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 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. Poor credit and obtaining a checking account are not related. Sadly banks still rely on your credit to decide if they will give you a checking account.
It is possible that your actual credit score can effect 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.
With a poor credit score, the few banks that do check this as a requisite for opening an account, will think you are not a good customer and assume you won’t be able to pay your bill or will over draft your account.
So it’s possible to have bad credit while still opening a bank account.
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.
Step 1: 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.
Even if you have poor credit, 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.
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
Step 2: 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.
Here’s what to do:
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.
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