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Bad Credit Checking Account: ChexSystems Myths and Facts

By Charles Hopkins Published 09/20/2007 | Finance
If you have made financial mistakes in the past, you may find it difficult or even downright impossible to open a checking account. If you find yourself in this position you may be wondering what you can do about it. After all, it can be very hard these days without a checking account to pay bills with.

Before you can start fixing the problem, it is important to understand what the real issue is. Many people think the problem lies with bad credit, but that is not the whole truth. The mistakes you may have made in the past may have resulted in a bad credit score, but the truth is that banks do not, and cannot, use your credit report when making a decision to allow you an account. Instead they have their own sort of agency that maintains a list of people who have written bad checks, and/or have unpaid fines or fees due to a bank. This company is called ChexSystems and if you have gotten on this list for any reason, you will find it very hard to open a checking account at a major financial institution.

If you are reading this article then you probably find yourself in that position. So then the question is; what can you do to acquire a checking account?

When approaching this problem you essentially have two options.

Option #1 - Work With the Bank

This is the more difficult option but is often worth the extra effort. What you need to do, essentially, is convince the bank to give you an account. This is easier than it sounds. You will need to actually visit the bank and speak with them in person. The goal here is to sell yourself and if you have a good stable job, then that will help. If you can provide direct deposit that can often push things over the edge. If that isn't enough, and you really want to deal with that bank, then you will need to provide some security to the bank. None of this is a guarantee but the lower the risk you are to the bank the better. Ask the bank if they will give you an account if you secure it with a deposit that they hold, or perhaps with a 6-month or 1 year CD.

This is the preferred option in my opinion. The advantage to this option, and why I recommend it, is because it can allow you to be more flexible. By this I mean you can quite possibly open an account at a major local bank rather than being forced into a lesser known, or inconvenient bank.

Option #2 - Non ChexSystems Bank

If option one doesn't work for you then your only other choice is to find a bank that doesn't use ChexSystems. There are banks out there, but you will need to do some research. When you are looking for a bank under this option then it is important to protect yourself. Don't be so focused on finding a bank that you get taken advantage of. Here are a few things to watch out for.

Banks Requiring a Direct Deposit

If you want to do a direct deposit, then that is your choice, but be wary of a bank requiring you to do this in order to open an account.

Extra or Unfair Fees

Sure banks charge fees, but watch out for banks that are charging extra fees just because you are in a bind. Do your research and see what sort of fees are generally charged by local banks in your area, and then when shopping a non-ChexSystems bank don't let them charge you differently.