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How To Build Credit With Secured Credit Card

3 min read

build credit with secured credit card

Written By

Brandi Marcene

Rounding it up

  • Building good credit is crucial for many financial goals, such as buying a home, getting a car loan.

  • Secured credit cards are a good option to boost your credit score.

  • Your financial priorities play an essential role in shaping your financial future and security.

  • KOHO offers a credit-building credit card option to improve your credit scores.

Building good Credit is crucial for many financial goals, such as buying a home, getting a car loan, or qualifying for a low-interest credit card. But if you do have a poor credit history at all, it can be harsh to get started.

And that is where secured credit cards come in. Secured credit cards are made for people with limited or bad credit. In order to open a secured credit card, you'll be required to make a deposit, which will serve as your credit limit. For instance, if you make a $500 deposit, your credit limit will be $500.

What are secured credit cards and, do they work?

Secured credit cards are a kind of credit card that requires a security deposit. The deposit amount serves as your credit limit, and you can't spend more than what you've deposited. Secured credit cards are a good option for people with limited or bad credit, as they can help you build your credit history and boost your credit score.

Secured credit cards are similar to regular credit cards. You can use them to make purchases online and in stores, and you'll earn rewards points or cash back on your spending. You'll also receive a monthly statement, and you'll need to make at least the minimum payment on your balance each month. Your payments and use will be reported to the credit bureaus and be recorded in your credit history and will be on your credit report for years to come.

How to use a secured credit card to improve credit rating

Given below are some tips on how to make use of a secured credit card to boost your credit score and credit report standing:

  • Frequent Card Usage: Use your secured credit card on a regular basis. Consistent usage, coupled with timely payments, contributes to the information reported to credit bureaus.

  • Balanced Credit Limit: Sustaining a low balance on your secured credit card is advisable. Preferably, keep your balance under 30% of the assigned credit limit. This demonstrates to potential lenders that you are prudent in managing your credit, avoiding overextension.

  • Punctual Bill Payments: Timely repayment of your credit card bills is of utmost significance. Your credit score is significantly impacted by the punctuality of your payments. Even a single instance of tardiness can result in an adverse effect on your creditworthiness and credit history.

  • Automated Payment Arrangements: Consider setting up automated payments for your secured credit card. This proactive approach minimizes the risk of forgetting payment due dates, ensuring that you maintain a positive payment history.

What are your financial priorities?

Your financial priorities play an essential role in shaping your financial future and security and helping you get a higher credit limit and credit rating score.

  • Good credit opens up a multitude of opportunities that can have a lasting impact on your financial well-being. One of the most significant advantages is the potential for significant cost savings.

  • When you have a strong credit score, you are more likely to secure loans and credit cards with lower interest rates.

  • This seemingly minor advantage can make a substantial difference in the long run, potentially saving you thousands of dollars in interest payments over the life of a loan or credit card balance.

Achieving Homeownership

If you aspire to buy a home, your credit score can influence the mortgage terms you are offered. With a higher credit score, lenders are more willing to approve your application and may even require a smaller down payment, making homeownership more accessible.

Enhancing Vehicle Financing

When you're looking to get a car loan, having good credit can be a game-changer. It not only leads to better loan terms but also a more extensive choice of vehicles. A strong credit profile opens doors to financing options that might be otherwise unavailable.

Pursuing Entrepreneurial Ambitions

Entrepreneurial ambitions are also within reach when you have good credit. Starting a business often requires access to capital. With a healthy credit history, you can more easily secure business loans and lines of credit, providing you with the financial resources needed to launch and grow your venture.

Access to Low-Interest Credit Cards

Credit cards are essential tools in managing personal finances. Good credit can help you qualify for low-interest credit cards, which can be incredibly valuable when you need to make large purchases or manage your day-to-day expenses efficiently. These cards can provide a cushion of interest-free borrowing if managed wisely.

Securing Rental Housing

Securing a rental apartment can sometimes be challenging, as landlords often conduct credit checks on potential tenants. Having good credit makes you an attractive candidate, increasing your chances of getting approved for the apartment of your choice.

Employment Opportunities

In today's job market; many employers require credit checks as part of their hiring process, mainly for positions that involve financial responsibilities. Good credit is an asset when seeking employment in such roles, as it demonstrates financial responsibility and trustworthiness to potential employers.

What Credit Score Is Needed for a Credit Card?

Your credit score represents a number that lenders use to assess your creditworthiness. The higher your credit score, the less of a risk you are to lenders. This will be a large part of what helps you get a secured or unsecured line of credit.

There is no specific credit score that is required for all credit cards. However, most credit card issuers will look for a credit score of at least 640. If you have a lower credit score, you may still be able to qualify for a secured credit card, which is a kind of credit card that needs a security deposit.

Opening a new line of credit will need many factors to align. You can use a secured credit card responsibly and manage things like payments, security deposit, and interest rates more easily with a good credit history and credit score. This is why credit score monitoring is important and why good credit history is so important in the eyes of lenders at all financial institutions.

Bottom line

Secured credit cards are a great way to build your credit history and improve your credit score. If you have limited or bad credit, a secured credit card can be a better choice for you. Just remember to make use of your card responsibly and make on-time payments each month. Work with KOHO today to see how a positive credit history can make it easier to secure a line of credit, borrow money, and manage your finances.

Opening multiple credit cards can be a challenging balance at times. Let the KOHO pros show you how to monitor your credit reports, credit scores, credit line, and how to build credit safely and effectively. You can learn more at and start the process for yourself today.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!


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