Short answer: Neither card type builds credit faster than the other. FICO and VantageScore treat secured and unsecured credit cards identically, since neither scoring model can see whether a deposit backs your account. What actually shapes your credit history is how you use the card: paying on time, keeping your balance low, and letting the account age. This guide walks through how each card works, who tends to benefit from each, and what to focus on no matter which one you choose.
If you are weighing a secured card against an unsecured one, you are really choosing between two on-ramps to the same destination. Understanding the differences can help you pick the one that fits where you are today.
What Is a Secured Credit Card?
A secured credit card requires an upfront, refundable security deposit, usually between $200 and $500, which typically becomes your credit limit. The deposit acts as collateral for the card issuer. Beyond that, you use it like a traditional card: you borrow, spend, and repay, and your payment activity is reported to the three major credit bureaus, Experian, Equifax, and TransUnion.
Secured cards tend to work well for people with no credit history, a thin credit file, or a recent setback like a late payment, a charge-off, or a bankruptcy.
A secured card is not the same as a prepaid debit card. With a prepaid card, you are spending your own preloaded money, and none of it gets reported to the bureaus. With a secured card, you are borrowing from the issuer against your deposit, and that borrowing activity is what builds your credit history.
Pros of Secured Credit Cards
● Easier approval. The deposit lowers the issuer's risk, so these cards are often available even to people with no credit file at all.
● Fewer hard credit checks. Some issuers skip the hard inquiry entirely, so applying may not affect your score.
● Full bureau reporting. On-time payments build history across Experian, Equifax, and TransUnion.
● A path to unsecured credit. After roughly 6 to 12 months of on-time payments, many issuers may upgrade the account to unsecured and refund the deposit.
Cons of Secured Credit Cards
● Upfront cash required. A typical $200 to $500 deposit ties up money you cannot use to pay the bill itself.
● Lower limits. Your limit usually equals your deposit, which makes it easier to cross the 30% utilization mark. On a $300 limit, spending more than $90 puts you above it.
● Higher interest rates. Secured cards tend to carry some of the highest APRs on the market, commonly in the mid-20s to high-20s, according to LendingTree's national rate data.
● Extra fees. Some issuers charge annual, monthly, or application fees, so it is worth reading the terms closely.
What Is an Unsecured Credit Card?
An unsecured credit card is the standard type most people picture: no deposit required. Instead, the issuer looks at your credit history, income, and existing debt to decide your limit and rate. Because there is no collateral protecting the issuer, approval standards are stricter.
Unsecured cards tend to work best for people with fair to excellent credit who already have a credit history to show a lender.
Pros of Unsecured Credit Cards
● No deposit. Your cash stays available for other things.
● Higher limits. It is typically easier to keep utilization low when your limit is not tied to a deposit.
● Rewards and perks. Cash back, travel points, sign-up bonuses, and purchase protections are common.
● More choices. There are hundreds of unsecured cards built for nearly every spending habit.
Cons of Unsecured Credit Cards
● Harder to qualify for. Most require at least fair credit, and negative marks can lead to denial.
● Overspending risk. Higher limits can mean more temptation, and carrying a balance can work against your credit history over time.
● Wide APR range. Depending on your credit profile, rates can run from roughly 20% to the upper 20s, per LendingTree.
Does a Secured Card Build Credit Faster Than an Unsecured Card?
No. FICO and VantageScore treat both as revolving credit accounts. Neither scoring model can see whether a deposit sits behind your card, because that detail does not appear on your credit report. What matters is the behavior tied to the account: on-time payments, low balances, and how long the account has been open.
A secured card used responsibly, with on-time payments and utilization around 5%, can outperform an unsecured card with a missed payment and utilization near 60%. The account type is not the variable that moves your credit history. Your habits are.
How Do Credit Cards Actually Build Credit History?
Both card types build your credit history through the same underlying mechanics. FICO scores weigh five factors, and here is roughly how much each one counts, based on Experian's breakdown of FICO scoring factors.
1. Payment History (about 35% of your FICO score)
This is the single biggest factor in your score. A payment more than 30 days late can cause a significant drop and can stay on your report for up to seven years. Setting up autopay for at least the minimum due is one of the simplest ways to avoid an accidental miss.
2. Credit Utilization (about 30% of your score)
This is the share of your available credit you are using at any given time. Keeping it under 30%, and ideally closer to 10%, tends to support your credit history the most.
Example: On a $300 secured card, keeping your balance under $90 at statement closing keeps utilization at 30%. Pay it down to $30 before the statement closes and you are closer to 10%.
Card issuers typically report your balance as of the statement closing date, not the due date. Paying down your balance before that date, even if you have been using the card normally, is what shows up as lower utilization on your report.
3. Credit History Length (about 15% of your score)
Generally, the longer an account has been open, the more it supports this factor. That is one reason to think twice before closing a secured card just to get the deposit back. If you are upgraded to an unsecured card, keeping the original account open, even unused, helps preserve your account age.
4. Credit Mix (about 10% of your score)
Having both revolving credit (cards) and installment credit (loans) shows lenders you can manage different types of debt. Pairing a card with a credit builder loan is one way to add variety to your file.
5. New Credit (about 10% of your score)
Each new card application typically triggers a hard inquiry, which can lower your score by up to about 5 points and usually recovers within a few months, according to Experian. Applying selectively, only for cards that fit where your credit stands today, limits how often this factor works against you.
How to Apply for a Secured Credit Card
● Verify your identity. Most issuers ask for a Social Security number, date of birth, address, and contact information. Some secured card issuers also accept an ITIN; requirements vary by issuer.
● Choose your deposit. Most require $200 to $500 minimum. A larger deposit generally means a higher limit, which can make it easier to manage utilization.
● Check the hard inquiry policy. Some secured cards skip the hard pull entirely.
● Confirm bureau reporting. Make sure the issuer reports to all three bureaus, since that is what makes the card useful for building your credit history.
● Use it, then look to graduate. After roughly 6 to 12 months of on-time payments, many issuers may upgrade the account and refund the deposit automatically.
Even secured cards, built for limited or damaged credit, can decline applicants with very recent bankruptcies or active delinquencies. Approval is never guaranteed.
Do You Get Your Security Deposit Back?
In most cases, yes. The deposit is collateral, not a fee.
● You close the account in good standing. Pay the balance to zero, close the account, and the deposit is returned in full.
● Your account is upgraded to unsecured. After roughly 6 to 12 months of responsible use, many issuers upgrade the account automatically, refund the deposit, and keep the account open, which helps preserve your account age.
● You default on payments. The issuer may apply your deposit toward the outstanding balance. If the debt is larger than the deposit, you could still owe the difference.
How to Apply for an Unsecured Credit Card
● Check your credit score first. Applying for cards above your current tier tends to waste hard inquiries.
● Match the card to your tier. Look for cards marketed to your current credit range.
● Prepare your information. Most applications ask for your name, Social Security number, address, income, and housing costs.
● Expect a hard inquiry. Nearly all unsecured applications trigger one, which can cause a temporary dip of up to about 5 points, according to Experian.
● Compare beyond approval odds. Look at APR, fees, rewards, and any introductory offers before deciding.
Which Credit Card Is Right for You?
Consider a secured credit card if:
● You have no credit history (students, recent immigrants, first-time borrowers)
● You are getting back on track after a setback, like late payments, collections, charge-offs, or bankruptcy
● You have been denied for an unsecured card
● You can set aside a 200-500 deposit and want a lower-risk way to start building credit history
Consider an unsecured credit card if:
● You already have fair to excellent credit
● You want rewards, cash back, or travel perks
● You want a higher limit to make managing utilization easier
● You would rather not tie up cash in a deposit
Building Credit Beyond Credit Cards
Credit cards are one of the more effective tools for building credit history, but they are not the only one. If you are starting from zero or getting back on track after a setback, pairing a card with other credit-building tools can support your progress.
● Credit builder loans. You make monthly payments on a small loan held in savings, which can build installment history and savings at the same time.
● Rent and utility reporting. Services that report the rent and utility payments you are already making can add payment history without taking on new debt.
● Authorized user accounts. Being added to someone else's card with a long, positive history can add helpful history to your file relatively quickly.
Ava brings several of these tools together in one place. Ava offers the Ava Credit Builder Mastercard®, the Save & Build Account6 and rent and utility payment reporting. Certain loan and credit services for the Save & Build Account are provided through Ava's banking-service and lending partners.4 Ava charges a flat-rate membership fee for access to its credit and non-credit products, and there is no interest on the Card or the Save & Build loan.10 For credit accounts, Ava reports your payment activity and tradelines to all three major credit bureaus; rent and utility reporting is limited to TransUnion.8 Your credit score may increase or decrease, and Ava cannot guarantee results. Adding the Ava Card and Save & Build Account as new tradelines can support your credit mix and credit history length, two of the five factors above.5 Approval for Ava's Card or Save & Build Account is not guaranteed, and a linked bank account through Plaid is required.7 Ava requires a Social Security number to apply.
If you want to build credit history through more than one account at a time, pairing a card with tools like these can help create a more well-rounded credit profile.
Frequently Asked Questions
Does a secured card build credit faster than an unsecured card?
No. Credit scoring models like FICO and VantageScore treat both as the same kind of revolving credit account, and neither can see whether a deposit backs the card. How quickly your credit history improves depends on your behavior: on-time payments, low utilization, and account age, not the card type.
How long does it take to build credit with a secured credit card?
You can typically generate a scoreable credit file within about 6 months of opening an account, which is the minimum FICO requires. Meaningful credit history, the kind that helps you qualify for better products, often takes 6 to 12 months of consistent, on-time use.
Can you be denied a secured credit card?
Yes. Secured cards have much lower approval barriers than unsecured cards, but some issuers may still decline applicants with very recent bankruptcies, active collections, or ongoing delinquencies. Requirements vary by issuer.
Should I keep my secured card after upgrading to an unsecured card?
Generally, yes, if there is no annual fee. Keeping the account open helps preserve the account age tied to it, which supports your credit history. Closing it can shorten your average account age and cause a temporary dip in your score.
What credit score do I need for an unsecured card?
Most unsecured cards require at least fair credit, generally 580 and above. The strongest rewards cards typically require good to excellent credit, generally 670 and above. Below 580, a secured card or credit builder product is usually the more practical starting point.
Does applying for a secured card hurt my credit?
Some secured cards require a hard inquiry, which can temporarily lower your score by up to about 5 points, according to Experian. Others skip the hard pull entirely. Check the card's terms before applying, especially if you would rather avoid extra hard inquiries right now.
Can I build credit without a credit card?
Yes. Credit builder loans, becoming an authorized user on someone else's account, and reporting rent and utility payments to the bureaus are all options worth considering. Ava combines several of these in one platform: the Ava Credit Builder Mastercard®, the Save & Build Account, and rent and utility reporting.4,6,8
Key Takeaway
The type of card matters less than what you do with it. Whether you start with a secured card or qualify for an unsecured one, on-time payments and low utilization are what move your credit history forward. For most people starting from scratch or getting back on track after a setback, consistent, on-time use, paired with additional credit-building tools where it makes sense, is the most reliable path forward.
If you are ready to put these habits to work, you can see how Ava's tools fit into your plan.
Footnotes
4. Ava partners with a technology service provider of banking related services Priority Technology Holdings, Inc., to provide your Ava Secured Loan Account. Money transmission services relating to the Passport Program are provided by Priority, directly or through its subsidiary Finxera, Inc. (NMLS #1168701) or its authorized affiliates and contractors.
5. With Ava's Credit Builder Card and Save & Build Account you add two new tradelines to your credit report that helps with your credit mix (10%) and credit history (15%). With each payment made on time you help build your payment history (35%). The Credit Builder Card's credit limit helps with your credit utilization (30%). Source: Experian, “What Affects Your Credit Scores.”
6. Ava is not a bank, Ava is a technology company that partners with technology service provider of banking related services Priority Technology Holdings, Inc., as well as Pier Lending LLC NMLS 2451164 in certain states to provide the Secured Loan Account. The Ava Credit Builder Mastercard® is issued by Patriot Bank, N.A., pursuant to a license from Mastercard® International Incorporated.
7. Your approval for the Ava Credit Builder Card or Save and Build Account is not guaranteed. Successfully linking your bank account to Ava via Plaid is a condition to any such approval. Your failure to maintain a Plaid connection may result in the termination of any credit product you utilize with Ava.
8. Ava reports your payment activity and tradelines (“Activity”) to all 3 credit bureaus, with rent and utility reporting limited to TransUnion, but does not promise or guarantee specific results. Credit bureaus independently determine credit scores based on multiple factors which include non-Ava transactions. Ava has no influence over bureau processing times and cannot guarantee or predict how the bureaus will interpret or reflect your Activity. Activity may reflect differently across bureaus. Improvements to your credit score cannot be guaranteed. Your credit score may be impacted positively or negatively.
10. Ava charges a flat-rate membership fee to access all credit and non-credit products. Membership plans are monthly or annual.
Important Disclosures & Regulatory Information
Ava Finance is a financial technology company, not a bank. Certain loan and credit services are provided by Pier Lending LLC (NMLS #2451164) in select states. The Ava Credit Builder Mastercard® is issued by Patriot Bank, N.A., pursuant to a license from Mastercard International Incorporated.
Your approval for the Ava Credit Builder Card or Save & Build Account is not guaranteed. Successfully linking your bank account to Ava via Plaid is required for approval. Failure to maintain a Plaid connection may result in termination of your account.
Ava reports your payment activity and tradelines to all three credit bureaus. Rent and utility bureau reporting is limited to TransUnion. Credit bureau reporting is not guaranteed to improve your credit score. Credit bureaus determine scores independently based on multiple factors, including non-Ava transactions.
Ava charges a flat-rate membership fee for access to credit and non-credit products. Membership plans are monthly or annual.
Go to meetava.com for additional important disclosures regarding terms and conditions.
Disclaimer: The content provided on this blog is for informational and educational purposes only and should not be considered financial, legal, tax, credit, or investment advice. Ava does not provide personalized financial advice, credit repair services, or guarantees regarding credit outcomes. Any references to credit history, credit scores, or financial results are illustrative only and may vary based on individual circumstances and factors outside of Ava's control. Please consult a qualified professional regarding your personal financial situation. Terms, conditions, and important disclosures apply. See meetava.com for additional disclosures and product terms.
