If you’ve been turned down for credit because you have no credit history, or because you have collections, past due payments or a low FICO score, a secured credit card is your best answer. Secured credit cards help rebuild credit, or build first time credit (keep in mind if you have no credit at all, there are options for credit cards if you’re a college student). But what exactly are secured credit cards and how does one apply for them?

The growing amount of debt in the world increased significantly in the past few years. Not everyone has good credit. In fact a growing number of people have very poor credit. Because of the number of poor credit borrowers, it’s been crucial to develop a card that works to be able to use in necessary situations and help repair credit.

A regular credit card is like a signature loan with a revolving line of credit. That means that the card has no collateral and is based solely off the credit of the borrower. A secured card, by comparison, does have collateral. A secured card has a monetary deposit as collateral.

Just because you have bad credit doesn’t automatically qualify you for a secured card. Secured cards have some credit requirements as well. Most secured cards will not, for example, lend to people with recent judgments or open collection accounts. It’s important to ready your credit before applying for a secured card, just as any other loan.

Step 1. Get a credit report from all three credit agencies; Experian, TransUnion and Equifax. All three have a different score related to your accounts and all three may have different credit issues.

Step 2. Check the entire past due, collections, judgments and missed payments for accuracy. Make sure there aren’t any incorrect listings on the credit report before moving to step 3. If there are it’s important to send a letter to the credit bureau immediately.

Step 3. If there are any recent (within 6 months) credit problems, you’ll want to wait to apply for your card. Any applications, approved or unapproved, can negatively affect your credit and if you have poor credit already, you don’t want to apply for a card and get declined.

Step 4. Prepare to have the cash to open the secured card, if it is approved. Many secured cards require a fee along with the application of around $50. This isn’t the only fee, but it’s fairly universal. The amount will differ for each card. You’ll also want to have the deposit amount ready if you’re approved. Normally secured card deposits range from $99 (partial secured card) to $500. A business secured card may have a higher deposit requirement, anywhere from $500-$1500.

A secured card is the first step in rebuilding your credit. There are other steps you can follow to repair it further, such as contacting a credit counselor and reducing your total debt.

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