Bad Credit Bank Accounts
In most cases, you can open a bank account at any bank regardless of your credit. This is because most banks and credit unions use ChexSystems to verify new accounts. There are some banks that actually use both ChexSystems and a credit report, but this is not common.
Technically speaking, ChexSystems is a CRA (Consumer Reporting Agency) even though the data it collects is a bit different than the 3 major credit bureaus. The main difference between the credit bureaus and ChexSystems, is that the credit bureaus (Experian, Equifax and Transunion) only keeps track of a consumer’s credit history, while ChexSystems maintains a database of banking histories. And unlike the credit bureaus, ChexSystems does not keep records of accounts in good standings, which means it only keeps records of consumers who have had a negative banking history.
Negative banking histories can include accounts that have been reported for excessive NSFs, outstanding debt, account abuse and fraud.
So, can a person with terrible credit open a bank account? Yes, as long as the bank does not pull your credit report.
How to Get a Checking Account When Your Credit is Bad
Bad credit bank accounts are the name given to bank accounts for those who have experienced credit problems in the past. You have to work your way back to good credit with your bank account. In the meantime you will have to accept being in the bank’s bad books for a while.
A checking account can be described as being a secure account that is held by a financial institution, be it a bank or a credit union. Being in possession of such an account allows you the opportunity to deposit and withdraw money from the account in a safe and secure manner, as long as there are enough funds in the account to do so. The funds in the account are supplied by the account holder. If you have bad credit or have written checks in the past when there was not enough money in your account to cover them then finding a bank who will take a chance on you can be difficult.
As an individual with bad credit and/or past banking problems you are considered a high risk customer and some financial institutions will not be interested in doing business with you. However do not lose heart because you can look for a bank or credit union that makes bad credit bank accounts available to its customers that are down on their luck.
Here is what you need to do in order to open a bad credit bank account:
First things first. You should visit the Chexsystems website at www.chexhelp.com and go through the process that is required to request a copy of your Chexsystem report if you have tried to open a checking account anytime in the past three months and have been declined. You most likely have a file in the Chexsystems if this has happened to you.
The Chexsystems is a reporting agency that banks use to see if a potential customer has had issues in the past such as bouncing checks on a regular basis. Banks are the ones that report their problematic customers to the Chexsystem and then other financial institutions use the system’s database to check up on those who wish to open new accounts.
You are entitled to receive one free annual report on yourself from the Chexsystems website. It is your right and you should exercise that right.
If you suspect that any fraudulent activity by another party has landed you in the bad books at the Chexsystem then you should report this to your bank and the local police. You will also need to get in touch with the Chexsystem and the credit agencies to let them know what has taken place.
If you owe money to a financial institution that you banked with in the past then you need to pay what you owe and get that cleared up. If you do not know for sure how much you owe then find out from the report at the Chexsystem. Once you do that then that negative item will be removed from your file. For the purposes of opening up a new checking account request that the bank you owed the money to write a letter stating that the debt has been paid in full. This will prove beneficial in opening a bad credit bank account.
Second Chance Banking Accounts
When it comes to bring approved for a bad credit bank account, a second chance bank account is your best option. The second chance account is geared towards high risk customers who need, as the name states, a second chance to improve upon their bank history and banking habits.
Find out if any of the lending institutions in your town or city offer such an account. You may wish to go online and research this as opposed to going door to door and visiting different banks. In most cases this account will come with a small fee charged monthly. There are also online banks that offer second chance banking accounts. Examples of banks that offer these types of bad credit bank accounts to their customers looking to make a fresh start include Chase Bank, Compass Bank, Century Bank and Trust, Etrade Brokerage, United Community Bank and the Woodforest Bank.