Opening A Bank Account With Bad Credit? Keep This in Mind

Having a bank account isn’t absolutely essential in today’s world, however, it does make things easier.

For starters, having a checking or savings account keeps your money safer. Carrying large amounts of money on you puts you at a greater risk to lose it. You can call and cancel a debit card, but if you lose $300 bucks cash, it’s gone.

Aside from that, having direct deposit, online banking, and an actual debit card makes paying for everyday things a breeze.

But what if your credit score isn’t the best? Having a credit score of 579 and below is considered poor. You may be wondering if it’s even possible for you to open a bank account

I’m here to tell you that it is possible to open a checking or savings account with bad credit. Having a poor credit score won’t necessarily prevent you from opening a checking or savings account, however, if you have a history of poor money habits from former banks, it could harm you.

What’s more important when it comes to opening a bank account, however, is your ChexSystems score. 

In this article, we’re going to talk about:

  • How bad credit is determined
  • A tool called ChexSystems
  • Options you have if having bad credit or a poor banking history gets in your way.

How Is Bad Credit Determined?

Everyone knows that your credit score is used to determine whether or not you get approved for things such as a car loan or mortgage. When applying for a loan, financial institutions use your credit report to see your history as a borrower. They want to see how good your track record is when it comes to paying back what you borrowed. 

Yes, you can open a bank account with bad credit, but how is bad credit determined in the first place?

Your credit history is tracked by the three major credit bureaus: Equifax, Experian, and TransUnion. The most popular type of credit score is your FICO score; it is ranged on a scale of 300 to 850. While your FICO score is important in terms of obtaining a loan, it’s unlikely that it will hamstring you from opening a bank account.

Banks, however, have their own method of tracking your banking history that is similar to a credit check: ChexSystems.

What Is ChexSystems?

ChexSystems is an agency that reports your previous problems with deposit accounts. These accounts include your checking and savings accounts.

Financial institutions use this report to decide whether to approve or deny your application to open an account. 

Although your ChexSystems report has no direct effect on your credit score, marks on your ChexSystems report signify that you may have had some financial difficulties in the past.

If you’ve had a few financial mishaps in the past, thinking about your ChexSystems report may be a daunting task. However, your report is not set in stone. The information on your ChexSystems Consumer Report only lasts for five years, then it’s completely gone.

So What Is On My ChexSystems Report?

Your ChexSystems report shows all of your prior account activities. The following are some negative things that may be on your ChexSystems report:

  • Unpaid Overdraft Fees
  • Overdrawn Accounts
  • Involuntary Account Closure
  • Account Freezes
  • Suspected Fraud or Identity Theft

ChexSystems is just one of many national consumer reporting agencies that keep track of your banking history. Similar to a FICO score, ChexSystems also has its own grading scale from 100 to 899.

Is It Possible To Check My ChexSystems Report?

It’s very possible that you may have never heard of ChexSystems before. You may be wondering how you can check your report yourself.

The good news is that you can check your ChexSystems report and it’s really quite simple.

Under the Fair Credit Reporting Act (FCRA), you are entitled to a free copy of your ChexSystems report once a year for free. There are multiple ways you can go about this:

  • You can fill out an application online through ChexSystems’ website
  • You can call them at 800-428-9623
  • You can download and fax the form to 602-659-2197
  • You can download and mail the request form ChexSystems Inc., Attn: Consumer Relations, 7805 Hudson Road, Suite 100, Woodbury, MN 55125

Luckily, you still have options if you have both bad credit and a poor ChexSystems report. 

Second Chance Banking

If you’ve been denied a bank account recently based on your ChexSystems report, then a second chance bank account could potentially be an option for you.


What Is A Second Chance Bank Account? 

There are many banks out there that offer “second chance” checking accounts. For this type of account, banks will look past your ChexSystems report as well as your poor banking history. 

This allows you to establish a positive history with ChexSystems as you wait for the negative marks to fall off your report. Generally, however, second chance accounts come with more restrictions and fewer perks.

A major drawback to a second chance account is that you may be subjected to multiple monthly fees. Aside from that, you may also have to maintain a minimum monthly balance or have direct deposit. 


It can be challenging to open a checking account with a poor credit history, but that doesn’t mean it’s not possible. 

Your FICO score and ChexSystems report are both essential components of your life as a consumer. It’s a good idea to maintain your ChexSystems score the same way you treat your credit score. 

Sure, having to open a second chance bank account may seem less than ideal, but it’s not designed to be permanent. If you do find yourself going down that route, you should take the time to focus on making smart financial decisions. 

Perhaps the most attractive quality of a second chance bank account is that many of them offer graduation plans. This means that if you use your account responsibly for a year or two, your bank may upgrade you to a regular checking account.

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Riley Draper