How Long Does It Take for a Secured Credit Card to Become Unsecured?

Getting a secured credit card can be a valuable option to help build your credit history.¹ By setting up a secured credit card account, you use a small refundable cash deposit to build your credit history².
 
With some creditors, you could potentially get approved to “graduate” to an unsecured credit card. Graduating means that you keep your card, but your security deposit is returned so that your credit card becomes an unsecured card credit card.

So, what does it take to graduate from your secured credit card?

How to graduate from a secured to an unsecured credit card

Secured credit card graduation depends on your credit card issuer and on demonstrating that you can be trusted with more responsibility. Credit card issuers will look at your secured credit card usage for a period of time to determine if you’re managing your credit responsibly.³

Stay on top of your credit score

Your FICO® Score⁴ is one of the factors that many credit card issuers may look at when deciding whether you’re ready to graduate from your secured credit card. Hopefully, your secured credit card usage has made a positive impact on your credit.

According to myfico.com, your FICO® Score (which ranges generally from 300 to 850) is determined by evaluating five categories, weighted in the following percentages for the general population:

• Payment History, approximately 35 percent: How long a track record you have of paying your past credit accounts on time
• Amounts Owed, approximately 30 percent: How much total debt you owe and the amount of available credit you are using
• Length of Credit History, approximately 15 percent: How long you have been borrowing money
• Credit Mix, approximately 10 percent: What different types of debt you have, such as a mortgage, installment or car loans, retail accounts, and credit cards
• New Credit, approximately 10 percent: How recently you have applied for new loans or credit cards

If you’re building credit history for the first time, you probably don’t have a lengthy credit history or much of a credit mix, so this means that the other factors—like your payment history—are even more important to your FICO® Score.

Since your payment history carries the most weight in calculating your FICO® Score, being late with credit payments can be a big problem. Paying your bills on time every month that you have your secured credit card, and managing your secured credit card account responsibly as well as all your other loans, can help you graduate to an unsecured credit card.

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Manage other credit accounts responsibly

Along with paying bills on time for your secured credit card account, you also need to manage the rest of your finances responsibly. If you have any other credit card accounts, debts, loans, or monthly bills, make sure to pay those bills on time. To graduate to an unsecured credit card, your overall financial life needs to be in good order—not only your secured credit card account.

For example, say that you have a Discover it® Secured Credit Card and a credit card from a different bank or issuer, if you consistently make the required payments for your Discover it® Secured Credit Card on time, but miss a payment on your credit card with the other issuer, your missed payment could affect your ability to graduate from a secured to an unsecured card with Discover.

This is because Discover looks at the bigger picture of your entire financial history across all of your accounts when deciding whether you’re ready to graduate from your unsecured card—not just your history of paying your Discover bills. See the information below for more information about the criteria Discover uses.

Pay your card’s minimum payment every month

Sometimes, when money is tight, people skip a payment on a credit card. That’s not a good idea. Missing a payment (especially if you fall behind by 30 or more days) can cause lenders to classify you as a higher-risk borrower, and this may delay your graduation from a secured credit card to an unsecured card.

To avoid falling behind on your credit-building goals, make sure that you’re paying at least the minimum payment on each of your credit accounts every month. Even if you can’t currently afford to pay more than that, just paying the minimum—on time—will help you build credit history by establishing a positive payment history, and should put you on the right financial path.

Limit how many credit accounts you open

Limiting the number of accounts you open in a short period can help your credit score as every hard credit inquiry can affect your credit score.

Monitor your credit until you graduate from a secured to an unsecured credit card

The FTC suggests regularly reviewing your credit report to avoid errors might also help your credit score if you spot something incorrect. The Fair Credit Reporting Act (FCRA) requires the three major credit bureaus—Equifax, Experian, and TransUnion—to provide a free copy of your credit report annually upon your request. If you see an error, you should submit a dispute letter to the credit bureau as soon as possible.

By paying your secured credit card on time, staying within the credit limit, and regularly making at least the minimum payments on time on any credit accounts that you have, you may be able to maximize your chances of graduating to an unsecured credit card.