How do I get a Checking Account with Bad Credit?

For people who have gone through difficult financial times and sustained significant damage to their credit ratings, obtaining any type of bank account can be difficult. This is especially true with checking accounts. Fortunately, there are institutions that will issue a checking account with bad credit, although there may be some restrictions. The process calls for being prepared to work with banks that are less concerned about the state of your credit, and possibly settling for higher monthly fees or the need to maintain a minimum balance for a period of time.

In order to begin your search for a bank that issue a checking account with bad credit, it is a good idea to know what type of background checking the bank uses before approving the account. Some banks will pull credit reports before issuing any type of account. Others rely on a network known as ChexSystems. You may find that banks using the latter service will be more likely to grant you a checking account with bad credit, since this network focuses on reports of insufficient funds or old bank accounts in your name that were written off for some reason. If you have never left an account with a negative balance and do not currently have a checking account that is negative due to insufficient funds charges, there should be no problems securing a checking account.

Depending on the detail found either on your credit report or the ChexSystems report, you may still be able to get a checking account with bad credit, if you meet the qualifications required by the bank. In some cases, this may require the establishment of a savings account that serves as collateral for your checking account. In the event your account falls into a negative balance, funds from the savings account are transferred, covering the overdraft. Along with accepting this restriction, you may also have to maintain a minimum balance in the checking account or pay a penalty whenever that balance falls below that minimum. Many banks that do provide checking accounts in spite of bad credit may also charge higher monthly service charges, allowing the bank to further offset the risk.

One possibly for obtaining a checking account with bad credit is to go through a credit union rather than a bank. Assuming that you are employed in a given industry and can set up a direct deposit for your paycheck, the process may be relatively simple. There are event credit unions that do not limit membership to specific companies or industries. Keep in mind that credit unions will still have qualifications that must be met in order to receive a checking account with bad credit, but those qualifications may be less stringent that those imposed by the bank down the street.

Keep in mind that if your past credit problems were severe and do include reports of old accounts that were written off due to negative balances, establishing a checking account with bad credit may not be possible right now. When this is the case, time may be your best ally. Negative reports eventually fall off credit reports and even ChexSystem reports, leaving you with a clean slate. At that point, securing a checking account will cease to be an issue, and you can obtain an account from just about any bank that you choose.