How To Open A Bank Account With Bad Credit
How To Get A Bank Account With Bad Credit
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:
- You have abused the overdraft on your checking account
- You have cashed one or more bad checks
- You have bad credit
- 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.