Denied a Bank Account?
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If have recently applied for a bank account and were denied due to your bad credit, then you are in the right place. When this happens most people are slightly confused as to how their credit score range has anything to do with their bank account, leaving them frustrated and with unanswered questions.
The term ‘bad credit bank accounts’ also known as ‘second chance banking’ is slightly confusing. At face value your credit score range has nothing to do with your ability to open a checking account with most banks. The things that traditionally go into your credit score (debt to credit ratio, late payments) actually have no impact on which banks you can bank with. There is another type of credit monitoring service (like we don’t have enough!) that specifically looks at how you handle deposit accounts and nothing else. This secondary credit bureau is known as ChexSystems. ChexSystems keeps records of your deposit accounts for up to 5 years. Almost all major banks run your information against ChexSystems records before they approve your bank account. The banks that do not use ChexSystems offer what is known as second chance bank accounts. Second chance banking is simply banks that offer special programs for people who have a negative banking history with ChexSystems, it is a little like lenders that offer bad credit loans.
There are a couple of items that can show up on your ChexSystems report and prevent you from opening a bank account. The first, and most common reason for being denied a bank account, is either having an current open account with a negative balance or a closed account with a negative balance. These are usually the result of overdraft fees from the bank, if you don’t pay the fees and bring the account balance back to positive, you may not be able to open another bank account for up to 5 years. Note: There are currently quite a few overdraft fee lawsuits filed with various banks, some banks like Wells Fargo have actually stopped assessing overdraft fees and instead are just declining transactions.
If you have been denied a bank account, you will need to start looking at banks that offer second chance banking and read up on how to open a bank account with bad credit.
How to Open a Bank Account with Bad Credit
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If you have been denied a bank account due to your credit, you are probably wondering where to turn to. If you have negative marks in your ChexSystems file then you have two choices if you want to open a bank account. There is a third choice of not opening a bank account altogether and just use check cashing places to do your ‘banking’ but the finance charges assess by these places are quite high and is not a economical long term solution.
The first thing you can do is try to dispute the information in your ChexSystems file. You can do this just like you would with any of the other credit bureaus out there. Your chances of getting information removed from your checking account are slim but might be worth the effort. If you are interested in getting a copy of your chexsystems report and trying to resolve a dispute you can do both of those things here.
The second option you have is two find some banks that offer second chance checking. These banks will typically advertise they don’t use chexsystems or there is no credit check. Note: If you are flagged into chexsystems for fraudulent activity you will not be able to open a bank account with the majority of second chance banks
The following banks offer second chance banking. Most of these banks require a monthly fee along with an initial fee to open an account, while it may feel ‘scammy’ to have to pay to open a bank account, they usually assess these fees as a way to offset the risk of taking on customer with poor credit history, just like how you get charged a higher APR on credit card when you have bad credit.
Clicking on any of these links will take you to their website where you can read more about the bank. All of the banks listed below allow you to open a bank account with bad credit.
