you've paid your security deposit and received your secured credit card, regularly using that card for affordable purchases can help you start building credit. When you use the secured card, you can save your receipts and check your balance regularly, so that you can keep your balance low.
Regardless of your balance amount, it's best to have a plan to pay it off so that you can avoid extra costs like your card’s purchase annual percentage rate (APR) or late fees. Those can add up quickly, and carrying over high balances from month to month can also damage your credit.
3. Make your credit card payments on time
When building credit with a secured credit card, the most important habit to practice is paying your statement balance on time, every time. Payment history is a critical factor for creditworthiness. Other factors, such as balances owed and age of credit accounts, are also important to keep in mind.
Some of the steps you may want to take to improve your credit include setting up payment reminders (or opting in to any electronic alerts from your creditor) and aiming to pay off your full statement balance each month.
4. Monitor your credit score
As you get used to your credit card, it’s a good idea to monitor your credit score and history. Over time, you may see how responsibly using your secured credit card helps improve your credit.
Your credit card issuer may give you free access to a credit score tracker. Over time, you may see how your diligent repayment habits with your credit card may help you reap the rewards of a strong credit history.
How long does it take to build a credit history with a secured credit card?
A new credit account may take a month or 2 to appear on your credit report. If you’re starting out with no credit history, you may have your first credit score after about 6 months of credit card use.
If you’re looking to repair credit that was damaged by financial setbacks, it may take longer to get your credit to where you want it to be. For instance, bankruptcies, collections and late payments can linger on your credit report for anywhere from 7 to 10 years. Still, with patience, timely payments and a low credit utilization, you may increase your credit score over time.
If you’re looking for a secured card to start building credit with, the Citi® Secured Mastercard can provide free credit score tracking and tools to support timely payments, such as the ability to choose your payment due date and AutoPay.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
