There’s one thing that everybody knows by now: we’re in the middle of the deepest financial crisis since the Great Depression. The current crisis has even been dubbed “The Great Recession”. The crisis has brought financial hardship to millions of American families who have had to deal with all sorts of unfavorable circumstances.

But there’s no such thing as a totally negative situation. The fact that so many people have had (or are having) financial problems means that some situations that weren’t so widespread have become increasingly common. More and more people have seen their bank accounts get closed and/or their credit go bad because of money problems.

Usually, and especially back in the days, that would mean that you could walk into every bank you see and continuously get rejected for just about every single bank account you apply for. In a lot of cases, people who are denied a checking account have no idea why they can’t open an account, nor do they know how to solve the problem.

Why You Are Being Denied A Checking Account

There are a couple reasons that can come into play here, but it mostly revolves around a number of things:

1. You have abused the overdraft on your checking account
2. You have cashed one or more bad checks
3. You have bad credit
4. You have been found guilty of trying to cash fraudulent checks

In the last case, there’s not much that can be done for you, since even companies that issue prepaid debit cards won’t want to deal with you. Sad to say, but you’re basically on your own on this one.

Now in the other cases, you do have a few options to kind of work around your problem. See, the reason why you can’t open a bank account is that banks have a system set up to protect themselves against people that they deem they don’t want to have as clients, for the reasons we’re specified above. This system works by keeping a record of the people who commit those infractions and making this record available to all banks who subscribe to Chexsystems (this is the company responsible for the compiling the data).

Since 80% of the banks out there subscribe to Chexsystems, that leaves only 20% of them for you to work with. Well actually it might be a little more than that, since a lot of banks do subscribe to Chexsystems, but give themselves a little leeway when it comes to making the decision to open the account or not. This is because Chexsystems only supplies the information; it doesn’t make the decision for hte banks.

How To Open A Bad Credit Checking Account

As you can see, you can’t really escape your bad credit if you’re trying to open a new bank account. It will come back to haunt you. But the good news is that you can still open a checking account even if you’re been reported to Chexsystems. You can get one either from a brick-and-mortar bank or from an online bank.

If you find out that you’re on Chexsystems’ database, you can take some measures to have your name removed. But be aware of the fact that you’re not going to be paid attention to just by either calling or writing them. Since it’s the banks that report you, they’re also the ones that can have your name taken off the database. That usually requires the bank(s) that reported you to send Chexsystems a letter stating that for such and such reason, you’re clear and all issues have been resolved. So you can imagine that it can easily be a very lengthy process. In the meantime, you’re still out of a checking account.

What you can do is look for a bank that does not use Chexsystems. Most large banks won’t even look at you. You have a better chance trying some of the local non-Chexsystems banks in your area. Now don’t walk in there and act like you don’t know that anything is wrong. Be upfront about it and if possible ask to talk to a manager. In any case he’s the one who’s going to be making the decision whether or not to open an account in your favor. Be ready to provide all the basic information that can be required of you. In many cases, before agreeing to open a new account for you, if you have outstanding overdrafts in other banks you will be asked to provide proof that you’ve paid them off. Once that is done, you’ll get your checking account.

If you’re unable to find a local bank to do that, you can look online. Many online banks cater to people who have trouble with Chexsystems. An online search will return lots of results. Just be ready to prepare to sift through lots of offers so you can compare and make an educated decision on which one will suit you best.

Yet another option is to get a second chance checking account. These can come in several flavors. They’re accounts that are designed for people who have poor credit or are otherwise in trouble with Chexsystems. But beware that these types of accounts do come with some restrictions. One restriction could be that it will take more time for a cashed check to be fully deposited into your account. The banks know that they are taking on a higher risk when they are opening an account for someone with bad credit. In order to decrease the amount of risk, they will impose a certain number of limits on what you can do with the account. But as a rule, you will have access to ATM transactions, online banking and online bill pay, as well as direct deposit. Not all financial institutions have the same rules for their second chance checking accounts. So it’s your responsibility to shop around and compare different banks to make sure you are getting the best deal.

Forget about free checking, you will most likely have to pay a monthly fee. You will also have to be ready to pay certain other fees. This is because the banks view you as a risk and will charge you in order to be compensated for taking that risk.

But even if you do get to open a bad credit checking account, don’t rest on your laurels and do what it takes to get your name off the Chexsystems database and/or repair your credit so that you are able, in the near future, to open a regular checking account.

How To Open A Bank Account With Bad Credit

According to the latest available statistics, ChexSystems is doing business with roughly 80% of the banks and credit unions out there. Maybe we’re different, but while most people tend to focus on the 80% figure, we tend to see things the other way around. And the other way around is simply that there are about 20% of the banks and credit unions out there that don’t use ChexSystems. If you stop and think about it, that’s quite a lot of banks! Now we’re not going to lie to you and tell you that those non-ChexSystems banks are popping up in every corner, but if we tell you that there’s a good chance that there are a few in your area, we won’t be lying to you either.

You know the deal: sometimes there’s a company out there that ventures off the beaten path, in order to give its customers a chance at something they really need. In other words, the company takes a risk, in order to make some money by serving a neglected portion of the population. So it is with banks that offer checking accounts for people with bad credit. Because the vast majority of banks out there use ChexSystems to determine whether or not they will open a checking account for a new customer, people with a negative record are left out in the cold.

While it might have been easy to turn away people when times were good, things are different now. The economic crisis means that a lot of people have fallen on hard times and have ended up with negative marks on their ChexSystems record. That doesn’t necessarily mean that they wouldn’t be good customers for the banks and/or credit unions. So those financial institutions have started to try and look beyond this simple aspect. There are now some that simply don’t check your ChexSystems record. Some others do, but also look at other financial information before they make their decision. What that means is that banks do open checking accounts for people with bad credit, so you can still get a second chance checking account and be able to benefit from banking services.

Now it’s important to point out that all banks are definitely not created equal. If you’re going to open a fresh start checking account a non-ChexSystems bank, there’s a few things you need to make sure are kosher, because all it takes is for you to fall on one bad apple, and you’re pretty much screwed. Here’s how to find a “bank without ChexSystems”

Finding Good Banks That Do Not Use Chexsystems

1. The most important part of finding a non-ChexSystems bank is, of course, doing your homework to make sure that the bank(s) you’re considering giving your business to are INDEED not going to run your ChexSystems report. Sometimes, and especially when they’re in a situation where they’re opening a lot of accounts in a short period of time, they will open up the account, pending verification. After running the scan, and they find negative marks on your report, your account will be closed. Period. Or, (and that’s even more embarrassing), if the bank checks on the spot, you will be declined in public! So make sure you have your facts right.
2. The second most important thing is that, just because you’re looking for a bank that doesn’t run your ChexSystems report doesn’t mean that you should settle for just ANY bank that you find. You still need the protection that comes with that financial institution being FDIC insured. So you need to have proof that the bank is FDIC insured before you open that checking account. In the case of credit unions, they have to be NCUA insured (that’s the equivalent of FDIC insurance, but for credit unions).
3. Finally, make sure that you’re not going to get some crippled service. If you can’t get the same (or almost the same) level of convenience, then it kinda defeats the purpose to go to such great lengths. You will need to get at least the following: check writing privileges, Visa- or Mastercard-branded debit card, and online banking. Also take a good look at their fee structure, in order to make sure that you’re not getting nickel-and-dimed.

Being reported to ChexSystems doesn’t necessarily have to mean that your financial life becomes a living hell. As previously stated, there are many financial institutions (banks and credit unions alike) that will open a second chance checking account in your area for you regardless of, or in spite of, your ChexSystems profile. All you need is to do your homework and find the reliable ones that will fit you best.

© “Banks Without Chex Systems” | How To Find A Good Second Chance Bank

The banking industry relies on a few companies to do its risk management, the most well-known of which is ChexSystems. This company keeps a record of past blemishes in your banking history and if you were to go open a bank account, this information is available to the participating banks and credit unions and will likely result in them refusing to open an account for you. Fresh start checking accounts can be opened, but of course they comes at a certain cost.

Bad Credit’s Impact On Your Banking Options

Now what a lot of people overlook is the fact that a bad credit history is also one of the factors that can put you in a situation where you can’t open a bank account. It’s obvious that being rejected for a bank account is not a pleasant experience, but when the basis of your rejection is bad credit, it’s sort of frustrating. In all honesty, opening a checking account has no connection whatsoever with your credit. But many banks have decided that having bad credit makes you ineligible for a checking account. A bad credit history should not affect your ability to open a checking account, although it does make sense that it would block you from having access to some bank account options like overdraft, personal line of credit, and so on…

Why Banks Turn Down People With Bad Credit

They base their position on the assumption that you will be a poor customer. They expect that you will overdraw your account because you don’t have enough money to pay your bills (as evidenced by your poor bill-paying history on your credit report). Returning your checks will generate fees on your account, which you may not be able to pay. Paying them will overdraw your account and you may not be able to pay back. Either way, they might have to end up closing the account and reporting you to ChexSystems, so they’d rather not open the account to begin with. In the end, many people with bad credit can’t open checking accounts, and that’s not a good position to be in.

Banks That Do Not Use ChexSystems For People With Poor Credit

If you have poor credit and need to have access to a checking account, you need to find those banks that offer second chance checking accounts, also known as fresh start checking accounts. They usually come with their own set of restrictions (you can’t overdraft the accounts and have limited check writing privileges) and costs (minimum opening balance, minimum balance, monthly fee), but it’s such a wide and largely untapped market that competition is picking up. Which means that you can find a bad credit checking account with check writing, no minimum balance, and a reasonable monthly fee of around $5.

Your best bet is to look online. This is such an ever-changing field that no list could realistically be kept 100% accurate. But whatever you decide to do, use the internet to do some comparison shopping, so that you can get a poor credit checking account that works best for you.

Related Resource: Bad Credit Low Income Loans

© Checking Accounts For People With Bad Credit