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Can I build my credit history with the Discover it® Secured Credit Card?

Published February 23, 2022

7 min read

A Discover it® Secured credit card can help you build credit with responsible use.¹ It’s among the secured cards that doesn’t have an annual fee, offers rewards, and after 7 months, automatic monthly account reviews begin to see if you qualify to upgrade to an ‘unsecured’ card and get your deposit back.²
Learn more about how secured cards can help you build credit history and what makes the Discover Secured credit card special.

What is a secured credit card?

A secured credit card is a type of card that’s created for people who want to build or rebuild their credit history. The card works similarly to a traditional unsecured card in many ways. You can use the card to make purchases online and in stores, pay off your balance over time, and with some cards earn rewards.

When you open a secured credit card, you need to send the credit card company a refundable security deposit. The deposit will generally determine your card’s credit limit. For example, if you are approved for the Discover Secured credit card with a $200 minimum deposit, your card will have a $200 limit. Depending on the credit limit you qualify for, you can deposit up to $2,500 if you want a higher credit limit.

If a cardholder stops making payments, the card issuer can keep the deposit to satisfy the outstanding balance. The arrangement limits the card issuer’s risk, which is why it’s typically easier to get approved for a secured card than an unsecured card.

How to build your credit history with a Discover Secured credit card

Once you are approved for a Discover Secured credit card, Discover will report your account to all three major credit bureaus — Equifax, Experian and TransUnion. Your credit scores are based on your credit report from one of these bureaus.

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

Use the card. You may want to regularly use your card to show that you can responsibly manage a credit account. At a minimum, you could set up your card to pay for a small monthly bill.
Pay your bills on time. Your payment history can be one of the most important credit scoring categories. Making at least your minimum payment by the bill’s due date each month could benefit your credit and help you avoid late payment fees. Additionally, you can avoid paying interest on purchases if you pay your bill in full and on time every month.
Don’t use a large portion of your credit limit. Credit scores compare your credit card’s balance and credit limit to determine your credit utilization ratio. A low utilization rate is best for your scores.
Pay down balances early. Credit card issuers often report your card’s balance and limit around the end of your billing cycle— a few weeks before your bill is due. As a result, you could have a high utilization rate even if you pay your bill in full. If you’re using your card frequently or for large purchases (perhaps to earn rewards), you could pay down the balance before the end of your billing cycle to decrease the reported balance.

As with other types of credit accounts, a secured credit card could also wind up hurting your credit. If you miss a payment, the late payment mark could stay on your credit reports for up to seven years. Maxing out your card can also hurt your credit and make it more difficult to manage your payments. However, paying down the balance might quickly help because many credit scores only consider your most recently reported credit card balance and limit.

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’re building credit history for the first time, you’re starting from zero. When you’re rebuilding, you’ve had credit history but have negative marks that are hurting your scores.

Rebuilding credit history might be a little more difficult, because negative marks can impact your scores as long as they’re on your credit reports. And most don’t fall off until seven years later.

But the same steps can help you build or rebuild credit history: opening new credit accounts, making payments on time, and having a low utilization ratio.

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, but it depends on your credit score and many other variables.

Benefits of a Discover Secured credit card

Many credit card issuers offer secured credit cards, and where you get a credit card doesn’t impact your credit score. However, the Discover Secured credit card has benefits and features that could make it a better option than some others

No annual fee

Secured credit cards often come with an annual fee — some may even have a monthly fee. But the Discover Secured credit card has no annual fee. It also doesn’t have a foreign transaction fee and waives the first late payment fee. See rates, rewards, fees, and other cost information for the Discover Secured credit card.

Earn rewards

The Discover Secured card is also one of the few secured cards that offers cash back rewards. Using the card, you can earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases – automatically.³

The card is also part of Discover’s Cashback Match, which will automatically match all the cash back you’ve earned at the end of your first year.⁴

Reports to all three credit bureaus

Discover will report your account and activity to all three major credit bureaus. When you apply for credit in the future, you might now know if the company will request your Equifax, Experian, or TransUnion credit report. Building credit history with all three means you’ll be covered, but some secured cards only report to one or two of the bureaus.

Could be upgraded to an unsecured credit card

Often, you’ll need to close your secured credit card to get back your security deposit. However, you can get your deposit back when you upgrade to an unsecured card after six consecutive on-time payments and six months of good status on all your credit accounts.² Your card could be upgraded to a standard, unsecured credit card, helping you continue to build credit history without having to close and open accounts.

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

The Discover Secured credit card may be the best option if you’re focused on building or rebuilding your credit history. However, students who are building their credit could also look into the unsecured Discover student credit cards.

If you’ve never had a credit card but you’ve had other types of credit, such as a student loan or auto loan, you could also see if you qualify for an unsecured credit card. The Discover pre-approval online tool lets you check your offers without impacting your credit score.

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

Getting denied for a credit card can be frustrating, but there are still options for building or rebuilding your credit history. To start, you could:

Check your credit report

Look over your credit reports for errors and dispute inaccurate information you find. All three credit bureaus have online portals you can use to file a dispute, and they generally need to respond within 30 days. Correcting inaccurate negative marks could quickly improve your credit score.

Apply for a store credit card

Sometimes, retail or store credit cards have less stringent requirements. You could try to build or rebuild your credit history with one of these cards instead of 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 credit card issuer may report the account to the credit bureaus under your name. Depending on how the primary cardholder manages their account, it could help (or hurt) your credit.

If you have a close family member or friend who’s responsible with credit, you could 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.

Important information

Apply for a Discover it® Secured Card and use your tax refund as a security deposit.**

Next steps

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Builds credit with responsible use: Discover reports your credit history to the three major credit bureaus so it can help build your credit if used responsibly. Late payments, delinquencies or other derogatory activity with your other credit card accounts and loans may impact your ability to build credit.

Getting your deposit back: Monthly reviews start your seventh month as a customer. We will refund your security deposit if you have made all payments on time for the last six consecutive billing cycles on all your Discover accounts including any loans, and you’ve remained in “good status” on all credit accounts you are responsible for whether they are Discover accounts or not. “Good status” means: (1) your credit report shows no delinquencies, charge-offs, repossessions, or bankruptcies for the six months prior to our review; and (2) your Discover Secured Card is not in a prohibited status at the time of our review, including, but not limited to: closed, revoked, suspended, subject to tax levy, garnishment, deceased, lost/stolen, or fraud. Monthly reviews may be delayed if you change your payment due date. We typically process your refund in 2-3 business days based on your delivery preference. If you close your account and pay in full, we’ll return your deposit within two billing cycles plus ten days.

You earn a full 2% Cashback Bonus® on your first $1000 in combined purchases at Gas Stations (stand-alone), and Restaurants each calendar quarter. Calendar quarters begin January 1, April 1, July 1, and October 1. Purchases at Gas Stations and Restaurants over the quarterly cap, and all other purchases, earn 1% cash back. Gas Station purchases include those made at merchants classified as places that sell automotive gasoline that can be bought at the pump or inside the station. Gas Stations affiliated with supermarkets, supercenters, and wholesale clubs may not be eligible. Restaurant purchases include those made at merchants classified as full-service restaurants, cafes, cafeterias, fast-food locations, and restaurant delivery services. Purchases must be made with merchants in the U.S. To qualify for 2%, the purchase transaction date must be before or on the last day of the offer or promotion. For online purchases, the transaction date from the merchant may be the date when the item ships. Rewards are added to your account within two billing periods. Even if a purchase appears to fit in a 2% category, the merchant may not have a merchant category code (MCC) in that category. Merchants and payment processors are assigned an MCC based on their typical products and services. Discover Card does not assign MCCs to merchants. Certain third-party payment accounts and digital wallet transactions may not earn 2% if the technology does not provide sufficient transaction details or a qualifying MCC. Learn more at Discover.com/digitalwallets. See Cashback Bonus Program Terms and Conditions for more information about your rewards.

Cashback Match: We’ll match all the cash back rewards you’ve earned on your credit card from the day your new account is approved through your first 12 consecutive billing periods or 365 days, whichever is longer, and add it to your rewards account within two billing periods. You’ve earned cash back rewards only when they’re processed, which may be after the transaction date. We will not match: rewards that are processed after your match period ends; statement credits; rewards transfers from Discover checking or other deposit accounts; or rewards for accounts that are closed. This promotional offer may not be available in the future and is exclusively for new cardmembers. No purchase minimums.

*Discover reports your credit history to the three major credit bureaus so it can help build your credit if used responsibly. Late payments, delinquencies or other derogatory activity with your credit card accounts and loans may adversely impact your ability to build credit.

**Minimum Security Deposit: A minimum security deposit of $200 is required to open this account and your security deposit must equal your credit limit. Your maximum credit limit (up to $2500) will be determined by your income and ability to pay.

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

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