Poor Credit and Checking Accounts
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Improving Your Credit Rating
Re-Establishing Credit to Buy a Home
Does anyone know how to get a checking account if your credit is not very good? I have not been able to open a checking account due to credit problems in the past.
Information from Experience
I would like to offer some advice to the person who was not able to open a checking account due to credit problems. I have had some experience with this. Here is what I have learned:
- Usually, checking accounts are refused based on what is called ChexSystems, not your credit report (although banks vary). The last information that I have heard is that about 80% of banks use ChexSystems. When you owe a bank money, like when you have insufficient funds and you have a negative balance and it is not paid back, they can send a report into ChexSystems. Since ChexSystems is not regulated as much as credit-reporting agencies, the banks are not required to report you or to turn down an account applicant because of a bad report. However, once you have anything on your ChexSystems report, most banks will turn you down for a checking account anyway.
- If you have been refused for a checking account based on a ChexSystems report, you are entitled to view your report for free. Go to www.chexhelp.com and request a copy of your report. The site also has information on refuting entries on your report, etc. If there are entries that are in error, you can write to the bank that made the report and request that it be changed. You can also make additions to your report. For example, if you had extenuating circumstances, you can write a letter to that effect and request that it be placed on your report. But banks are not required to be swayed by it, so you may still be refused for an account. The web site above has information on submitting to your file as well.
- To the best of my knowledge, entries are cleared from your ChexSystems report after three years, but you should double-check that with ChexSystems. After that time, the entries are deleted and your report is considered clean. This is how I was able to obtain an account by simply waiting.
- Another option is get a savings account at a bank. If you can prove to be a long standing and good customer, they may be willing to compromise on a checking account. One credit union at which I had a savings account would not even issue an ATM card for the savings account because I was in ChexSystems. It is completely up to the bank.
Based on my personal experience, the best thing to do is get your ChexSystems report, then challenge anything you can and contact banks that have reported you. Compromises can be made. Banks that have reported you can rescind their negative reports or add information about how you have paid your debt, etc. But the most effective method is time. I dealt with cash and money orders until October of this year, when I was able to get a checking account and debit card from US Bank. And I think it taught me to manage my money better and now I know that I can be responsible with my checking account and not have problems like I did when I was younger.
Show Good Faith Steps
Go to your local bank of preference first. Set up an appointment to speak with a new account manager. Explain to him or her that you have awful credit. Then tell them you are prepared to purchase a one-year CD at their bank. The amount may vary. We put down $1,000 for this when we did it three or four years ago. Explain to the new account manager that this CD is in exchange for a checking account opened in your name(s) at the bank. At the end of one year, we had to go in to another meeting with the same account manager. He pulled our bank records and saw that we had not bounced a single check. He let us cash out our CD and we got to keep our checking account. It worked for us.
Checking Account Classes
We recently had problems with our checking accounts due to poor credit as well. In our area, we have local credit unions. You can usually obtain a checking account if you take some special classes. They usually have the information onsite. Once you graduate from these classes, you can now open an account with them. The classes are not free. For us, it cost $35 per person or $60 for a couple. The classes are the basis of how to maintain a checking account, etc.
Credit Union is the Key
You might try a credit union. Some credit unions require you to be employed by a certain employer or industry, but some are not as restrictive. I belong to a credit union with the requirement that you have to live in or be employed in the certain counties that they service. I got my account after being rejected by a couple of banks.
A checking account is the primary tool used to maintain an individual's personal finances. Money Orders or Cashier's Checks can be an expensive alternative to a checking account. However, that might be the only option if the individual has a blemished credit past.
If an individual has a poor credit history, the first thing they need to do is obtain a credit report and review the items listed. What are the problems? Are the problems accurate? And what are the steps to clear up those problems which is usually by paying dated debt?
Do you know your credit score? Get yours now at myFICO.com.
There is a program offer by Consumer Credit Counseling Services, entitled "Get Checking". "Get Checking" is a workshop created to help individuals who have never had a checking account, have a closed checking account, or are opening a new checking account at a participating financial institution. The workshop focuses on successful money management, budgeting, and the mechanics of checking accounts. Contact your nearest CCCS agency and asked about the "Get Checking" program. It will put you one step closer to a checking account.
Take the Next Step
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