Having a messed up credit history is one of the fastest ways to get yourself blacklisted from opening a checking account. It’s not fair at all, but it’s reality. Most banks will not accept new applicants that could potentially be a credit risk in the future. So, how can your bad credit history affect your chances of opening a checking account?
Your credit score tells of the way you manage your finances and how you pay your bills. If you have a bad credit score and you often overdraw your bank account, you may have to deal with rejections when it comes to opening new checking accounts. There is no denying that banks probably assume the worst with a bad credit score, and that they base their judgment on your financial history. They think if the person cannot pay their bills on time, they may end up overdrafting their new account.
Individuals with this problem are being turned down daily by banking institutions. You must wonder how these banks know about your credit history. It’s pretty simple. They simply check with Chexsystems, a service that lists people who have a bad credit history or have made bad decisions with their former bank accounts. Being listed on Chexsystems for five years may not be significant to you until you try applying for a bank account and realize that being listed on Chexsystems could be the reason why you get rejected at every turn.
On the plus side, you can still convince the bank that you have been behaving yourself even if you’re listed on Chexsystems. But this will take some doing. Banks tend to budge a bit more if they see that you have been listed for about 3 or 4 years, and you’re now ready to start afresh.
There are also banks that don’t use Chexsystems and simply go for a straight investigation of your banking history. The thing is, banks today are more wary of people who try to game the system. There are people who simply open accounts after accounts so they can overdraft and never pay what they owe.
Banks have so many requirements nowadays, it’s a wonder how some people still manage to open checking accounts.
If a bank really wants your business and they see that your name is on Chexsystems, they may give you a chance to open a bank account if you agree to more stringent banking terms. This is often referred to as ‘second chance banking account’, which the banks offer to those who have bad credit history. A lot of people have already availed of this service from some banks. The second chance accounts charge more fees for late payments than normal accounts, but people would rather have that than lose another checking account.
You may even keep another credit card. Start with a low limit card then prove to the bank that you can pay on time, and that you have learned your lesson. Your credit limit will eventually be raised by the creditors.
A second chance checking account with bad credit works for most people. This is because these people have already learned their lesson. They are not likely to throw away a second chance that the bank has given them by messing up again. With over 90% of banks running credit checks nowadays, most people with bad credit simply have no choice.