subject: Ins and Outs of Bad Credit Checking Accounts [print this page] Ins and Outs of Bad Credit Checking Accounts
Bad credit individuals - those people with poor credit histories and low FICO scores - have a lot of adversity to contend with in their financial lives. Having a low credit score means it is harder to get approved for home, auto and personal loans. It also usually means having to pay higher interest rates than they would otherwise - making it harder to get out of their situation.
There is another type of bad credit, however: being reported to something called Chex Systems. Chex Systems is the banking industry's answer to FICO scores.
Chex Systems is not actually a score. Rather, if a person's name merely appears in this system, they are considered a poor risk from a banking perspective. Usually, showing up in this database will cause a bank to refuse an account application.
A person can end up being reported to Chex Systems for a number of reasons, including past debit or check card abuse, bank fraud, or other irresponsible use of a checking account. Of course, just as is the case with mistakes on a FICO credit report, a person's name can mistakenly show up on the Chex Systems database - even if no prior transgressions were made. Still, that doesn't mean you can't get rejected for a new checking account all the same.
Once your name is reported in this system, it can be hard to re-establish a positive standing with prospective new banks considering you for a new checking account. Bad credit checking accounts can be had, however. The answer is to look for a bank that offers second chance checking, such as this one: http://www.escape-overdraft-fees.com/.
Second chance checking is only offered by a limited number of national banks. However, it provides bad credit individuals with the opportunity to establish a checking account even if they have been reported to Chex Systems. These checking accounts are usually available via online sign-up. Important: make sure that the second chance checking bank you choose is FDIC-insured.
