Can I Get a Checking Account With Bad Credit?
If you are looking to open an account with a bank, online bank or credit union, the last thing you want is to find out your credit report may stop you from doing so. Banking history is one thing, but having access to your funds and being able to make debit card purchases shouldn’t be hindered by a bad credit score.
Can Bad Credit Prevent You from Opening a Checking Account?
As with many financial products, the terms and conditions of opening any banking account can be influenced by the state of your credit. Opening a checking account is typically a pretty straightforward process, however, if you currently have a poor credit history here are some things you should consider:
Though a bad credit score won’t prevent them from opening a bank account it can hinder or slow getting a loan or applying for a credit card.
If the reason you have bad credit includes overdue bills, missed or late payments or high amounts of debt, these are the indicators that may make opening a checking account more difficult.
It’s not impossible to get approved for a new bank account with bad credit, but you may need to supply more paperwork or only have certain allowances made available on the account such as minimum balance requirements or interest rate options.
A bad credit score is considered a VantageScoreof 600 or lower and a FICO score of 699 or lower, so if your score is below these you may want to take steps to improve your overall score with assistance from platforms like CreditStrong.
Banks track how many accounts you have open as well as the activity on those accounts through ChexSystems. A ChexSystems report is a consumer credit reporting agency that tracks activity related to your closed checking, savings, and other deposit accounts at banks and credit unions.
If you have ever had issues with an account, such as a bounced or returned check, you might have a ChexSystems profile which could hurt your ability to open a new checking account depending on your history.
Are There Free Checking Accounts?
You can find free checking accounts at many financial institutions such as banks, online banks and credit unions. Be sure to do your research because although a free checking account just promises no monthly service or maintenance fees this may be dependent on other factors, as well as other charges associated with it.
What You May Have To Pay For With a Checking Account:
Overdraft protection
Monthly maintenance fees
Minimum balance requirements
Paper statement fees
Negative balances
Recommended Banks for Free Checking Accounts:
Final Take To GO: Improving Your Credit Score
Though you can still open a checking account with bad credit, it can potentially be more of a hassle. To avoid this looming financial headache, try taking some of these easy steps to quickly improve your credit score:
Check your credit report so you know your starting point.
Open a line of credit to establish a positive history.
Pay your bills on time or early and do so consistently.
Avoid multiple credit inquiries that can ding your score for no reason.
Keep your credit utilization ratio low.
Don’t close your old credit card accounts for no reason.
Become an authorized user on someone else’s account you trust.
Make sure you have no paid-off negative entries.
FAQ
Here are some answers to frequently asked questions about opening checking accounts with bad credit.
Can you open a checking account with bad credit?
Yes, you can open a checking account with bad credit but it may hinder the process or make it more difficult. This especially applies if the reason you have bad credit includes overdue bills, missed or late payments, high amounts of debt or a poor ChexSystems report
Can you be denied a checking account because of bad credit?
You could be denied if you have bad credit, but typically you'll be able to open a checking account even with a poor credit score, there just may be more things to consider such as banks tracking how many accounts you have open as well as the activity on those accounts through ChexSystems. A ChexSystems report is a consumer credit reporting agency that tracks activity related to your closed checking, savings, and other deposit accounts at banks and credit unions.
Can I open a bank account with a 500 credit score?
Yes, however, a 500 credit score is considered poor as VantageScore considers a bad score to be 600 or lower and a FICO score of 699 or lower, so if your score is below these you may want to take steps to improve your overall score with assistance from platforms like CreditStrong.
This article originally appeared on GOBankingRates.com: Can I Get a Checking Account With Bad Credit?
