To build credit with a secured credit card, apply for a secured card and place a refundable security deposit to open an account, then use the account responsibly by paying the bill on time and in full every month and keeping your credit utilization low. Every month you have the secured credit card, the card issuer will report information about your account to major credit bureaus. And if you use your card responsibly, the information reported to the credit bureaus will build your credit history. In fact, you don’t even have to use the card to get credit-boosting benefits. As long as you keep the account in good standing, your credit score should hike upward in time.
Secured credit cards build credit the same way as regular credit cards, so you don’t have to do anything differently than you would with any other credit card to build credit with a secured card. The only difference between the two is that a secured card’s credit line is secured by a refundable deposit, which is required to open the account. The deposit amount then becomes the card’s credit limit, in most cases. In other words, a secured credit card won’t get you very far if you need an emergency loan, but it can definitely help you build credit.
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.
The best secured credit card to rebuild credit is the Secured Mastercard® from Capital One because of its low deposit requirement and $0 annual fee. The deposit is $49, $99 or $200, depending on your credit standing, but you’re guaranteed a $200 credit limit.
To be clear, all major secured credit cards can help you rebuild your credit. They all report account information to the major credit bureaus every month. And all those with low annual fees and low deposit requirements are in the running for the top spot. But the Discover it Secured Credit Card, Capital One Secured and OpenSky each bring something special to the table.
Here are the best secured credit cards to rebuild credit:
Best for Rewards:Discover it® Secured Credit Card – $0 annual fee. $200 deposit required. 2% cash back on your first $1,000 per quarter at gas stations and restaurants combined. 1% cash back on all other purchases. Rewards matched after your first year. Reports to all 3 major credit bureaus.
Best for a Low Deposit:Secured Mastercard® from Capital One – $0 annual fee. $49, $99 or $200 deposit required. $200 minimum credit line guaranteed. No rewards. Reports to all 3 major credit bureaus.
The Applied Bank® Secured Visa® Gold Preferred® Credit Card also has a low APR, at 9.99%. But you probably don’t want to carry a balance from month to month with a secured credit card. It basically means paying interest on a loan you’ve given yourself, since you pre-pay your spending limit.
Choosing the best secured credit card to rebuild credit is only the first step toward actually rebuilding. You must also use that card responsibly month after month so that positive information flows to the credit bureaus. Regularly adding positive information to your credit reports gradually covers up the negative past records.
Your card will report positive information as long as you pay your bill on time every month. Using less than 30% of your spending limit each month or paying multiple times per month can also too. But if you really want to rebuild your credit, you’ll need to get the rest of your finances in order as well. That means paying down debt, catching up on past-due accounts and steering clear of collections accounts.
There is no surefire way to raise your credit score 100 points overnight. Everyone’s situation is a bit different. And even if you do everything right, your score still might not rise that much or that quickly. But you can see exactly how to improve your credit score and how long it will take by checking out … read full answeryour free personalized credit analysis on WalletHub. You will receive grades for each part of your credit score, plus a customized action plan designed to maximize your credit score gains in a minimal amount of time.
Credit score gains don’t just happen. There’s usually a fair amount of legwork involved. So the start-to-finish process of credit improvement really does not happen overnight. But you certainly could wake up one morning with a credit score that’s a lot higher than it was when you went to sleep.
Your credit score can change whenever new information is added to your credit report or old information is removed. Because of that, a handful of things could possibly raise your credit score 100 points overnight. But none of them happens often, so don’t hold your breath.
Here’s how to raise your credit score 100 points overnight:
Dispute negative information on your credit report. If your credit score fell 100+ points as a result of certain negative records being added to your credit report, it figures that removing such information could trigger an increase of 100+ points. The credit bureaus will remove disputed information that you prove is inaccurate, or that the data provider cannot substantiate.
Wait for negative records to fall off your credit report. The information on your credit reports doesn’t stay there forever. Negative records become too old to be included after 7-10 years. So people who hit a rough patch during the Great Recession but used credit responsibly ever since have seen significant credit score improvement lately.
Catch up on missed payments. Preventing past-due accounts from defaulting, paying off collections accounts and otherwise bringing your borrowing back to good standing can quickly produce credit score gains. That’s especially true when you factor in the credit score damage you’re avoiding.
Benefit from a change in credit reporting requirements. In July 2017, changes to the major credit bureaus’ documentation requirements resulted in most tax liens and civil judgments being wiped from consumers’ credit reports. The average person who was affected saw his or her credit score rise by only 10 points as a result.
But 0.7% of people who started with a score of 621-640 saw an increase of about 100 points when all liens and judgments were removed from their credit reports, according to VantageScore. The same happened for 0.2% of people who started with a 641-660 score as well as 0.1% of people who began with a score of 541-560.
Even if your credit score does get 100 points higher overnight, you won’t find out about it for a while with most free credit score sites, which update weekly, monthly or quarterly. But you’ll always see the latest changes on WalletHub, the only site with free credit scores and free credit reports that update daily.
Still, it’s important to emphasize that an excellent credit score is not an overnight sensation. Credit scores reward consistent performance over a long period of time. So paying your bills on time, keeping your credit utilization low, and otherwise managing money responsibly month after month is the best way to build credit and maintain a great score.
But there is a middle ground, fortunately. Credit scores do jump from time to time during their gradual journey higher. So if you need the best credit possible in the near future, there are steps you can take to make your score presentable in 30 days or fewer.
In particular, reducing your credit utilization is one of the easiest ways to improve your credit score within a month’s time. It won’t give you a 100-point bump, but it will produce results. And there are three ways to do it. You can spend less than you ordinarily do, make a bigger payment than usual, or pay your bill more often than normal. The goal is to reduce the balance listed on your monthly account statement, so this strategy won’t benefit you until the end of your billing period.
More generally, paying off debt will always help your score as well as your overall odds as a borrower. You should also avoid applying for credit in the months leading up to needing your credit score for something important. Each application results in a hard inquiry, which can take points off your score for six months or so.
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