It usually takes 12 to 18 months for a secured card to become an unsecured card, if used responsibly. Exactly how long it takes for a secured card to become unsecured depends on the card issuer, how the account is managed, and whether or not the card even has the capability of graduating in the first place.
Credit card graduation is when a secured card’s security deposit is returned to the cardholder and the card, in turn, becomes unsecured. Graduation to an unsecured card could occur in as little as 6 months, but it could also take several years. In addition, some secured credit cards won’t graduate no matter how long you have them or how good your account history is. You can always call the card issuer’s customer service line to see if your secured card is eligible for graduation, though.
Secured card issuers may also review your account once or twice a year to evaluate it for automatic graduation. To maximize your chances of automatic secured card graduation, pay on time each month and keep your credit utilization low. But remember: Graduation is never a guarantee.
You can build credit with a secured credit card in as little as 1 month, but it will take many months or even years to build a consistently good or excellent credit score. The length of time also depends on whether you’re building credit from nothing or rebuilding damaged credit. If you have no credit, you could see a good score after just a few months of paying on time. You’ll have a … read full answerVantageScore after 1 month and a FICO Score after 6. With bad credit, though, it will probably take 12-18 months of responsible use for you to move up to the fair credit range. Secured credit cards are great for building credit because they are easy to get and report to the credit bureaus just like unsecured cards.
But it's hard to give you an accurate estimate of how long it will take to build credit with a secured credit card without knowing the details of your situation. That’s where WalletHub can help. Just sign up for a free account, and we’ll give you a personalized credit analysis that will tell you what to improve and give you a better sense of how long it will take.
Here’s how long it takes to build credit with a secured credit card:
If you have no credit, it will take 1 month to get a VantageScore and 6 to get a FICO score. Depending on how responsibly you use your card, your first score could be anywhere from bad to good.
If you pay your bill on time and otherwise manage your finances responsibly, you can rebuild from a bad credit score (300-639) to a fair credit score (640-699) in approximately 12-18 months.
A good credit score based on limited information could easily fall due to an increase in credit utilization or a single missed payment. Building and then keeping a good or excellent credit score requires consistency over time. This is a project measured in years.
For people rebuilding credit, it will take 7-10 years for some negative information, like bankruptcies and late payments, to disappear from your credit report. But the older they are, the less impact they will have on your score.
If you’re looking to rebuild your credit, secured credit cards are the best way to do it. They’re easy to get and are indistinguishable from unsecured cards aside from the deposit requirement.
Rebuilding credit will take a while, so it’s best to get started as soon as possible. Some good behaviors to practice are always paying on time and using less than 30% of your available credit.
A secured credit card will increase your limit under certain conditions. You can add additional funds, up to $25,000 in some cases, to your security deposit to raise your credit limit. Also, if you make several consecutive timely payments, the issuer may increase your limit without an additional deposit.
When you have a secured credit card, you put up a security deposit to establish your credit limit. As secured cards are designed for people with less than good credit, the deposit also serves as collateral for the issuer should you default on the account. The amount of your deposit determines your credit limit, depending on creditworthiness. Some credit cards are only partly secured, depending on the specifics of an applicant’s credit. … read full answerSecured Mastercard® from Capital One, for instance, offers a minimum credit limit of $200 in exchange for a $49, $99 or $200 minimum security deposit, depending on the specifics of an applicant’s credit.
You’ll be refunded the deposit in full when you close your account in good standing. Any unpaid balance or fees owed will be deducted from your balance when you close the account.
How to increase your secured credit card limit
Increase the amount of security deposit
Contact customer service or log on to your secured card’s website to start the process. Provide your name, address, account number, date of birth, Social Security Number and any other information need to verify your account. Please note that some credit card issuers require that you make additional deposits, up to the maximum amount allowed, before the account opens.
Some issuers will evaluate your account and credit history after you make your first several payments on time and consider an increase in your credit limit without an additional deposit. Capital One Secured is one such example. The drawback is you have no control over how much you credit limit will be increased, if at all.
Also, you won’t know when the issuer will evaluate your account. The issuer will perform a soft inquiry on your credit report to determine if you’re eligible for a credit limit increase. A soft inquiry does not affect your credit score, nor does the issuer need your permission to generate the inquiry. Not all secured credit cards offer automatic credit limit increases, though. But your card may be eligible for graduation to an unsecured credit card. If you’ve kept up timely payments, and have had your secured card for more than 12 months, contact your issuer and see if you are eligible for graduation. If approved, you will receive a refund on your security card. And you may be eligible for automatic credit limit increases or request them yourself if you’ve used your card responsibly. If you are not eligible or graduation, you can always search elsewhere and apply for an unsecured that best fits your credit profile.
Keep in mind that a credit card application generally, results in a hard inquiry on your credit report. Hard inquiries can have a slight negative impact on your credit score, so if you’re teetering on the border of good credit, it might be best to wait a few months and apply after you’ve raised your credit score a few more points. Secured credit cards are a great way to build credit as long as you make payments on time and preferably in full. Also, try to keep you credit utilization below 30%.
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