What to Do If You Were Denied Opening a Bank Account
Bank accounts are easier to get approved than credit cards, but it is still possible to get rejected one at a time if you have bad credit. But don’t let rejection hold you back – there are other ways to keep checking or savings accounts safe.
Know why you were denied
If you were turned down, it is most likely because of something bad in your credit history. Services such as ChexSystems Consumer Reports or Early Warning Services look for “negative actions” that include:
- Canceled checks
- Unpaid commissions
- Loan inquiries
- How many checks have you ordered
- Check Fraud and Identity Theft / Fraud
- Unpaid negative balances
- Excessive withdrawals
Once you know what negative actions led to your rejection, you can make sure they are legal and then start fixing them.
Ask the bank to reconsider
Bankers use consumer reports to pre-screen candidates, but they can approve or reject new invoices as they see fit. You may be able to convince the bank to reconsider its decision and allow you to open an account. Also remember that federal law requires these agencies to disclose why you were denied, so ask for that information as well.
Get a copy of your report
If you are unable to obtain a revision from the bank, request a copy of the ChexSystems report or early warning service . To do this, you only need your current address, social security number, and your last five-year residence address. After completing the request form, the report will be mailed to you within five business days.
Check for errors in your report and dispute them
Then review your reports for any fraudulent activity or inaccuracies, as you might just fall victim to a mistake or even a scam. If you are viewing your report and you see incorrect or outdated information, you can also submit a dispute to the ChexSystems or Service for early warning , as well as your financial institution.
However, if your report is accurate and you have money, you will need to pay off those debts before they can be excluded from the report. Otherwise, negative entries can remain on your report for up to five years.
Explore Second Chance Accounts
Some banks offer second chance accounts to those with poor credit and banking history. For these accounts, banks don’t look at your consumer report or negative actions when qualifying you, so getting approved is easier. As a result, however, the fees are usually higher. Another option is to apply to open a bank account with a credit union or smaller bank as some of them are not subscribed to ChexSystems.
Temporarily use a prepaid debit card
If you are still having trouble opening a bank account, apply for a prepaid debit card that must be preloaded with a certain amount of cash. The card offers some of the features of a regular bank account, such as paying bills and transferring money to other people. Over time, you can pay off debt or wait for your negative actions to expire so that they no longer appear in your consumer reports.