When lenders, insurers and other financial services providers want to make decisions about you, they check your credit history. If you want the best rates on your loans, the best deals on insurance, and, in some cases, access to the best jobs, your credit history needs to reflect the best…
Remember the terrible feeling you got as a kid when your parents wouldn’t let you have a piece of candy or stay up past your bedtime to watch your favorite show? What about later on in life when you’re turned down for the loan you wanted to take out for your new car?
I’m sorry to bring up these painful memories, but the point I’m getting at is that rejection is no fun. It’s never a good feeling to be denied of something you desire. While everyone has been rejected at some point in their life for various reasons, have you ever heard of someone getting denied to open a bank account?
That’s right, it happens. If financial problems plague your past, you may have a difficult time finding a bank that will open an account for you. To open a checking or savings account, you first have to fill out an application. Based on your financial history from the application, the bank then decides if it’s going to allow you to open an account.
According to the Federal Deposit Insurance Corporation (FDIC), there are three main reasons that a bank would deny a person an account:
- Negative screening, such as having negative items in your banking history (bounced checks)
- Insufficient identification
- Poor credit
How do banks obtain this information? The majority of banks in the U.S. use a bank account screening report provided by ChexSystems Inc. ChexSystems uses the information provided to assess the risk institutions have in opening a new account for a person.
While there was most likely nothing you could do to talk your parents into letting you have that piece of candy or stay up past your bedtime, you don’t have to sit back and accept the fact that you were rejected from opening a bank account. There are steps you can take to open the type of account you need.
First, you should start by contacting ChexSystems to obtain a free copy of your report. Under the Fair Credit Reporting Act, you’re allowed one free credit report every 12 months. Once you receive the report, you’ll be able to find out which banks reported and their reasons for doing so.
After finding out why, contact the bank(s) that reported you and see what you need to do to fix your wrongdoings. If you owe a bank or multiple banks money, you’ll need to pay up and ask them to remove their ChexSystems report on you.
After paying off your debt(s), banks have the option to decline removing your name from the ChexSystems report, although they must report to ChexSystems that you paid off your debts.
As with anything else in life, errors can be made. If you think a bank reported you in error, speak up and make your case. If the bank refuses to acknowledge a mistake was made, you’ll need to dispute the information in question with ChexSystems, who is obligated by law to investigate these types of issues.
If following the above steps still doesn’t allow you to open a bank account, you still have other possible options. In most cases, a credit union or local bank may be more flexible and forgiving when it comes to your financial history. Check with them to see if they’ll allow you to open an account.
Another option would be a second-chance account. Also known as an alternative bank account, these are special accounts for people with a troubled financial past. To limit the risk, most come with limitations, such as a limited number of checks.
For some of you, a debit card may be the only thing you’re looking for. If that’s the case, you can purchase a reloadable prepaid card, which allows you to decide how much money you want on the card.
If you’ve been denied the opportunity to open an account, don’t sit back and get that same depressing feeling you got when you couldn’t get that piece of candy.