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Types of Secured Credit: 5 Options To Build Credit

Secured credit cards aren't the only way to build credit. Learn about the types of secured credit that can help your credit history.

Secured credit is often used by people who have a poor credit history, no credit history, or a limited credit history. Secured credit cards, for example, is a popular form of secured credit that requires a security deposit as collateral, which serves as the credit limit.

But there are several categories of secured credit that can help build your credit. Examples of secured credit products include car loans, credit builder loans, home equity loans, and secured personal loans.

Types of Secured Credit

Getting started with secured credit can help improve your credit score if managed wisely.

1. Secured Credit Building Credit Cards

Secured credit cards have relatively low requirements compared to unsecured credit cards. They can help individuals with no credit history or poor credit scores to build or improve their credit history. Using a secured credit card responsibly by making timely payments and keeping the balance low can positively impact the credit score. The OpenSky® Plus Secured Visa® Credit Card offers customers no annual fee which is rare for secured cards.


  • Limited Time Offer: $200 minimum refundable security deposit. Click “Apply Now” to see additional terms and conditions.
  • No annual fee.
  • No credit check to apply. Zero credit risk to apply!
  • Looking to build or rebuild your credit? 2/3 of cardholders receive a 48+ point improvement after making 3 on-time payments
  • Extend your $200 credit line by getting considered for an unsecured credit line increase after 6 months – no additional deposit required!
  • Build your credit history across 3 major credit reporting agencies: Experian, Equifax, and Transunion
  • Fund your card with a low $200 refundable security deposit to get a $200 credit line
  • Fund your security deposit over 60 days with the option to make partial payments

2. Auto loans are Considered Secured Credit

Auto loans are backed by collateral. The collateral is the car that the borrower is purchasing with the loan. If the borrower defaults on the loan, the lender has the right to repossess the car and sell it to recover the funds.

Bad credit auto loans made fast and easy. Purchase your new vehicle on your terms. MaxCarLoan matches bad credit applicants with the best possible auto loans on the Internet.


  • Bad Credit? No Problem.
  • No Application Fees.
  • No Obligations.
  • Fast Decisions.

3. Credit Builder Loans

A credit builder loan is a type of secured loan designed to help people establish or improve their credit history. With a credit builder loan, you borrow a small amount of money and make regular payments over a fixed period.

The lender holds the borrowed amount in a special account, and each on-time payment you make is reported to the credit bureaus. As you make payments, you establish a positive payment history, which can help improve your credit score over time.

Once you’ve paid off the loan in full, the lender releases the funds to you, and you have access to the money you borrowed. Self is a financial technology company that offers credit builder loans.


  • You don’t need money upfront to get the loan.
  • Choose the loan amount that fits their budget and make payments over the course of 12 or 24 months.
  • Payments are held in a certificate of deposit, which is insured by the Federal Deposit Insurance Corp.
  • After all payments are made, you get access to the money minus the finance charges.
  • Self reports your payments to the three major credit bureaus, Equifax, Experian and TransUnion.

4. Home Equity Loans

A home equity loan is a type of loan that allows you to borrow against the equity you have in your home. Home equity loans typically have fixed interest rates and are paid back over a fixed period of time, usually between 5 and 30 years. The interest rate on a home equity loan is often lower than the interest rate on a credit card or unsecured personal loan because the loan is secured by your home.

The interest you pay on a home equity loan may also be tax deductible, but it’s important to consult with a tax professional to understand the specific tax implications.

5. Secured Personal Loans

A secured personal loan is backed by collateral. Lenders can use the collateral to recover the loan if the borrower fails to repay the loan.

Examples of collateral include:

  • Vehicles
  • Home
  • Boat
  • Jewelry
  • Stocks, Bonds
  • Fine art
  • Insurance policy
  • Antiques, Collectibles

Building credit is an important part of establishing financial health and is essential for securing loans, credit cards, and other financial products. It takes time so be patient and continue to make responsible credit decisions to build a strong credit profile.


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