With all the advertisement banks do, we usually think they’re desperate for clients. But sometimes checking accounts are denied to customers. What can you do to fix things if you were not given a checking account?
When you apply for a checking account, most banks check your bank account activity and account closure history with ChexSystems, a reporting agency for consumer banking activity. If you have a poor banking history that includes overdrafts or, if another bank closed your account because of bad financial behavior, you might have difficulty opening a new account.
The good news is that if you're denied a bank account, federal law requires the bank to give you an adverse action notice naming the company that supplied the negative information, so you can find out what factors influenced the bank's decision. This is important if you want to fix the problematic banking behavior and ensure approval next time you apply.
Why could you be rejected by the bank?
There are several reasons that you could be denied when applying for a bank account:
• Poor past financial performance
• Insufficient identification
• Poor credit report
• Minimum opening balance
Four Strategies if You’ve Been Rejected by the Bank
If you were denied a bank account because you fell short in one of those áreas these are four ways to revert the situation:
1. Figure Out What Your Purported Transgression Is – and Fix It
If the problems are fixable or your account has been flagged in error, work with the services to the issue. If the financial challenges are legitimate, talk to your bank about what you can do to get back in their good graces.
2. Open a “Second Chance” Account
20% of banks offer a “second chance” account to those who have initially been rejected by the bank. Talk with your local manager about how to obtain one – although you should note that they often come with additional fees.
3. Consider a Prepaid Debit Card
Another option is to get a prepaid debit card, where you load funds in advance and then spend them down. Again, the fees must be taken into account. Bear in mind that this is not a “credit card,” so you won’t be building credit.
4. Find a Bank That Doesn’t Use One of the Reporting Agencies
Finally, if you were denied a checking account and are unable to solve it with your bank, you might need to switch banks. A good option is to try a credit union, which might have more lenient standards or find a bank that doesn’t use background services such as ChexSystems to evaluate new customers.