Checking accounts are necessary in today’s world.
Unfortunately, if you have a history of risky financial behavior (which may include bad credit), you can find yourself barred from opening a checking or savings account.
Your credit history (which is tracked by the 3 major credit bureaus) affects your ability to get credit — credit cards, loans, mortgages, etc — but it does not directly affect your ability to open a bank account.
Financial institutions have their own version of a credit check that tracks your banking behavior rather than your credit history. This behavior is recorded by most of the major banks through the following agencies:
ChexSystems is the most ubiquitous financial history tracking agency of all three with roughly 80 percent of the banking institutions using it to vet potential clients.
It’s never a good experience when the bank denies you an account simply because you have a few problems with your credit.
The good news for those with bad credit history is that poor credit and obtaining a checking account are not directly related.
But in some cases (depending on the institution) banks may rely on your credit to decide if they will give you a checking account. It is possible that your actual credit score can affect your ability to open a bank account, IF ChexSystems or Telecheck is not used by a bank. In this situation banks may opt to look at your credit history instead — but this is dependent on banking policy.
And it’s also possible to have good credit while also not being able to open a bank account because you have a ChexSystem record.
So, if you have BAD Credit and need to open a bank account, here are your options.
Option: Try Opening a Regular Bank Account
This is the first thing you should try.
If you can open a bank account right away, you are done and problem is solved.
Note, you will likely be unable to open a bank account if you have the following:
- racked up overdraft fees and not paid the bank for these
- committed some sort of bank fraud in the past
- owe the bank money
These will give you a ChexSystems record that will stop most banks from giving you an account.
If you have a Chexsystems record and can’t fix that record, then you need to find a bank that does not use ChexSystems.
Credit Unions are a good bet as are smaller, community banks. Some major banks don’t use ChexSystems but may use Telecheck or EWS.
If EWS is used, your credit history may come into play.
If you have a ChexSystems Record
The key here is to open an account that does not use ChexSystems (or doesn’t flat out reject you based on a ChexSystems record). Your best bet here are local banks or credit unions rather than big, national bank branches.
You can apply for BBVA Compass Free Checking (if you live in Alabama, Arizona, California, Colorado, Florida, New Mexico, or Texas). Don’t live in one of these states, if you don’t live in these states, try the BBVA Compass ClearConnect Checking which is offered nationally and has no monthly fees.
Now the good news here is BBVA often ignores ChexSystems records, so you might be good to go. If, however, they reject your application, BBVA will offer you their Compass Easy Checking Account, which is a Second Chance account. So you stand a very good chance of getting a bank account.
For more recommendations, see our Non ChexSystems Banks list.
If you have Bad Credit History but Good Banking History
Even if you have poor credit history, the good news is that as long as you have not mismanaged previous bank accounts and established a poor banking record, you should be able to open a new (regular) checking account with most national and local banks. So try any bank and you should be fine.
Option: Open a Second Chance Account
IF the following has not worked so far…
- You can’t open a regular account (and you’ve tried many times with different banks)
- You have done a ChexSystems check and you DO have a record
- You are unable or willing to fix your ChexSystems record (i.e. you can’t pay a bank money you owe them and request them to remove it or you can’t dispute your record)
- You can’t find a bank that does not use ChexSystems (note, you SHOULD be able to if you look around enough)
THEN you need to look at opening a Second Chance Checking Account.
What is a Second Chance Checking Account
These are basically special bank accounts offered by many banks that are for people who are unable to open regular bank accounts because of credit or ChexSystems issues.
They function just like regular bank accounts, but may have additional limitations imposed on them and additional fees.
However, if you prove yourself over a year or two, the banks will upgrade you to a regular bank account.
Many banks, both national and local, do offer these special for people who can’t open a regular bank account. This is more than likely because those people have a ChexSystems record, but there may be other reasons as well.
If you can’t open a regular account (and you’ve tried and tried with different banks first), then your best bet is to find a bank that offers a Second Chance Account.
Second Chance Account Features
Some second chance account offer Direct Deposit. It’s also possible to get a Visa Debit Card (or MasterCard Debit Card). Unfortunately, you won’t be able to write checks from a Second Chance account. Still, this kind is excellent if you want to improve your credit. After a year, apply for a normal bank account. You should be approved.
Where to Find a 2nd Chance Account
I recommend looking at the BBVA Compass Easy Checking which BBVA will offer you if you apply but are rejected for another one of their checking accounts first.
You can also look at banks like Wells Fargo and TD AMERITRADE which do offer some second chance checking account options.
Option: Check ChexSystems Report (and try to get records removed)
The idea here is to get your credit and chexystems reports, look at them, and see if you can fix anything on the reports.
Fixing can mean:
- finding an error and reporting that error to get it removed (credit report or chexsystems report)
- disputing something about that report (credit report or chexsystems report)
- finding the bank who may have added a record regarded owed payment, then paying the bank what’s owed to get record removed (ChexSystems report)
Fixing will mean an improved score (ChexSystems or Credit Score) and may improve your ability to OPEN new bank accounts.
How to Dispute Your ChexSystems Report
1) Request Your ChexSystems Report
IF you are unable to open a regular bank account, then it’s likely you have a ChexSystems record — regardless of your good credit or bad credit.
You need to request your FREE ChexSystems report and see what it says. You are allowed one free report each year.
Look at the report and make sure it’s correct. If you spot errors, DISPUTE them and you may be able to clear your ChexSystems record enough to be able to open a new bank account.
If your ChexSystems record exists and you can’t dispute it, you are going to have to wait 5 years from the time the record is added for the record to be dropped.
2) Pay Off Any Owed Bank Fees and Request Bank to Remove Record
IN the event you have a ChexSystems record and it relates to owing a bank some money, contact the bank and PAY what you owe off. Banks can get records they’ve added to ChexSystems removed and may do so if you pay what you owe.
This may fix your record.
If successful, you may be able to open a new bank account.
So assuming you find you owe a bank money, pay that bank what you owe, then request the bank to remove the ChexSystems record, you can then try opening a new bank account once you verify that information has been removed from your ChexSystems Record.
3) Check Your Credit Report
While many banks do not actually do credit checks, some banks may depending on policy. So bad or poor credit can still hinder your ability to open a new bank account even though many banks do use ChexSystems and NOT your credit history as the main determinant as to your eligibility.
Request a credit check to see where you stand with your credit history. You might as well know what it is because banks may look at it too.
These days, you don’t need to pay to see your credit scores anymore. Use a completely free service such as Credit Sesame which gives you access to your credit score without paying a dime (or needing to sign up with a credit card).
Once you obtain your credit report, review it for any errors. Even small errors can affect your score and an increase will improve your chances of opening a checking account online if the bank does a credit check on you prior to opening an account.
Again, your credit report is not essential here, but it’s still a good idea to know what it says — so we recommend you check it first.
Option: Open an Online-Only Bank Account
If you are not able to open a basic account try using an internet bank (i.e. online only bank account). You may need to open with a larger deposit but these banks often do not require any credit check (or if they do, they may accept poor credit) and they may not use ChexSystems.
Again, it depends on the actual bank, but it’s worth a shot trying.
Some legitimate internet banks are ING Direct, HSBC Internet Account and Emigrant Direct Internet.
Read our Best Online Bank Accounts article for some recommendations
Option: Open An Investment Bank Account
If you are not successful opening the regular bank accounts, second chance accounts, internet accounts, and can’t find a bank that does not use ChexSystems, then you have one more option: try to open an investment account (Merrill Lynch, Fidelity).
TD Ameritrade is known to give out accounts. You’ll need to first add TD’s investment account then once you get it, add a TD Checking account on as an option. This is a under-the-radar way of getting a full checking account.
These investment accounts need large opening deposits but usually offer an additional checking account. Credit scored are not used to determine if you can get this type of account.
Option: Get a Prepaid Debit Card
If all else fails and you absolutely are unable to open any sort of bank account, anywhere, but you need access to BANKING, such as the ability to deposit money to an account online and to withdraw that money from ATM’s or to make purchase on a debit card, consider getting a prepaid debit card.
Something like the Green Dot Bank Prepaid Debit Card.
What can you do with these?
- Receive Payments / Money to an account
- Send payments online
- Spend the money via a card at stores
- Withdraw cash via ATM’s
But there’s a catch, right?
You’ll pay more money likely in the form of transactional fees. That means you’ll have to pay each time you make a withdrawal via ATM or reload money onto the card.
But it’s a small price to pay for having a bank account like service that you can use.
Some prepaid debit cards may also function like a prepaid credit card these days — you can also use them as prepaid credit cards to make purchases online with the credit card number — as well as allowing normal debit card features. These are sometimes called Prepaid Visa Debit Cards.
Prepaid Debit cards are not as good as a bank account, BUT if you can’t get a bank account, they WILL work in a pinch as a substitute.
Option: A Secured Credit Card
A secured credit card is basically a credit card with a held deposit you put down on it. That deposit is held and becomes your credit limit. You use the card like a regular credit card.
As this is a credit card, you can add money to it, transfer money from it, use it in stores and even withdrawal via ATM’s.
Look at an easy to get secured card with decent terms like the Open Sky Secured Visa Card.
The benefit is that secured credit cards, unlike prepaid debit cards, don’t usually have transactional fees. And you get the side benefits offered by credit card (travel insurance, extended warranties, fraud protection) depending on the type of card and the bank offering the card.
The downside is that you if you want to withdraw cash from the card, you’ll likely pay a sharp interest rate by using a credit card to do this.
The Final Word
We’ve found that the simplest method is opening a checking account if you have bad banking history is to just find a bank that does not use ChexSystems. Or a second chance account offering.
This will give you a regular bank account without any limitations or any extra costs that may be associated with second chance, internet, or investment accounts.
Again, we recommend looking at BBVA’s Checking Accounts. You might just luck out and get a regular bank account.
If you JUST have bad credit but no ChexSystems record, then you can still easily open a regular bank account pretty much anywhere you try.
Once you DO manage to open a bank account, make sure you PAY all fees, don’t rack up any overdrafts, and don’t write checks you can’t cash or commit any sort of banking fraud. If you have a ChexSystems record, it takes about 5 years for the records to be tossed — so as long as you practice GOOD banking, your ChexSystems record will improve over time.
If you have a ChexSystems record, it takes about 5 years for the records to be tossed — so as long as you practice GOOD banking, your ChexSystems record will improve over time.
If you have bad credit, you should also make an attempt to improve your credit. Credit History, while not as important for opening a bank account, is vital if
Credit History, while not as important for opening a bank account, is vital if you want to get any sort of loan or access to some credit in the future. Good credit also means you will pay much less interest. So make sure you improve your credit if you credit is bad!
Good credit also means you will pay much less interest. So make sure you improve your credit if you credit is bad!