Build Credit & Secured Cards: how they work and what to compare
Secured and starter cards are designed for people who are building or rebuilding credit. Using one responsibly, and having the issuer report to the credit bureaus, is how payment history can be established.
How secured cards work
A secured card typically requires a refundable deposit that often sets the credit limit. The deposit protects the issuer, not you, so the card still needs to be paid on time. Some issuers review accounts after a period of responsible use and may allow a move to an unsecured card.
What helps credit over time
Payment history and the share of your available credit that you use are among the factors commonly discussed in credit scoring. Paying on time and keeping balances low relative to the limit are widely recommended habits.
What to confirm
Make sure the issuer reports to all three major credit bureaus, review the annual fee and any monthly fees, and check the APR and the deposit refund policy.
Questions to ask before you apply
- Does the issuer report to all three credit bureaus?
- What is the deposit and is it refundable?
- Are there annual or monthly fees?
- Is there a path to an unsecured card?
- What is the APR if I carry a balance?
Common mistakes
Paying late, using most of the credit limit, choosing a card with high fees, and applying for several cards in a short period.