Opening a checking account with bad credit does not mean you will have difficulty getting approved if you failed to pay an emergency room bill or have been late with your credit card payments. Your credit bureau history is seldom checked. Banks rely on agencies that report on banking history instead. The two largest such agencies are ChexSystems and TeleCheck. If your last checking account was fraught with overdrafts or if the bank chose to close the account, you can assume that it was reported to one or both of these services. When you apply for a new account, the bank will obtain the report; while each bank has its own policy regarding approval, few will open a new checking account if there is a consistent history of problems. However, some banks offer what they call second chance banking, and if your report shows only one bad account, they will often approve opening a checking account.
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ChexSystems
We are excited to announce a new second chance bank account that recently became available. This new second chance account is the iBankUp account, and is offered by the folks behind the UpSide Visa prepaid debit cards.
Yesterday, the Board of Governors of the Federal Reserve announced a set of rules designed to prevent financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.
Apparently, the great State of Missouri is the defendant in a lawsuit involving our favorite (that’s sarcastic) credit reporting agency — ChexSystems. Yep, Missouri faces damages of to $250 Million (or more) if a recent class action suit is successful.
There’s a great article over at the Consumerist blog that reveals how Bank of America uses ChexSystems. The article follows the story of a young person who has had problems opening an account at Bank of America.
A study just released by the FDIC claims that “one-quarter of banks offer ’second chance’ accounts designed for individuals not qualified for conventional bank accounts.” What? Where are these “one-quarter” of banks at? Have you tried to find a good second chance bank account lately?