How Much Will a Secured Credit Card Raise My Score?

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Having a strong credit score is sort of a finance essential that allows you to obtain more favorable interest rates on lending products like mortgages, auto loans and credit cards. However, if you’re starting out with no or low credit, you may worry that you don’t have many options available that can help you improve your score. Fortunately, one of the best credit card tips applies in this situation: considering a secured credit card.

A secured credit card works similarly to an unsecured one. Often, the only difference is that you need to provide a security deposit, usually in an amount that matches your credit limit, to obtain a secured card. In some cases, you can also find secured credit cards that don’t involve a credit pull, so you don’t see a dip in your score based on the lender’s checks to see if you qualify.

Once you have a secured credit card, you can typically see improvements in your score in about six months if you make sound financial decisions. If you’re wondering how a secured credit card helps your score and what to do if you don’t see positive movement, here’s what you need to know.

What Credit Score Do I Need to Get a Secured Credit Card?

If you want to use a secured credit card to boost your credit score, the first step is typically opening an account. However, if you have no credit or a very low credit score, you may wonder if you’ll be able to open this type of account.

Fortunately, many secured credit cards are created with specific borrowers in mind, including those with no or bad credit. As a result, the card companies don’t rely solely on credit reports when making lending decisions. In fact, some may not pull your credit report at all.

There are options available for those with no credit score at all, as well as those with very low scores. Just make sure you meet any other criteria the lender has outlined, such as having a reliable income and saving up a suitable deposit. If you meet some of these basic lender requirements you can usually find an option that meets your needs.

How Secured Credit Cards Impact Your Credit Score

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Generally speaking, secured credit cards can impact your credit score in a few ways. First, opening a new account alters your credit utilization ratio, and that number will shift depending on how you use the card. Second, it impacts your credit mix, as you’ll be adding a new revolving account to your report. Third, it alters the average age of your accounts, as well as the age of your youngest account.

However, the biggest impact secured credit cards usually make involves allowing you to establish a positive payment history. Overall, your payment history accounts for 35% of your FICO score, making it the most significant single component of influencing your credit.

By using the secured credit card for small purchases and paying it off in full every month, you can position yourself for the largest credit score gains possible. You’ll keep your utilization rate low and establish a good payment history, both of which work in your favor.

How Much Will a Secured Credit Card Raise My Score?

Precisely how much your credit score will change after you open a new secured credit card depends on a variety of factors, and there’s no set answer. While establishing a positive payment history and ensuring your credit utilization ratio stays low usually work in your favor, those aren’t the only factors that make up your credit score.

Instead, the rest of your history and current activities are also part of the equation. In some cases, that can work in your favor, particularly if you start making wiser financial choices across the board. However, it can also work against you if you aren’t making sound decisions about your other accounts. Poor decisions can offset any gains associated with the secured credit card or even drag your score down lower than it was previously.

Ultimately, the number of pre-existing derogatory remarks on your report — and any new negative comments — alter your score right along with new positive behaviors. If you start making wise choices on all your accounts right when you open your secured credit card, you can typically see positive movement within three to six months. 

What to Do If a Secured Credit Card Isn’t Making a Difference

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As mentioned above, opening a secured card usually leads to some improvements in your score in about three to six months. However, if you don’t see any gains, then it’s wise to take a closer look at the situation.

First, review your credit report to see if there are any new errors. This can include mistakes relating to your new secured credit card, as well as issues with any other reported items. Derogatory remarks that are added to your report in error can lower your score. And, those marks can eliminate any gains you may have made from using your new secured credit card wisely. You want to report errors to the credit bureaus as quickly as possible.

Along the way, you also want to make sure your new secured credit card is listed on your report. Some companies are faster at reporting than others. However, if you don’t see the account after six months, contact the lender to discuss the issue and ensure your positive payment behavior gets reported correctly.

It’s also wise to examine how your other credit-related activities may be playing a role. As discussed previously, missteps on your other accounts — such as missing a payment or using too much of your available credit — can drag your score down, even if you’re acting responsibly with your secured card.

If you know you’ve made a mistake with another account, it may take longer for your new behavior to offset it. Continue making responsible choices, and not just with your secured credit card. Along with creating better financial habits, you can stop activities that may bring down your score and work your way up more efficiently over time.