Are you someone that has withdrawn your checking account repeatedly? Have the bank fees piled up and you are unable to afford paying them? Have you had to close accounts because of these issues? Or even worse, has your bank closed your account on you as a result? Do you now need a checking account and want a fresh start? Since banks do protect themselves from negligent consumers, finding a bank that will allow you to open a checking account after a history of poor account maintenance will be difficult, but not impossible.
Similar to how creditors report your account activity to the credit bureaus, banks will report your negative banking history to a company called Chex Systems, Inc.. All negative information reported on you by your bank/s will remain on your Chex Systems, Inc. record for five years. But, it is important to understand that you can have your information removed from Chex Systems, Inc....as outlined below. And therefore, even with bad credit, you do have options.
What exactly is a second chance checking account?
Second chance checking accounts are for people who have a history of banking problems that have been reported to Chex Systems, Inc. and are unable to open standard checking accounts. A second chance account will be bare boned and have limitations. But having an option is better than not having one. In addition to the imposed limitations, you may also have to pay higher fees as well as guarantee that you will direct deposit your paycheck. You may also have to do all of your banking online without the ability of writing out physical checks. The intent is to limit your ability to utilize cash from your debit cards and/or buying mail orders to pay other bills. So what is the benefit you may ask? Second chance checking accounts give you a solid route for rebuilding a positive relationship with banks. Typically, as time goes by, the fees associated with your account will go down and eventually you will be granted a standard checking account that will give you full account access and usage (writing checks, banking other than only online, etc.). In addition, a checking account with positive activity will equate to an improved credit rating.
Where do can I find second chance checking account?
The Federal Deposit Insurance Corporation (FDIC) reports that around 35% of financial institutions offer second chance checking account options to consumers. You don't hear about these choices because banks really don't want to open the doors too much to high-risk customers. The best thing to do is to go into your local branches and ask if they offer second chance checking accounts. You can search online, but be aware that the results you obtain may not be accurate/current.
When in the market for a second chance checking account, do not divulge that you are the one searching. Just ask about their approval process. If the bank does not do a bank history check with ChexSystems, Inc. (some banks do and some don't and you can find one that does not), then let them know you are seeking a second chance account. Rejected applications for a second chance checking account will hurt your credit rating. So be careful when applying.
On the mend...
If you are utilizing a second chance checking account as part of your plan for improving your credit, it is important that you keep close tabs to the balance in your account. You don't want to overdraw or bounce checks which will ultimately create an even worse situation for you. Because if you screw up your second chance checking account, you are then out of options. But, banks will pay close attention to your second chance account to see how you handle your finances. So, when used properly, a second chance checking account can be a temporary setback and can ultimately lead to the bank approving you for a standard checking account after some time!
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