There are few things as frustrating as going into a bank branch to open a checking account, only to be told that you’re not eligible for a new account because of blemishes on your credit report or because of your name being listed on a Chexsystems report. With the economy being in bad shape, lots of people have taken serious hits when it comes to their finances, and the number of people whose credit has deteriorated has increased dramatically. So now what you get is a lot of people looking for banks that don’t rely on your credit rating to allow you to open an account. Bank accounts with looser requirements are necessary because not only do you need them from a convenience standpoint to do your regular financial transactions, but you also need an account so that you can get your finances back on track because relying on check cashing services to do all your financial transactions is a very expensive option.

Second chance checking accounts

This is where second chance checking accounts come in. If we’re (brutally) honest, we have to tell you that your options will be limited, because as weird as it may sound, financial institutions are not very risk-prone. What you’re looking for is a bank that will offer you a checking account with standard features, but that will be willing to overlook your bad credit. Checking accounts for people with bad credit are not a different product per se: behind the scenes, they work in exactly the same manner. The only difference is that because you’re considered a “higher risk”, you will pay higher fees and service charges compared to people who have “regular” checking accounts.

To open the account, the requirements are minimal (the hardest part is actually finding a bank that doesn’t check credit): have a government-issued ID and a valid Social Security number. This is required because of fraud verification, and also to make sure that the financial institution complies with FINCEN, which is a set of financial requirements to combat terrorism financing and money laundering.

Advantages and features of second chance bank accounts

Like we said previously, second chance checking accounts work the same way a regular bank account does. You will get standard features such as direct deposit, online banking, online bill pay, Visa or Mastercard debit card, ATM transactions, and so on. As for the restrictions, there’s a good chance you will have limited check writing privileges (if at all), and you will certainly not be allowed overdrafts. But considering how those overdraft fees can quickly pile up, we’re not sure that’s a bad thing.

Even though such accounts do come with their drawbacks, they are viable options as long as you remember what got you in trouble in the first place and do your best to manage them well and qualify for the “regular” accounts as fast as possible. Consider the fees as you paying back your way into the good graces of the financial system. In any case, it beats carrying cash everywhere (which is really not safe). Banks that don’t check credit provide a good solution to people looking to get their financial house back in order.

Banks That Don’t Check Credit To Open New Accounts | Second Chance Checking Accounts

A bankruptcy is, by all accounts, a traumatic experience: in most cases you lose a good chunk of your assets, your credit is ruined, and it stays on your report for the next ten years. But that doesn’t mean that you can’t rebuild your financial credibility. After all, companies do it all the time. You just have to be in the right mindset, and look in the right places for resources that are available to you

Fresh Start Checking Accounts

Once you have come out of bankruptcy, you will be able to open new bank accounts. Actually, this is the first thing you should be doing, since as a standard procedure, your bank accounts will be closed when you file for bankruptcy. Once the bankruptcy has been filed and a person’s debts have been charged off, you need to immediately starting to rebuild your credit. A bank account is going to be the first thing you need.

Bank Account After Bankruptcy

The first thing that we want to point out to those asking “can I get a bank account after bankruptcy” is this: a checking account has nothing to do with a bankruptcy unless when you filed for bankruptcy, you included some current bank account you had. When you do this, the bank will place an inquiry on ChexSystems and that is what banks use to determine if they will grant you a bank account at their branch.

Related: Repair your credit after filing for bankruptcy

Now if you have included one or more bank accounts in your filing, don’t despair. Getting a new bank account after bankruptcy is not the easiest thing to do, but it is not impossible if you have a plan. Here’s how you should go about it.

1. Look for banks that don’t check with Chexsystems when opening new accounts, or that check it but don’t necessarily reject you if you have a negative entry. You’ll find that the big boys like Chase or Bank of America won’t really work to accommodate you. You’re much better off looking online or in your community’s smaller regional banks where it’s more likely that someone has the option of overriding a ChexSystems report.
2. Speaking of negative Chexsystems entries, it would be best if you could get rid of those. Chexsystems will typically not respond to a removal request unless it comes from a bank, so you should get your Chexsystems report and contact those institutions with which you have outstanding unpaid balances. Work something out with them, with the agreement that once the debt is paid off, they will write to get you out of Chexsystems’ database. Get that agreement in writing. If this can’t be done, have them at least give you an official note stating that the debt has beenpaid off.
3. If the unpaid account balance was pre-petition (before the filing of bankruptcy) and properly listed in the case, then there is a simple fix. Get a copy of the Notice of Bankruptcy and send it with a cover letter to Chex Systems. If a debt is discharged in bankruptcy, that account must be reported as “$0.00 owed, discharged in bankruptcy.” Bankruptcy should not prevent you from opening a bank account.
4. Open a savings account. There is no issuing checks, so you might have a better chance of being approved for one. It also makes it easier to open a checking account in the future. Actually, if you have a little money available, it’s even better to open a Certificate of Deposit (CD) and offer it as a collateral for any negaative balance on your checking account. This is the ultimate show of good will and will greatly reduce a bank’s reluctance to do business with you.
5. Enroll in a consumer credit course.  Some banks will view this as a positive step in the right direction if you have done this already prior to trying to open your checking account.  These classes teach you how to maintain and manage a checking account properly which banks are well aware of.

By following the above steps, it is not uncommon to get a new bank account within 60 days after a bankruptcy discharge.

Related: Banks that don’t pull your credit report

Opening A New Bank Account After Filing For Bankruptcy

If you’ve been reported to Chexsystems, contrary to what you might have been told, you do have options. This is especially true if you have been unfairly reported. What a lot of people don’t know is that Chexsystems is ruled by the Fair Credit Reporting Act and that opens up some options to you.

The first thing you can do is request a copy of your Chexsystems report. Since they’re bound by the Fair Credit Reporting Act, you’re entitled to a free copy of your report every year. This is obviously excellent for monitoring purposes.

You can land on Chexsystems’ list for a number of reasons: if a bank believes you’ve written a check with insufficient funds, closed an overdrawn bank account, or if you’ve done anything that the bank doesn’t approve of, they will report you. Once your name is on that list, you’re led to believe that it’s supposed to stay there for five years, and that you will only be able to open accounts through second chance checking. But that’s only if you don’t do anything about it.

When you receive your report after requesting it, check it carefully. Make sure that all the information that’s included there is accurate. If, for example, you had an overdraft account that was then closed, and in the meantime you paid it off, the bank is required to mark that it was paid in full. Check whether or not that was reported correctly. Anything that you spot that is incorrect, make a note of it for your next course of action.

Said course of action involves writing a certified letter to Chexsystems, where you dispute whatever is wrong in your report. You should address the letter to

ChexSystems, Inc.

7805 Hudson Road, Suite 100

Woodbury MN 55125

Your Chexsystems report includes a “consumer ID number”. Use that to identify yourself, along with your name, just to make things easier. List the incorrect information, and then the correct information as it should have appeared. Include a short explanation of why the information is wrong, and specify that you’re enclosing documentation. Include whatever proof you have, such as a cancelled check to show payment, a bank statement, or whatever.

Chexsystems must contact whatever bank reported the information, request an investigation, and get back to you in 30 days. If the report is wrong or can’t be verified, it will be removed.

If it’s not removed, you can add a statement to the item explaining your side of the story. Write or fax Chexsystems at the same address above, saying you want to include a consumer statement, and say what you want to appear. It must be less than 100 words, can’t mention the name of another person or business, and should be a clear summary of why the report shouldn’t be counted against you. When you apply for a bank account and the bank pulls your Chexsystems report, they’ll be able to read your statement, so think what you’d like to tell a busy banker about the situation.

If you can’t get off Chexsystems even by disputing and you’re still having trouble opening a bank account, there are non Chexsystems banks that  don’t care whether you’re on it or not. Using one of them may be the simplest solution in that case, until five years pass and Chexsystems finally removes you.

Related: Bank Of America’s Policy Regarding ChexSystems

Get Off Chexsystems

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 Resources: Bad Credit Low Income Loans - Build credit with secured credit cards

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