How or Where do I apply for a credit card with little or bad credit?

My credit score is like 540. I want to raise my credit score and I think this may be one good way to do that, but I just filled out an online application from Capitol One for a credit limit of $300 and got denied. I do not yet have any response from them as to why, but I am just guessing that it's because of my credit score. I have been making payments on a car for the last year and have ALWAYS been on time. Other than that I have really very little debt.What can I do to get my score up to something that I can work with??? Help please.( I am employed and have been for several years, I do have a checking account.)