We prefer a bank account to keep our money safe but many customers do not yet know how helpful it can be when they want to improve their poor credit standing.
There are many banks that allow you to open an account with bad credit and report to bureaus as well so you boost your credit score over time. If you dont know much about second-chance bank accounts, then you have come to the right post!
First of all, let us give you a quick overview of why bad credit can be an issue then we’ll talk more about how you can open a bank account to solve this problem.
Bad Credit Can Have Serious Impact On Your Financial Standing
Poor credit score not only makes it difficult to get approval for good credit cards but will also be an obstacle when you wish to open a new bank account. This is because most financial institutes will run a credit check to make sure you can manage finances responsibly.
Since your bad credit score will reflect otherwise, it will become difficult to score approval.
Banks hesitate to accept bad credit customers as they worry that they can overdraw from their account and then fail to deal with overdraft fees.
How Can a Bank Account Help When You Are Facing a Poor Credit Score
First of all, there are banks that dont run a credit check when opening a checking account and therefore dont reject your application based on credit scores. These banks typically dont rely on a Chexsystems report that is responsible for assigning a score to you depending on your banking history.
When you apply for a checking account here, there are high chances that you will be approved and this can kickstart your credit building journey right away.
Secondly, most banks report to credit bureaus. This means once you start maintaining good spending habits, there are fair chances that you will be able to improve your credit score quickly when your report is updated.
The last, and perhaps the most important benefit, of choosing a new bank account for bad credit is that it will pave the way for you to apply for better credit cards and for regular checking accounts in the future.
So, How Can Open a Bank Account With Bad Credit?
These types of checking accounts offer all the services that a regular checking account does. The only downside is that they are deprived of some basic perks such as overdrafts and checks.
The first step towards opening an account in such banks is to note down which institutes offer second-chance bank accounts or accounts for customers with poor credit scores. As you may have noted, this feature is not presented by all the banks in the US.
When you are choosing a bank, make sure its terms and conditions would help you to ease back into healthy banking life.
After that, you can contact their customer support team that will guide you on how to apply for the account. You would have to submit certain documents and stay in touch with the bank to obtain any additional information that might be needed.
Some important things to look into when opening an account at any bank includes
- Its saving account requirements
- All hidden fees
- The overdraft allowance
Most banks will request you to open a savings account first so they can monitor how well you can maintain your spending habits. Other than that, hidden fees can be a big deal. You must ask the bank to share all the details regarding expenditure such as any fee for online services, paper statements, etc.
Additionally, new bank accounts for bad credit may also stop you from making overdrafts. This is a protective feature that ensures that new customers dont abuse their funds and end up under debt later on.
After taking all of these things into consideration, you will have to submit a photo ID and social security number. Moreover, you will be asked to make the minimum deposit into your bank account and that would complete the process!
The Bottom Line
Bad credit situation is not a dead end. There are a few steps that you can take to improve your financial standing and the first thing to do is consider opening a bank account for bad credit in a reputable institution.
It might take some time for you to find the right choice but once you have short-listed good banks, the application process is easy and straightforward! Before you know it, you will be back on track with your healthy financial life.
