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FEATURED CREDIT CARDS

Mission Lane Visa® Credit Card

Mission Lane Visa<sup>®</sup> Credit Card
  • No Annual Fee
  • Fair Credit
  • Enjoy coverage from Visa®.
    *See Card Terms

Indigo® Mastercard® - $1,000 Credit Limit

Indigo<sup>®</sup> Mastercard<sup>®</sup> - $1,000 Credit Limit
  • Get the credit limit you deserve—$1,000 guaranteed if approved
    Rates & Fees

Milestone® Mastercard®

Destiny Mastercard
  • $700 Credit Limit
  • No security deposit
  • Less than perfect credit is ok
    Rates & Fees

Secured vs. Unsecured: The Right Card for Your Fair Credit Score

For those with fair credit, a crucial decision is whether to get a secured or an unsecured credit card. While both can help you improve your credit score, they work differently and are suited for different financial situations. Understanding the distinction between them is the first step toward choosing the right card for your goals, whether you're building credit from scratch or aiming for a stronger financial future.

To get a full understanding of your options with a fair credit score, read our hub article on A Complete Guide to Credit Cards for Fair Credit.

The key difference: Collateral

The fundamental difference between a secured and unsecured card is collateral.

  • Secured Cards: Require a security deposit, typically equal to your credit limit. This deposit acts as collateral for the issuer, significantly lowering their risk and making it much easier to get approved, even with a limited or poor credit history. The deposit is held by the bank and is refundable when you close the account or graduate to an unsecured card.

  • Unsecured Cards: Do not require a deposit. The credit limit is determined by your creditworthiness, income, and other financial factors. Because the issuer takes on more risk, approval is generally harder to get, especially for those with fair or poor credit.

    • Secured credit cards: Pros and cons

    Pros

  • Easier to Get Approved: Secured cards are easier to get, making them an excellent tool for those with fair, poor, or no credit history.

  • Builds Credit: With responsible use, a secured card reports to the major credit bureaus, helping you build a positive payment history and improve your credit score.

  • Refundable Deposit: Your security deposit is refundable once you close the account or graduate to an unsecured card. We have a detailed guide on the process, read Secured Credit Cards: Getting Your Refundable Deposit Back.

  • Lower Spending Risk: The low credit limit tied to your deposit can act as a natural guardrail against overspending, helping you build discipline.

    • Cons

  • Requires a Deposit: You must have the cash upfront for the security deposit, which can range from $200 to over $2,000.

  • Lower Credit Limits: Limits are often low, which can make a small purchase feel significant and can make it difficult to keep your utilization rate low.

  • Fewer Rewards and Perks: Rewards programs on secured cards are less common and typically less generous than on unsecured cards.

    • Unsecured credit cards: Pros and cons

    Pros

  • No Deposit Required: You don't need to tie up your cash in a security deposit.

  • Potential for Better Rewards: Many unsecured cards offer cash back or other rewards programs that are more generous than those on secured cards.

  • Higher Credit Limits: As your credit score improves, you can qualify for higher credit limits, providing more financial flexibility.

  • Path to Better Credit: An unsecured card can help you build credit and graduate to even better cards with lower interest rates and more generous rewards.

    • Cons

  • Higher Approval Requirements: Approval is based on your credit history and score, making it harder to get if your credit isn't established.

  • Higher Risk of Debt: Without a deposit and with higher credit limits, it can be easier to fall into high-interest debt if you are not disciplined with your spending.

  • Higher Interest Rates: Cards designed for fair credit often come with higher interest rates to offset the issuer's risk.

    • Making the right choice for your fair credit

    The best choice depends on your starting point and your financial goals. Once you've decided on the right type of card for you, the next step is to start your search. Read our guide on How to Find the Right Card for Fair Credit for a strategic approach.

  • Choose a secured card if: You have a limited credit history, are actively rebuilding after past mistakes, and have the cash available for a deposit.

  • Choose an unsecured card if: You have a fair credit score, a steady income, and are confident you can manage your spending responsibly without the protection of a security deposit.

    • How to graduate to an unsecured card

    If you start with a secured card, your goal should be to graduate to an unsecured card. After several months of on-time payments and low credit utilization, you may be eligible to graduate automatically or apply for an upgrade. For more tips on improving your score in the fair credit range, you can read our guide on How to Move from Fair to Good Credit: A Strategic Plan.

  • Check for automatic graduation: Some card issuers automatically review your account and will "graduate" you to an unsecured card and return your deposit.

  • Maintain responsible behavior: To increase your chances, maintain a low credit utilization rate and always make your payments on time.

    • Related credit card articles

  • A Complete Guide to Credit Cards for Fair Credit

  • How to Move from Fair to Good Credit: A Strategic Plan

  • How to Find the Right Card for Fair Credit

  • How Your Credit Card Affects Your Credit Score

  • How Many Credit Cards Should You Have? A Guide to Optimizing Your Wallet

  • Secured Credit Cards: Getting Your Refundable Deposit Back







    • Found this guide helpful? Bookmark it for future reference as you continue your financial journey!

    Experian Boost: A Comprehensive Guide to Boosting Your Free Credit Score

    FICO® Credit Scores

    A FICO® Score is a specific, proprietary type of credit score created by the Fair Isaac Corporation (FICO). It is the most widely used credit scoring model, with approximately 90% of top U.S. lenders using a FICO® Score to make lending decisions.

    FICO® Score Ranges:

    • Exceptional: 800–850
    • Very Good: 740–799
    • Good: 670–739
    • Fair: 580–669
    • Poor: 300–579
    While many people (and credit education websites) use "Excellent" and "Bad" as general, descriptive terms, FICO® officially categorizes its score ranges as Poor, Fair, Good, Very Good, and Exceptional.

    What is a Credit Score?

    A credit score is a three-digit number, typically ranging from 300 to 850, that predicts your creditworthiness—how likely you are to repay borrowed money on time. Lenders use this score to assess the risk of lending to you and to determine the interest rates and terms of any credit you might receive.

    Why is a Credit Score Important?
    A credit score is important because it acts as your financial reputation. Lenders, landlords, insurers, and employers use this single number to quickly judge how reliable you are with money. A higher score helps you qualify for loans and credit cards, often securing lower interest rates that can save you significant money. Conversely, a poor credit score can lead to application denials or much higher costs for borrowing, making it a key factor in your overall financial opportunities.

    FICO® Credit Score Facts

    Key Characteristics of FICO® Scores

    • Three-Digit Number: Like other credit scores, FICO® Scores are a three-digit number that summarizes a consumer's credit risk.

    • Range: Most standard FICO® Scores range from 300 to 850. Higher scores indicate lower credit risk.

    • Data Source: FICO® Scores are calculated using data from your credit reports maintained by the three major credit bureaus: Experian, Equifax, and TransUnion. Your score may vary slightly depending on which bureau's data is used.

    • Industry Standard: Lenders rely on FICO® Scores for mortgages, auto loans, and credit cards because they provide a consistent, statistically sound assessment of the likelihood that a borrower will repay their debt.

    Note: Credit scores are used to represent the creditworthiness of a person and may be one indicator to the credit type you are eligible for. However, credit score alone does not guarantee or imply approval for any credit card product.


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