Turned Down for a Credit Card? Consider This Option

A low credit score or an insufficient credit history are two of the most common reasons people get turned down for a credit card. Whatever the cause, if you apply for a card and the company says it doesn't want to do business with you, this can be really disappointing.

The good news is, you don't have to just accept that you'll never be able to access the credit card you want in your wallet. There's a simple option that can help you to become the kind of customer who gets a quick approval when you apply for a card.

Could this type of credit card be the ticket?

If you are denied a credit card as a result of a low credit score or not having a long enough credit history, one of the best options available to you is to apply for a secured credit card.

Secured cards, like the Discover it® Secured Credit Card or the Bank of America® Customized Cash Rewards Secured credit card offer rewards for spending just like other cards do. But more importantly, the cards also report your payment history and borrowing behavior to the credit reporting agencies. This means if you use them responsibly, you can develop a credit file if you don't have one or can start improving a low credit score.

The big difference between secured cards and unsecured cards is that secured cards don't present a risk to lenders, so just about anyone can get one. Unsecured cards can be harder to get.

Why is a secured card a good option for some borrowers?

Secured cards can be a great solution for those who don't have easy access to credit. That's because when you apply for a secured card, a lender has more than just a promise to repay.

When you get an unsecured card, you agree to send a payment out of your checking account for the charges you put on the account. But if you don't pay, then your lender has to go through a lot of hassle to try to get the money -- often sending you to collections or even getting a court judgment against you. This takes time and costs money and lenders don't like to do it, so they tend to check credit and make sure the likelihood of default (nonpayment) is low.

If you get a secured card, though, you have to make a deposit equal to the amount of your credit limit. So if you want to be allowed to borrow up to $500, you'd need to make a deposit of that amount into a special account. If you don't pay your bill, your lender can take the money to cover what you charged.

Because of how secured cards work, lenders often approve applications for people denied other credit. And that opens the door to using the card in a responsible way. If you make your payments on time every month and you keep your credit use to 30% or less of the amount of your credit line, these positive behaviors will be reported to the credit bureaus.

Since paying on time and maintaining a low credit utilization ratio are two of the most important factors in credit scoring, your secured card can help you improve your credit score over time. Eventually, your score should ideally be good enough that you can get the cards you may have been turned down for in the past.

You have little to lose by getting a secured card as long as you have the money for a security deposit and can trust yourself to use the card responsibly. So, if you were denied credit, check out your options for the best secured cards to see if one is right for you.