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Using a Secured Credit Card to Build Credit History

8 min read

Last Updated: January 8, 2026

Table of contents

Key Takeaways

A secured credit card may help those who want to build or rebuild their credit history.
You typically provide a refundable cash deposit to back the credit limit on a secured credit card account.
Other options for building credit history may include student credit cards, store credit cards, or becoming an authorized user on another credit card account.

When you apply for a credit card or loan, lenders typically use your credit score and other information from your credit report to determine whether you qualify. But because you often need a credit history to open a new credit account, getting started may seem difficult. That’s where secured credit cards may come in.

You don’t usually need a credit score to open a secured credit card account. Instead, you provide a deposit at account opening that acts as collateral for your credit limit. Otherwise, a secured card works like a traditional credit card. As you shop with your secured card and make payments, you may gradually build a credit history.

What is a secured credit card?

A secured credit card is a type of card that requires a refundable security deposit to back the credit limit. Secured credit cards are generally designed as tools for building or rebuilding credit history.

When you open a secured credit card account, the credit card issuer typically offers you a maximum credit limit. Then, you make a cash deposit of that amount or less. The amount you deposit usually determines your credit limit. With Discover, your credit line will equal your deposit amount, starting at $200.¹

The deposit limits the card issuer’s risk. If a cardmember defaults, the card issuer may keep the deposit to settle the outstanding balance. The extra reassurance for card issuers is why it’s typically easier to get approved for a secured card than an unsecured card (which doesn’t require a deposit).

In many ways, a secured card works similarly to a traditional unsecured card.

You may use the card to make purchases online and in stores or restaurants and pay off your balance over time. As long as the credit card issuer reports your activity to the major credit bureaus, a secured credit card may help you establish a credit history.

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How to build your credit with a secured credit card

You may follow a few simple steps to use your new card to build your credit history:

Use the card. Regularly using your card may show that you know how to responsibly manage a credit account. You might consider linking a monthly subscription to your credit card as a small, consistent expense.
Pay your bills on time. Your payment history is one of the most influential credit scoring categories. Make at least your minimum payment by the bill’s due date each month to build a strong payment history and avoid lowering your credit score.
Avoid overspending. Your credit utilization ratio (the portion of your total available credit in use at one time) has a significant impact on your credit score. Keep your balance much lower than your credit limit to avoid increasing your credit utilization.
Make more than the minimum payment. Any credit card balance you carry accrues interest over time. When you make only the minimum payment each month, your balance may grow. Making more than the minimum payment may help you keep interest under control and lower your credit utilization ratio.

Like any credit card, a secured card may lower your credit score if you don’t use it responsibly. Missed or late payments may appear on your credit report for years, even after you’ve addressed them. Responsible habits are key to building a strong credit history.

How to rebuild credit with a secured credit card

The main difference between building and rebuilding your credit history is the starting point. When you build credit history for the first time, you start out without any credit score. When you’re rebuilding credit history, you may begin the process with a low credit score.

In some cases, rebuilding credit history might be challenging because most negative marks may impact your score for up to seven years, according to the Federal Trade Commission.

But the same steps may help you build or rebuild credit history: using credit accounts, making payments on time, and keeping your credit usage low.

If you’re rebuilding your credit history, you may also want to review your credit reports for errors and dispute any inaccurate negative marks. Paying off collection accounts may also help, depending on your circumstances.

Benefits of a Discover^® Secured credit card

If you’re ready to start building credit with a secured credit card, it’s important to find the best fit. The Discover it^® Secured card offers features that may benefit your financial life.

Charges no annual fee

Some credit card issuers may charge an annual fee for maintaining your secured credit card account. But Discover has no annual fee on any of our cards. Plus, there’s no late fee on your first late payment.

Offers rewards

With Discover, you don’t have to forgo rewards while you build credit history. When you use your Discover secured card, you earn 2% Cashback Bonus^® at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically. Plus, earn unlimited 1% cash back on all other purchases.²

Did you know?

You may earn even more rewards on your secured card with Discover Cashback Match, Get a dollar-for-dollar match of all the cash back you earn at the end of your first year, automatically. There is no limit to how much we’ll match.³

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Reports to all three credit bureaus

Credit bureaus create credit reports based on the information they receive from your lenders. Using your credit card responsibly helps build your credit history only if the card issuer reports your activity to at least one major credit bureau. Discover reports your account activity to all three major credit bureaus, so each of your credit reports should reflect the work you put into building your credit history.

Could be upgraded to an unsecured credit card

When you close a secured credit card account or move onto an unsecured card after staying on top of your payments, you get your deposit back. Then, you may be eligible for an unsecured card with a higher credit limit. However, the timeline and process depends on your credit card company.

Some credit card companies may require you to close your secured account and apply for an unsecured account to upgrade, but not Discover. After 7 months, we begin automatic monthly account reviews to see if you qualify to upgrade to an ‘unsecured’ card and get your deposit back.⁴ If you qualify for an upgrade, your account number, benefits, and rewards stay the same.

What is the best Discover card to build or rebuild credit history?

A secured credit card may be a helpful credit-building tool for many people, but that doesn’t mean it’s always the right fit. You may have other options, depending on your circumstances.

For example, if you’re in college, a student credit card may help you build your personal finance skills and establish a positive credit history. There’s no credit score required to apply for Discover Student credit cards.⁵

If you’ve never had a credit card but you’ve managed other forms of credit responsibly, like an auto or personal loan, you may already have a credit score. In that case, you might qualify for other unsecured credit card options.

What if I’m not approved for a secured credit card?

Getting denied for a secured credit card may be frustrating, but your credit journey doesn’t have to end there. Even if you don’t qualify for a secured card right now, you still have other options.

Check your credit report

Look over your credit reports for errors and dispute inaccurate information you find. All three credit bureaus have online portals for filing disputes. You may also dispute directly with your creditor. Correcting inaccurate negative marks may improve your credit score.

Apply for a store credit card

Sometimes, retail or store credit cards have less stringent requirements than traditional cards. You may try to build or rebuild your credit history using a retail credit card from your favorite store, rather than a secured card.

Become an authorized user on someone else’s credit card

When someone adds you as an authorized user on one of their credit card accounts, the account activity may appear on your credit report. As long as you and the primary cardholder both use the account responsibly, you may build credit history as an authorized user.

If you have a close family member or friend who’s responsible with credit, you may ask them to make you an authorized user. But check with the credit card company’s policies first — some don’t report authorized user accounts.

The bottom line

Whether you’re just starting your credit journey, or you need to recover from some credit challenges, a secured credit card may help you establish a positive credit history—as long as you use it responsibly. Paying your bill on time and keeping your balances low with a secured credit card is a great place to start.

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