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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 or rebuild your credit responsibly.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 important pricing 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 the first $1,000 you spend on combined purchases each quarter3
  • 1% cash back on every other eligible purchase

The card is also part of Discover’s Cashback Match, which will match all the cash back rewards you earned after the end of your first year with the card.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 after 6 consecutive on-time payments and maintaining good status on all your credit accounts with the Discover Secured card.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.

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