Checking Accounts for People with Bad Credit

Opening a checking account can be particularly difficult when you have bad credit; though they are precious few, you have some options. In response to the flood of applicants with bad credit, a number of banks are offering second chance or bad credit checking accounts.

Most banks rely on ChexSystems, Inc. or TeleCheck, which are national databases for checking account histories. These organizations keep track of your checking account history and provide reports to their clients, which include most banks and credit unions. Though originally designed to maintain tabs on those who engage in checking fraud or theft, they now keep records of negative financial histories, meaning a history of bounced checks, failure to pay fees and having your account closed for cause.

These organizations are similar to credit bureaus, however you are usually not aware you have landed in their database until after the damage is done. If you find yourself in their database, it can take five years to remove yourself from the list, meaning that while you are on the list, your chances of opening a checking account with almost any bank or credit union are very slim.

Fortunately, a number of banks offer second chance or bad credit checking accounts for those seeking to rebuild their credit and establish a positive financial history. These checking accounts can help you establish a positive account history with your new bank, giving you the benefits and convenience you typically find in a standard checking account while managing how you access it so that you rebuild your credit and history instead of damaging it further.

They are heavily regulated, however. Most of them require that your account history does not include instances of fraud and that you have paid all of your fees in the past. They might also require that you take a check management class. Your bank may be willing to let you open a second chance checking account. There are also a number of online banks that offer second chance and bad credit checking account.

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