What unsecured cards are and how they differ from secured cards
An unsecured credit card does not require you to put money down as a security deposit. The card issuer extends credit based on your credit history, income, and other factors — not on collateral they hold. If you've been building credit with a secured card, moving to an unsecured card means you get your deposit back and stop paying interest on money sitting in a bank account.
The main difference: with a secured card, the issuer holds your deposit as insurance against default. With an unsecured card, there is no deposit. The issuer takes on the risk directly. This is why unsecured cards typically require a higher credit score or a shorter history of on-time payments than secured cards do.
Many card issuers offer a path from secured to unsecured. After 6 to 12 months of perfect payments on a secured card, you can often request to convert that account to an unsecured card, or you can open a new unsecured card and close the secured one.
Key Takeaways
- Unsecured cards do not require a deposit, but most issuers want to see at least 6 months of on-time payments on a secured card or other credit history before approving you.
- Your credit score, income, and payment history are what the issuer reviews — not a deposit amount.
- Some issuers offer a direct upgrade path: after 6 to 12 months of perfect payments on a secured card, you can convert to unsecured without a new process.
- Unsecured cards typically have higher credit limits and lower interest rates than secured cards, but only if you have built a track record of paying on time.
- If your credit score is still below 600, you may not yet meet the issuer's requirements for an unsecured card, even with a deposit-backed secured card.
When you are ready to move from secured to unsecured
The timing depends on your credit history and the issuer's requirements. If you opened a secured card with no credit history, most issuers want to see 6 to 12 months of on-time payments before they will consider you for an unsecured card. Some will move faster if your credit score has risen above 650 or 700.
Check your credit report before you explore. You can get a free report once per year from each of the three bureaus — Equifax, Experian, and TransUnion — at annualcreditreport.com. Look for errors, late payments, or accounts in collections. If your report shows missed payments in the last 12 months, most unsecured card issuers will decline you. If your report is clean and your score is above 650, you have a reasonable chance.
Do not explore to multiple issuers in a short window. Each process creates a hard inquiry on your credit report, and multiple inquiries in a few weeks can lower your score by a few points. Space applications out by at least a month.
Issuers that offer unsecured cards to people rebuilding credit
Some issuers specifically market unsecured cards to people with limited or damaged credit. These cards often have higher interest rates and annual fees than cards for people with excellent credit, but they do not require a deposit.
Capital One, Discover, and Chime are among the issuers that review applications from people with credit scores in the 550 to 650 range. Discover's Secured Card can convert to unsecured after 8 months of on-time payments. Capital One's Secured Card also offers a conversion path. If you already have a secured card with one of these issuers, ask whether you are may be able to access to convert rather than explore for a new card.
Credit unions sometimes offer unsecured cards to members with lower credit scores, especially if you have a savings account or checking account with them. Call your credit union and ask whether they have a card product for people rebuilding credit. The terms are often better than what you will find from national issuers.
What the issuer will ask for on the process
You will need your Social Security number, date of birth, current address, and employment information. Have your most recent pay stub or tax return handy — the issuer will ask for your annual income. Be honest. Overstating income can result in denial or, if discovered later, account closure.
The issuer will also ask whether you have any open accounts, outstanding debts, and recent late payments. They will pull your credit report to verify this information. If you have a secured card with another issuer, mention it — some issuers view this as a positive sign that you are actively building credit.
Some issuers ask about your employment history and whether you rent or own your home. These questions help them assess stability, but they are not deal-breakers if you have been in your job for less than a year or if you rent.
Credit limits and interest rates for unsecured cards
Unsecured cards for people rebuilding credit typically start with a credit limit between $300 and $1,000. This is higher than many secured cards, which often start at $200 to $500. Your limit may increase after 6 to 12 months of on-time payments.
Interest rates (called the APR, or annual percentage rate) on unsecured cards for people rebuilding credit usually range from 18% to 29%. This is higher than the rates offered to people with excellent credit, but it reflects the risk the issuer takes by extending credit without a deposit. As your credit score improves, you may be able to request a lower rate or switch to a different card with better terms.
Watch for annual fees. Some unsecured cards charge $25 to $95 per year. Others charge no annual fee. If you are comparing cards, factor in the annual fee when you calculate the true cost. A card with a 20% APR and no annual fee is usually better than a card with a 19% APR and a $95 annual fee, especially if you carry a balance.
How to use an unsecured card to keep building credit
The goal of moving to an unsecured card is to continue building your credit score. To do this, keep your balance low — ideally below 30% of your credit limit — and pay your bill in full or on time every single month. A $300 limit with a $90 balance and a full payment each month will help your score more than a $1,000 limit with a $800 balance and a late payment.
Set up automatic payments if the issuer offers them. This removes the risk of forgetting a due date. Even one late payment can set back your credit score by 50 to 100 points and make it harder to get approved for other credit products later.
Do not close your secured card when ready after you open an unsecured one. Keep both open for at least a few months. Closing an account lowers the average age of your accounts and reduces your total available credit, both of which can lower your score temporarily. After 6 months, you can close the secured card and recover your deposit.
What to do if you are denied for an unsecured card
If an issuer denies you, they must tell you why. Common reasons include a credit score below their minimum threshold, recent late payments, or high existing debt relative to your income. Ask the issuer what their minimum credit score requirement is. If your score is close, focus on paying down existing balances and making on-time payments for another 3 to 6 months before explore again.
If you were denied because of errors on your credit report, dispute them with the bureau that reported the error. You can file a dispute online at equifax.com, experian.com, or transunion.com. The bureau has 30 days to investigate. Once errors are removed, your score may improve enough to may have access to for an unsecured card.
If you are not yet ready for an unsecured card, stay with your secured card. Continue making on-time payments, and ask the issuer about a conversion path. Many issuers will convert a secured card to unsecured without requiring a new process, which means no hard inquiry and no risk of denial.
Frequently Asked Questions
Can I get an unsecured card with a credit score below 600?
Most mainstream issuers require a score of at least 600 to 650. Some credit unions and smaller issuers may go lower, but approval is not may provide. If your score is below 600, continue using a secured card and aim to raise your score to 650 before explore for an unsecured card.
What happens to my deposit if I convert my secured card to unsecured?
The issuer will return your deposit to the bank account you provided when you opened the card. This usually happens within 5 to 10 business days of the conversion. You do not need to do anything — the issuer handles it automatically.
Should I close my secured card after I get an unsecured card?
Not when ready. Keep both open for at least 6 months. Closing an account can lower your credit score temporarily because it reduces your available credit and the average age of your accounts. After 6 months, you can safely close the secured card.
Will explore for an unsecured card hurt my credit score?
Yes, but only slightly and temporarily. Each process creates a hard inquiry, which can lower your score by a few points. The impact fades after a few months. Space applications at least a month apart to minimize the damage.
What is the difference between an unsecured card and a regular credit card?
There is no technical difference. An unsecured card is a regular credit card. The term "unsecured card for people rebuilding credit" just means the issuer has approved you despite a lower credit score or shorter credit history. As your score improves, you can explore for cards with better rewards and lower interest rates.