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Can Unsecured Cards Improve Credit?

Last Updated: January 15, 2024
5 min read

Key Points About: unsecured cards for improving poor credit

  1. If you use your card responsibly by practicing good credit management habits, an unsecured credit card may help boost your credit score.

  2. If you believe that you have a bad credit score, getting a secured card may be an option.

  3. Using your secured credit card responsibly may allow you to graduate to an unsecured card.

Can an unsecured credit card improve your credit?

Whether secured or unsecured, any credit card could help improve your credit score depending on how you use it. If you use your card responsibly by practicing good credit management habits, an unsecured credit card may help boost your credit score. 

But what are good credit habits? There are a few things you can do to boost your credit score with an unsecured card (or any card).

How to build credit with an unsecured credit card

Make on-time payments 

When you make on-time payments on your unsecured credit card, you add positive payment history to your credit report, according to Consumer.gov. Payment history is important because it’s one of the factors lenders (like credit card companies and others) look at before deciding to loan you money. 

Pay your monthly balance in full

Your statement balance is the amount of charges and payments you made during your billing cycle. If you want to pay your account in full, you would pay your statement balance. Paying your account in full is important because of something known as credit utilization. 

Credit utilization (or your credit usage) is the amount of debt you owe on your credit cards compared to your credit limit across all cards. How much of your credit that you use is such a big deal because credit utilization makes up 30% of your credit score. When you pay your statement balance in full (instead of just making your minimum payment) you can lower your credit utilization, and this may boost your credit score.

When you pay your statement balance in full and on time, not only do you lower your credit usage, you can also avoid incurring interest charges on your purchases.

Are secured or unsecured cards better for your credit?

While secured credit cards are a great option for building or rebuilding credit, they aren’t better or worse for your credit than unsecured cards. How you use your card, and your overall credit history, is what determines the impact to your credit score. An unsecured card may help you build credit with responsible use.

What’s the difference between a secured card and an unsecured card?

An unsecured card is a credit card where your credit limit is determined by your credit profile and will vary by cardmember. On the other hand, while your credit history still comes into play with a secured card, you will typically have to send the credit card issuer a deposit at account opening. In general, your deposit will determine your credit limit. 

Can I still improve my credit if I don’t qualify for an unsecured card?

If you have no credit or believe that you have a bad credit score, getting a secured card may be an option. 

A secured card is backed by the cash you deposit at account opening. Your security deposit is usually refundable depending on the terms set by your credit card company. Other than that, a secured card works just like a regular, unsecured card. Typically, your credit card company will report any activity on your secured card to a credit bureau (or all three: Equifax, Experian, and TransUnion). Plus, using your secured credit card responsibly may allow you to graduate to an unsecured card.

Did you know?

Your account number, benefits and rewards stay the same. With a Discover it® Secured Card, you can get your deposit back, because 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. Your account number, benefits and rewards stay the same.1

How can I qualify for an unsecured credit card?

An unsecured credit card is a type of card that is not backed by collateral (compared to a secured card that usually requires a security deposit). Because unsecured cards aren’t connected to a deposit, the credit limit is determined by your credit history and other factors, like your income. 

Lenders use your credit score to help determine if you can handle the credit and payments responsibly on an unsecured card. So, the higher your credit score, the more options you’ll have for an unsecured card. Because of this, unsecured cards usually require a higher income level and credit scores than a secured card. 

What credit score is needed for an unsecured card?

The exact requirements to qualify for an unsecured card vary by credit card issuer. But you can still apply for a secured credit card if you get turned down for an unsecured card. From there, you can work on building credit until you qualify for an unsecured card. 

What you need to apply for an unsecured credit card if you have bad or poor credit

Before applying for any credit card, you should compare different credit card offers. There are many different credit cards out there with different offers, fees, and rewards programs. It’s a good idea to look at your spending habits to see what categories you spend the most in, and then shop for a card that best fits your needs. You may want to review your credit report and have an idea of your credit score so you know what kinds of cards you may qualify for. 

Information needed for a credit card application

You may need the following information when you apply for a credit card online:

  • Your full name 
  • Your Social Security number
  • Home Address 
  • Date of Birth 
  • Employment/Income Information
  • Rental/Housing Information
  • Email Address 

You may need more information depending on the credit card company. Card issuers want to get a good idea of your current financial health and may use your SSN to perform a credit check before extending you an offer. 

How long does approval take if you have poor credit?

From there, all you would need to do is wait for the credit card company to make an approval decision. Sometimes approvals or rejections are instant, but some credit card companies may take a longer time to decide. If you’re applying for a secured card, you will also need to pay for your deposit. You should also keep in mind that it may take a few days (or weeks) for you to receive your new credit card in the mail. If your credit card application is rejected, you’ll usually receive a letter in the mail telling you why. If you’re rejected for a secured card, you can take the needed steps for building credit before applying again.

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  1. 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. When you qualify to upgrade to a standard, ‘unsecured card’, Discover will also consider you for a credit line increase. 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.
  • 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.