Typically people who have issues getting credit cards use debit cards as a "credit card". When I worked at a hotel people couldn't understand why there was a hold on their card since they would be paying cash at checkout and if they didn't have enough money to cover the charges that it would decline (unless they had overdraft protection -which was a whole other matter as banks used to be um not as open about advising that in some cases overdraft protection was a high interest loan to prevent the charge from being declined) ...
I understand that for folks that can't get a regular CC, but I know lots of folks who easily could get a CC still insist on using the Debit.
Prepaid or Reloadable cards like a Bluebird would seem to be a perfect alternative for those who cant' or don't want to use a regular CC
and avoid some fo the major downsides of a Debit.