How bad is your credit? You may be surprised. Before applying for any type of credit, it's important to check your credit score to get an accurate picture of where you stand. If you were recently denied credit, you should be eligible to receive a free credit report from whichever credit bureau was contacted in the decision. Often, the rejecting lender will mail you instructions on how to request your free report. Many banks also offer free credit score checks for customers, and several popular consumer sites offer free credit reports once you sign up for a site account. Beware of sites promising free credit reports in exchange for paid credit monitoring subscriptions. You don't have to pay for your credit report, so don't be fooled.

Just because something appears on your credit report doesn't make it true. After obtaining your report, check it for accuracy. Verify that the accounts listed actually belong to you and that all reported information is correct. Appeal inaccurate information. You can even ask prior lenders to remove negative marks on your credit report if you've ultimately made good on your debt. If you're polite and courteous, some lenders may accommodate your request.

If you have bad credit and are looking for a credit card, you might be tempted to apply for a multitude in the hope that one sticks. Resist the temptation. With every application, a hard inquiry will appear on your credit report and can stay there for up to a year, negatively impacting your credit even further. Research credit cards of interest, and don't apply for any requiring a high credit score. Most financial companies list the minimum credit score required for approval, as well as what credit bureau they use to obtain the score. Apply only for cards that suit your particular credit situation.

Not all credit cards are created equal. Some have better approval odds than others. In particular, some financial institutions target their credit cards to people with poor credit. These cards have less stringent qualifications, but generally lower credit limits and higher interest rates. They also tend to have steeper late charges. Many have annual fees. It's a case of risk versus reward -- if you're looking for a card to have in case of emergency or want to rebuild credit, these cards might be for you.

Retail stores and even online retailers often approve people with lower credit scores. Primarily, these credit cards are only for use in one particular chain, although some can be used at several chains of an umbrella company. Your favorite retailer may approve a credit card for you, but be aware: these cards tend to have higher interest rates and often start with a low available credit balance. However, that will increase over time as you make regular, on-time payments.

A secured credit card is a good option for someone looking to rebuild their credit. Secured credit cards essentially take a security deposit to hold against your line of credit. For example, you put $250 down and get a credit limit of $250. It's easy to dismiss this option, but many secured credit cards report regularly to credit bureaus so if you make on-time payments, it's a good way to repair your credit. If and when you close the card, as long as your balance is paid off, the company will return your security deposit.

If you can't get credit approval on your own, perhaps family can help. If you have a spouse, parent, or sibling willing to add you onto their own credit card account, or even to co-sign a new account, this is another possibility. For many people though, money and family don't mix. Create a plan to assure you make on-time payments so as not to jeopardize personal relationships.

Watch out for subprime credit cards, also called fee harvester credit cards. They often charge high, upfront fees, sometimes even before issuing the credit card. Make sure the financial institution you're applying to is a reputable company with a good track record for customer service.

Once you have a credit card, be smart with it. Don't use it frivolously, and pay as much off as possible each month. Set money aside in a dedicated account for payments in case of an emergency such as job loss. Leave department store cards home in a secure place to avoid the temptation of unnecessary spending.

The good news is that bad credit isn't forever. There are things you can do to improve your credit score. Pay down current debt, make on-time payments, and use any new credit wisely. It won't be long before you find yourself in a better position to apply for new credit.