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?

Here’s a quote from the FDIC study:

A blemished credit history presents further challenges to opening a new account. Most banks (87 percent) require a third-party credit check screen, such as ChexSystems, when a customer opens a new checking account. One-quarter of banks automatically reject a new account application that receives a negative result on the credit check screen, and only half (49 percent) can override a negative result at a branch location. However, one-quarter of banks offer “second chance” accounts designed for individuals not qualified for conventional bank accounts.

Survey results reveal that a blemished credit history and insufficient identification impede unbanked and underbanked individuals from opening bank accounts more than any other factor. When asked to rank order the three most common reasons that a new account applicant is declined, banks identified “negative account screening” first, followed by “insufficient identification information” and a “low credit score.”

The study references the following footnotes and information:

…ChexSystems, Inc., is a network of financial institutions that provides deposit account verification services to members and information to help them identify account applicants who may have a history of account mishandling (for example, people whose accounts were overdrawn and then closed by their bank).

…”Second chance” accounts are frequently checkless accounts or accounts with limited check-writing privileges that may be connected to a debit card. They usually provide most or all of the benefits of a regular checking account, including a bank routing number and account number.

We aren’t sure where they got the information about the second chance bank accounts… but we are pretty sure that the 87% statistic regarding ChexSystems is accurate (or maybe even low!).

You can check out the whole FDIC report here.

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Related ChexSystems Banking Information:

1. What Features do Bank Accounts for Bad Credit Offer?
2. New FDIC Insurance Limits
3. Bank Accounts for Non-Residents — Why So Difficult?
4. Finding Local Second Chance Checking Accounts
5. Do Banks Encourage NSF Transactions?

Tagged as: ChexSystems, FDIC, second chance