How Much Will a Secured Credit Card Boost My Credit Score?

A secured credit card is a credit card where the corresponding credit limit is determined by a deposit made with the issuing financial institution. The cards are often used to rebuild credit history. According to MyFICO, your FICO credit score ranges between 300 and 850 and changes as the information in your credit report changes. A secured credit card can boost your credit score but could also lower it.

Identification

Your credit score is based on your credit report. Thirty-five percent of your FICO score reflects your payment history, 30 percent is your debt load, 15 percent is the length of your credit history, 10 percent is the mix of credit types you have and the remaining 10 percent is the level of new credit you've applied for recently.

Significance

When you apply for a credit card, secured or unsecured, the credit issuer checks your credit, which places a hard inquiry on your report. This inquiry may cause a small drop in your score, less than five points, according to MyFICO. Once the new credit card account appears on your credit report, that new card will shorten the average length of your overall credit history, which may cause your score to drop. How much it drops depends on the other items in your report. Your score may initially go down before it goes up.

Consideration

Paying your bills on time is the biggest contributor to a higher credit score and represents the largest percentage of your score's calculation. When you obtain a secured credit card, how well you pay the bill on that card will help determine how much your score will rise. If you make your payments late, your score will decrease. One 30-day late payment will drop your score by as much as 45 points, according to Bankrate.com. On-time payments, over time, raise your credit score, according to MyFICO but how much depends on the other items in the report.

Warning

Never pay a company to fix your credit in an effort to boost your credit score. Often the promises made by such companies are not legitimate, according to the Federal Trade Commission. The Fair Credit Reporting Act gives you the right to dispute credit report errors yourself at no cost. Once you file a dispute, the bureau has up to 30 days to investigate and correct mistakes. According to Bankrate.com, correcting credit report errors will help boost your credit score.