How to graduate from a secured credit card in Canada (and when you're ready)

You're ready to graduate from a secured credit card when your credit score reaches 680 or higher and you've maintained at least 12 months of on-time payments and low utilization. At that point, you can apply for an unsecured card. You can choose to keep or close your secured account, depending on whether you need the deposit back.

Ready to make the switch to an unsecured credit card? Keep reading. 

What to do before you apply for an unsecured card

Before making the switch, make sure your credit profile is ready. Most issuers are looking for consistent, responsible use. Here's what that means in practice:

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1. Pay every bill on time, every month. Payment history is one of the key factors contributing to how your credit score is calculated by credit unions like Equifax and TransUnion. Pro tip: Avoid missing due dates by setting up reminders or automatic payments.

2. Keep your credit utilization low. Experts recommend keeping usage below 30% of your available credit limit. On a $500 limit, that means keeping your balance under $150 when your statement closes.

3. Give it time. Most issuers and credit experts suggest at least 12 months of consistent, responsible use before applying for an upgrade.

What credit score do you need to get an unsecured credit card in Canada?

According to Richard Goyder, Chief Credit Risk Officer at Neo Financial, "You can start thinking of graduating from your secured card when your credit score is 680 or higher."

A score in that range signals to lenders that you've built a reliable credit history—which is exactly what a secured credit card is designed to help you do.

How to make the switch from secured to unsecured credit

The graduation process differs by issuer. Some companies automatically review your account periodically and may invite you to transition. Others require you to take the initiative.

1. Check your credit score. Before applying, use a free tool like Borrowell or Credit Karma to confirm you're in the right range. 

2. Apply for an unsecured card. For Secured Neo Mastercard holders, graduation means applying for a separate unsecured Neo card once your credit is strong enough. As Goyder explains, "When you get to the stage where you think your credit score is strong enough, you can graduate to a fully unsecured card by applying for another Neo credit card."

3. Manage both accounts temporarily. Once approved, you don't need to close your secured card immediately. Keeping it open while you transition can protect your available credit balance and stabilize your score during the switch.

What to do with your old secured credit card

After getting approved for an unsecured card, you face a decision about your secured account. You can close it, or if you don’t need the deposit back urgently, can choose to keep it open. Keeping the account open for a few extra months can cushion your credit profile while you settle into the new card.

Does closing a secured credit card hurt your credit score?

It can, temporarily. Closing the account recovers your security deposit¹ but reduces your total available credit, which raises your utilization ratio. It also shortens your average account age. Both of these factors can nudge your score downward in the short term.

Common questions about graduating from a secured credit card

How long does it take to graduate from a secured credit card?

Most people are ready to upgrade after 12 to 24 months of responsible use. This means making on-time payments and keeping utilization below 30%.

Do I get my deposit back when I close a secured credit card?

Yes. Your security deposit is returned when you close the account in good standing. Timing varies by issuer, typically 30–60 days.

Can I have both a secured and unsecured credit card at the same time?

Yes. Many people keep the secured card open temporarily after getting approved for an unsecured one to avoid a sudden drop in available credit. 

Can you upgrade your existing secured card, or do you have to apply for a new one?

It depends on the issuer. Some automatically review and upgrade accounts. Others, including Neo, require you to apply for a separate unsecured card. Check with your provider before assuming you'll be invited to upgrade.