Yes, you can open a bank account with bad credit.
If you have bad credit, don’t worry – you’re not alone. According to a report by the Federal Reserve, more than one-quarter of Americans have low credit scores. This means that if you’re looking to open a bank account, you may have some difficulty finding a bank that will work with you.
However, there are still plenty of banks that offer checking accounts for people with bad credit.
In this blog post, we’ll discuss what to look for when opening a bank account with bad credit, as well as some of the best second chance checking accounts available. We’ll also cover the requirements needed to open a bank account with bad credit.
How do you know if you have bad credit or what is considered a bad credit score?
Let’s break down how to find your credit score and how to know if you have a bad credit score.
What You Need To Know About Your Credit Score
In this section you will learn about your credit score. We will go over how to check your credit score and how to know if you fall into the bad credit score category.
How To Check Your Credit Score
There are a few ways that you can check your credit score. One way is to check your credit report. You can get a free copy of your credit report from each of the three major credit bureaus – Experian, Equifax, and TransUnion – once per year at AnnualCreditReport.com.
Another way to check your credit score is to use a credit monitoring service like Credit Karma or Mint. These services will give you your credit score for free, as well as provide you with updates if there are any changes to your score.
Related: How To Get Your Free Credit Report
What Is A Bad Credit Score?
A bad credit is any credit score below 630. This includes scores from credit reporting agencies such as Experian, Equifax, and TransUnion.
If you have bad credit, it may be difficult to get approved for a loan, credit card, or mortgage. It can also make it hard to rent an apartment or buy a car. However, having bad credit doesn’t mean that you’re ineligible for a checking account.
You don’t always have to have a bad credit score. A good credit score is possible by using tools to help you increase your credit score. Some of these tools include:
- Adding tradelines to increase your credit score
- Rent Reporting Services to increase your credit score through rent
- How To Use Dispute Letters to remove negative items from your credit report
- The Credit Repair Blueprint To Learn How To Fix Your Credit For Life.
Now that you have learned how to check your credit score and know if you have a bad credit score how does this impact you being able to open a bank account?
Related: The Easiest Ways To Increase Your Credit Score
Why and How Do Banks Check Your Credit Score Before Opening A New Checking Account
Do you know why banks check your credit score before they let you open a new account with them? And what are they looking for?
Let’s take a look at why banks accounts check your credit score before they let you open a checking account.
How Do Banks and Financial Institution Check Your Credit Score?
Some banks will check your credit score to see if you have any outstanding debt that needs to be paid off. They will also check to see if you have any unpaid bills or collections. Banks will often run a ChexSystems report to check your banking history.
What is ChexSystems?
ChexSystems is a system that banks use to track your banking history. This includes things like whether you have ever bounced a check, or overdrawn your account. It also includes information about your credit history and any outstanding debt you may have.
Banks use this information to decide whether or not to approve you for a new account. They want to make sure that you are a responsible customer and will not cause them any problems in the future.
When you apply for a bank account, the financial institution will likely run a soft credit check. This type of credit check won’t impact your credit score and is only used to determine whether or not you’re eligible for an account.
What’s the Difference Between a Hard Credit Check and Soft Credit Check?
A hard credit check or hard inquiry is when a lender pulls your full credit report from one or more of the three main credit bureaus: Experian, Equifax, and TransUnion. This type of check can lower your credit score by a few points and may stay on your report for up to two years.
On the other hand, a soft credit check only pulls information from the credit bureau that bank typically reports to. This type of check doesn’t lower your credit score or impact your credit at all.
Related: 5 Best Student Checking Accounts For College Students
Why Is Opening A Bank Account Difficult If You Have Bad Credit?
Banks use your credit score to determine whether or not you’re a good candidate for a checking account. A bad credit score may lead the bank to believe that you’re more likely to overdraft your account or default on your payments. As a result, they may be less likely to approve you for an account.
Related: How Can I Get A Car Loan With Bad Credit
What Happens If You Open A Bank Account With Bad Credit?
If you open a bank account with bad credit, the bank may require you to put down a deposit. The deposit is usually equal to the amount of your credit limit.
Before we open any new bank accounts let’s learn about what features you should look for in a bank and checking account if you have bad credit.
Checking Account Features To Look For
Now that we have learned about bad credit, why banks look at your credit and banking history and why you might have a hard time opening a bank account let’s look at some of the features you should be looking for.
Monthly Fee
You want to make sure that you are not being charged a high monthly fee. This is one of the most common fees associated with checking accounts. The best way to avoid this fee is to find a checking account that does not have one.
Minimum Account Balances
Another common fee associated with checking accounts is a minimum balance requirement. If you have bad credit, you may not be able to meet this requirement. Look for a checking account that has no minimum balance requirement or has a very low minimum balance requirement.
Direct Deposit
Direct deposit is when your employer deposits your paycheck into your checking account. This is a great way to avoid overdraft fees and keep your account in good standing.
Minimum Deposits
When you open a checking account, the bank will usually require a minimum deposit. This is the amount of money that you must have in your account to keep it open. Look for a checking account that has a low minimum deposit requirement.
Overdraft Fees
Overdraft fees are charges that a bank will charge you for spending more money than you have in your account. Look for a checking account that has no overdraft fees or has very low overdraft fees.
Credit Card
Does the bank offer a credit card? If so, what are the interest rates and fees associated with the credit card?
Debit Cards Or Prepaid Debit Cards
Will you have access to a debit card or a prepaid debit card ? If so, what are the fees associated with using the card?
ATM Fees
Does the bank have ATM locations that you can use without being charged a fee? If not, are the ATM fees reasonable?
Savings Account
Is there a savings account associated with the checking account? If so, what is the interest rate on the savings account?
Mobile Banking
Is mobile banking available? If so, is there a fee associated with using mobile banking?
Free Report
Do they offer you any free reports such as a credit report? If so, how often do they provide these reports?
Cash Management Account
Do they offer a cash management account? If so, what are the fees associated with using the account?
Personal Loans
Do they offer personal loans? If so, what are the interest rates on the loans?
Regular Checking Account
Do they offer a standard checking account that everyone can use with low fees or is it a second chance checking account?
Second Chance Checking Account
A second chance checking account is an opportunity for people with bad credit to rebuild their credit score and improve their financial situation.
Now that you know what to look for when opening a checking account with bad credit, let’s take a look at some of the best second chance checking accounts.
If you want to learn more details about the banking services each bank offers, their fees, requirements and other financial products contact them to learn more.
Now, lets learn where you should open a checking account if you have bad credit.
Best Checking Accounts For Bad Credit
There are a few checking account providers that give people with bad credit a second chance. When researching checking accounts, you should look for the following features:
-No credit check
-No minimum balance requirement
-Free online banking and mobile app
-Low or no monthly fees
-Visa or Mastercard debit card access
-Overdraft protection available
What Are The Best Options For Opening A Bank Account If You Have Bad Credit?
There are a few options available for those with bad credit who are looking to open a checking account. The best places to look for opening a bank with bad credit will be small local banks, credit unions, online banks and some traditional banks.
Best Online Banks For Bad Credit
An online bank or financial technology company offers financial account and tools that are strictly online with no physical locations. These banks tend to have no fees at all or lower fees because they don’t have the overhead of traditional brick-and-mortar banks.
Current Checking Account
Current is an online bank that offers checking and savings accounts with no minimum balance and no monthly fees. They also offer a free debit card and mobile check deposit. To open an account, you will need to provide your name, address, date of birth, Social Security number and email address.
Current was our #1 Choice for Best Free Online Checking Account No Credit Check No Deposit
Chime
One of the most popular online banks is Chime. They offer a Spending account which comes with a Visa debit card and there are no overdraft fees, foreign transaction fees, minimum balance requirements or monthly service fees. You can also get paid up to two days early with direct deposit.
CIT Bank
CIT Bank offers a Savings Builder account that requires a $100 minimum deposit to open. Once you have the account open, you can set up automatic deposits to help reach your savings goals. CIT Bank doesn’t require a minimum balance and there are no monthly fees. They do offer a free mobile app to help you manage your finances on the go.
Axos Bank
Axos Bank offers a Rewards Checking account and essential checking that has no monthly fees, no minimum balance requirements and no foreign transaction fees. You can also earn up to 0.25% cash back on all debit card purchases. They offer a free mobile app to help you manage your finances on the go.
Best Credit Unions For Bad Credit
Credit Unions are a great option if you have bad credit. They are typically more lenient when it comes to approving checking and savings accounts for people with bad credit. The best Credit Unions are:
Navy Federal Credit Union
Navy Federal Credit Union offers a free checking account with no minimum balance requirements and no monthly fees. They also offer a free mobile app to help you manage your finances on the go.
Alliant Credit Union
Alliant Credit Union offers a free checking account with no minimum balance requirements and no monthly fees. They also offer a free mobile app to help you manage your finances on the go.
Best Traditional Banks For Bad Credit
Traditional banks are big banks that are for-profit. They tend to be more strict when it comes to approving checking and savings accounts for people with bad credit. The best traditional banks are:
Wells Fargo
Wells Fargo offers a free checking account with no minimum balance requirements and no monthly fees. They also offer a free mobile app to help you manage your finances on the go.
Related: How To Increase Credit Limit With Wells Fargo
Chase
Chase offers a free checking account with no minimum balance requirements and no monthly fees. They also offer a free mobile app to help you manage your finances on the go.
Bank of America
Bank of America offers a free checking account with no minimum balance requirements and no monthly fees. They also offer a free mobile app to help you manage your finances on the
Best Second Chance Bank Account
Second chance checking accounts are designed specifically for people with bad credit. These accounts typically have fewer fees and offer features such as online and mobile banking. There are also a number of online-only banks that don’t use traditional methods of credit scoring. The best second chance bank account include:
Wells Fargo Second Chance Checking Account
Wells Fargo Second Chance Checking account is designed for people who have had trouble with banking in the past. This account has no monthly service fees and no minimum balance requirements. You’ll also get access to online and mobile banking, as well as a debit card.
Chase Second Chance Checking Account
The Chase Second Chance Checking account is designed for people who have been turned down for a checking account in the past. This account has no monthly service fees, no minimum balance requirements, and comes with a number of features including online and mobile banking. You’ll also get a debit card with this account.
Truist Second Chance Checking Account
Truist Bank, formally known as BB&T, checking account is designed for people who want to rebuild their credit. This account has no annual fee, no monthly maintenance fees, and comes with a number of features including online and mobile banking. You’ll also get a debit card with this account.
KeyBank Second Chance Checking Account
The KeyBank Second Chance checking account is designed for people who have been turned down for a checking account in the past. This account has no monthly maintenance fees, no minimum balance requirements, and comes with a number of features including online and mobile banking. You’ll also get a debit card with this account.
Related: 18 Free Checking Accounts No Credit Check No Deposit
How Can I Open a Bank Account with Bad Credit?
If your credit isn’t in great shape, don’t worry – there are still options for opening a checking or savings account that we mentioned above. Many second-chance banks don’t use ChexSystems or conduct hard credit checks. Instead, they may look at other factors like employment history or current financial situation.
Keep in mind that even if you’re approved for an account, you may be subject to certain restrictions.
Related: How To Rent A House With Bad Credit and Evictions
What Do I Need To Open A Bank Account?
To open a bank account, you’ll need to provide the following:
– A government-issued ID (driver’s license, passport, etc.)
– Your Social Security number
– Proof of your current address (utility bill, lease agreement, etc.)
– Minimum deposit amount (varies by bank)
Once you have all of the required documents and information, you’re ready to open an account!
If you’re still not sure which bank is right for you or if you want to learn more about credit scores in general, head over to our blog. We have tons of articles that can help guide you in the right direction.
The Bottom Line
Now that you know what to look for when opening a checking account with bad credit, be sure to compare different banks and credit unions before choosing one. Once you find the right bank for you, be sure to manage your account responsibly to avoid any future problems.