One reader asked, “I just got turned down for a credit card. How am I supposed to establish credit, if I can’t get a credit card?”

Great question! It’s very hard to get credit today with our economy the way it is.

First, I would have you apply for a credit card at your own personal bank – the one where you keep your checking and savings accounts. They may be willing to work with you because you already have a relationship.

If your bank isn’t willing to give you a traditional credit card, then you should apply for a secured credit card. A secured credit card is one that is secured or guaranteed by your own bank account.

For example, if you have a savings account with $1,000 in it, then you can get a credit card with a $1,000 limit. The bank will use your savings account as collateral to guarantee your credit card. If you are responsible with the card, you will eventually be eligible for traditional credit cards or loans.

You must ask your bank this one very important question before you apply for a secured credit card: Does the Lender report the secured credit card information to the three major credit reporting agencies: EquiFax, Experian and Trans Union? If they don’t, you’ll want to get a secured card at a different bank. You won’t “establish credit” unless your credit habits are reported to the right agencies.