Bad Credit Checking Accounts

There's one major thing that sets second chance checking accounts apart from regular checking accounts is that there's no credit check required prior to opening them. They don't check your credit history, and they don't necessarily rely on a Chexsystems report to make their decision either. The banking industry has decided that if, for whatever reason, your name is listed on Chexsystems, then you're not eligible to get a checking account.

When stuff like that happens, there's really only two options. Well actually, three, but the third one is not really an active option. It just involves waiting and let time do its thing. After five years, your name gets removed from the database and you're good to go. But isn't that quite a long wait? During all those years, you can't have access to almost any basic financial services, and have to carry cash everywhere you go.

Anyway, back to the two options. You can either fight to have your name removed from the list, or you can look for banks that do not use Chexsystems and get a second chance checking account with them, so you can go on with your life. Actually, there's nothing that prevents you from doing both: you don't want to put your financial life on hold while you're trying to fix your current situation.

So second chance checking accounts are the best way to get a checking account while you're on Chexsystems. They're available to people whose names are on the banking industry's "black list" and still want to be able to open an account. If you have a bad credit history, have been a victim of identity theft, or have had your account closed because of unpaid overdrafts, then this is one option that's available to you.

Depending on the bank, the procedures may vary. But if they do have a product that's geared towards people with Chexsystems issues, then all that will be required of you is to fill out a form, give the necessary information, and fund your account. You may have to meet a minimum opening balance, but that's about it, as more and more there's no minimum account balance requirement. You won't be able to escape a monthly service fee, though. It's a small price to pay for having, once again, access to banking conveniences like ATM transactions, online bill pay, paycheck direct deposit, and in many cases, limited check writing privileges.

Despite Chexsystems aggressively marketing its service and aiming to have 100% of financial institutions using its database, the economic slump has pushed a lot of people into bad financial situations. It has become understood that sometimes people run into serious financial troubles, or can make mistakes. Second chance checking accounts represent a good opportunity for them to get back into the fold while getting back in good financial shape.

Non Chexsystems Banks exist simply because there's a whole section of the population that can't open bank accounts because they have a negative Chexsystems record. The banking industry is all about minimizing risk, and if your name is on Chexsystems' list, then you're viewed as a risky customer and they simply will not accept your business.

Recognizing the size of this market, a host of financial institutions have decided that they would offer tailor made products to this underserved, neglected market. So as a result, you have non Chexsystems banks, and also a few other services that will be the topic of another post. Non Chexsystems banks can come under different shapes.

Your first type of Non Chexsystems bank is the local bank, where customers and employees know each other pretty much on a personal level. If you have that type of relationship with a local bank branch, you can go and open a bank account even if you're on Chexsystems. You will most likely have a talk with the branch manager, and more often than not, you'll have to bring proof that any issues with other banks, that hae led to you being reported, have been solved. That includes paying off any unpaid overdraft balances.

The second type of Non Chexsystems bank is the relatively large bank that realizes there's more to a customer than his/her Chexsystems report. In those cases, the process is similar to the one described above, except that these banks will take a long hard look at your Chexsystems report and your credit report. It's just that they won't rely solely on them to make their decision.

Finally, there are the online non Chexsystems banks. Everything is dealt with online. You get a decision on the spot. If your account is approved, all you have to do is fund your account, and shortly thereafter you can start using your online account's services. You receive the associated debit card in the mail shortly thereafter.

Everyone needs typical banking services in order to carry out normal day-to-day transactions: paying your bills either online or with a check, making ATM transactions, making purchases online, and so on. When your credit is bad, most banks won't open bank accounts for you because you're supposedly a risky customer. Most of us know that having bad credit doesn't necessarily mean you won't be a good client for the bank, but they just don't want to take the chance.

What makes it worse is that sometimes you end up having bad credit as a result of one single mistake that sometimes banks contribute to. See, when you give out a series of checks, the bank has the liberty to process them in any order they wish to. So what they do is that they process the check with the largest amount first, and then work their way down. The problem is that if you had written that large check last, you might have had only one overdraft charge. When they process it first, then they get to charge you an overdraft fee for every single check that they process afterwards. The overdraft fees pile up, and soon you may find yourself in a very deep hole. If you don't pay it back, you get reported to Chexsystems, and get bad marks on your credit. The problem then compounds because the bank that reported you has closed your account, and you can't open an account at another bank because of your negative chexsystems record and the bad marks on your credit.

There are several steps that you can follow if you've been reported to Chexsystems and want to get rid of that negative record. The first course of actions should be to get back in touch with institutions that you owe money to, and negotiate with them so that once you've paid them off, they write Chexsystems and ask that your name be removed from the database. That usually works, although it can get complicated and lengthy if you owe several banks. You can also let time work its magic, but it's going to take five years for your name to be removed from the database. That's a long time.

You can get a second chance checking account. Actually, even if you're working out your problem, you should still get one if only to be able to function normally. Since 80 to 90 percent of banks use Chexsystems, finding one that doesn't is going to be somewhat challenging, but that doesn't mean it's impossible.

Many banks that offer second chance checking accounts don't advertise it, and you should probably call before you go to a branch. Or you can do an online search and try and find online banks that offer these types of accounts. In any case, you should do your homework and pick one that offers as many services as possible, at a reasonable cost. In reality, these services offer accounts that aren't as crippled as you might think: in addition to the usual deposit and check writing transactions, you can become PayPal verified and pay bills online, and even rebuild your credit.

When applying, many bad credit checking accounts offer instant approval with no credit check. These accounts are recommended, as stated above, if you have had trouble obtaining a checking account. Just be sure to research all your options prior to making a decision.