Bad Credit Checking Accounts

In this article we will discuss how bad credit checking accouts affect you in the current economy.

In today's economy banks and other lenders are far more strict to whom they lend credit to. If you have bad credit you are probably finding difficult to either open or keep an existing checking account.

However, just because you have bad credit does not mean that you cannot open a new account as many people will a low credit score can vouch for.

Are You On The Chexsystems Database

A more plausible reason that people are denied a new checking account is because their name appears on the Chexsystems database. If you have not heard of the Chexsystems database then, let me briefly explain. Chexsystems is a deposit account verification service that is similar to the credit references agencies such as Experian and Trans Union. However the key difference with Chexsystems is that is they record data relating to how people manage their bank accounts.

It is estimated that 80% of all commercials lenders and banks are members of Chexsystems and the company provides details of how people handles their accounts. This assists its banking members to scrutinize new checking account applicants who might have had bank accounts closed due to mismanagement or being continuously overdrawn. If you have bounced or have written bad checks a few times this would also be recorded.

Can I Still Open A Checking Account If I'm On Chexsystems?

People who have a bad credit checking accounts on Chexsystems should not give up hope of finding a bank that will allow them to open credit check bank account. In life there is always a solution. The following are a number of options that you may want to consider:

Finding A Bank or Lender Who Is Not A Member Of Chexsystems

Not all banks are members and there are even banks that will not dismiss you completely if you are listed. However, you will save more time and effort if you look around for banks without Chexsystems.

Finding one is not easy however, a good place to start would be to call up banks in your county and state. You can do this by going through your local business directories. You will have to contact them directly and ask them if they use Chexsystems. This may take time and effort however, if you find one it will be worth it.

All banks will use some form of credit check before opening a new account and you should have nothing to worry about as long as your credit report does not reveal any negative entries such as defaults or bankruptcies. If you have a low credit score and your on Chexsystems then, it will near impossible for you to open an account.

Consider Applying For A Second Chance Checking Account

If your search for a non Chexsystems banks bears no fruit then a second chance checking account could be your best option. Second chance checking accounts have been specifically devised for people who have a bad credit history. With this type of internet bank account a person can use it the same as an ordinary bank account. They can deposit and withdraw money, write their own checks and cash them as well.

More banks are offering these types of accounts due to the increase in people finding themselves in financial difficulties. Banks are not providing these accounts out of the kindness of their own hearts. Not at all. Although, they give people with bad credit a chance to rebuild their credit the bad credit checking accounts fees can be very high especially compared to a standard account.

Many of these second chance accounts require that you maintain a positive credit balance. If you go overdrawn then, you will be hit by penalties and charges. It is for these reasons that these type of online checking accounts need to be managed carefully and responsibly by the account holder.

Disputing Your Chexsystems Record

If you believe that you have a good claim that your record should not be on their database then you can make an appeal. As with the other credit reference agencies Chexsystems will have to look at your claim within 30 days as stipulated by the Fair Credit Trading's act. Making a dispute can be a complicated and a time consuming process which involves writing a dispute letter to Chexsystems with evidence to support your claim.

If the decision is upheld then the record will remain on Chexsystems database for 5 years and only when that time has expired will your record be removed.

How To Avoid Being Put On the Chexsystems Database

One of the main reasons why people end up on Chexsystems is simply because they write bad or bounced checks. These can be done fraudulently when a person writes out a check in payment for goods and services knowing that there is no cash left in their account.

Bad checks can happen through no fault of the account holder. For example,when a person cash a check the bank who takes the check hands over the cash. However, there is a time delay which can take up to seven and ten days for the check to clear. This means the bank that handed over the cash is still waiting for payment from the bank account that the check was originally written on.

If the that checking account has no balance then the check will bounce and the person who cashed the check will be liable for that amount. That should not be a problem if the person has not spend the money, If they have they will have to pay the same amount back. If they cannot pay then, they will be liable for the bad check and there name will be recorded on the Chexsystems database.

If you have a low balance in your account and you cash a check it is advisable that you wait until the check has cleared before you spend the money.

In general the best way to keep your name out of the bad credit checking accouts database is to manage your bank accounts responsibly. Make sure you have enough cash in your account so that you do risk going into the red. Check your bank account statements on a regularly basis and keep an eye out for any transactions that maybe linked to identity theft.

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