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Opening a bank account with bad credit

You've just applied for a new bank account and you're excited to take the next step in your financial journey—only to find that you've been denied due to poor credit.

This can feel disheartening. You might be wondering why you were denied and if you'll be able to open a bank account with bad credit, whether that's at a different bank or at all. Don't worry—while it can be more difficult, it is not impossible to get approved for a new bank account with bad credit.

A bad credit score is considered a VantageScore® of 600 or lower and a FICO® score of 699 or lower. If you don't know your credit score, all you have to do is enroll in Chase Credit Journey®, where you can receive your free credit score and tips to help reach your financial goals.

If you have a poor credit score, your lender could see you as higher risk, which can affect your eligibility for opening a new account. However, this score is just one of many other factors considered when you apply for a bank account. To better understand this topic, let's explore the following:

  • How credit affects your ability to open an account
  • ChexSystems® consumer score
  • Steps to take if you're denied a bank account
  • Ways to improve your credit score for the future

Does credit affect your ability to open an account?

Your credit score is essential for getting approved for many important moments in your life—whether that's buying a car, taking out a mortgage or opening a new bank or credit card account.

When you have good credit, you have increased creditworthiness, meaning you have a strong history of making timely payments and are considered low-risk and reliable with your money. Your credit score is a key indicator of this. The higher your score, the more likely it is that you can get approved for a new bank account. You can learn more about your credit when you enroll in Chase Credit Journey®, where you can access free tips and resources.

However, your credit score isn't the only determining factor here. This is because your score doesn't account for your history around deposit/savings/checking accounts. That's where ChexSystems comes in.


You may already be aware that bankers, lenders, credit card issuers and employers may run a hard inquiry (a type of credit check) to gather insights on your relationship with money. They may look at your credit score to determine your eligibility for certain credit cards or to land on a particular annual percentage rate (APR).

When it comes to opening a bank account, a similar process takes place with a system called ChexSystems. This is a tool that lenders, bankers, issuers and credit unions use to see if you have a poor record with your accounts. This includes activity such as overdrafts, identity theft and bank fraud.

ChexSystems is a credit reporting agency under the Fair Credit Reporting Act (FCRA). In a process similar to that of credit bureaus, ChexSystems collects information about bank accounts that have been closed and will release this information to bankers looking to determine your risk. Those who faced financial troubles—from fraudulent activity to bounced checks and more—could be listed in ChexSystems. The negative items in this report could last up to 5 years or more before falling off.

ChexSystems report and consumer score

Similar to a credit score, a ChexSystems consumer score takes your banking history into account and generates a number that reflects your risk. It can range from 100– 899 and the higher the number, the lower your risk. A banker may see a low score and fear that you are more likely to commit fraud, bounce checks and perform other risky financial activities.

Your score will appear on your ChexSystems report, which you can request for free every 12 months online or over the phone. Your banker may provide you with this report if they deny your application to open an account.

On your report, you'll see information including but not limited to:

  • Personal information (such as your name, Social Security number and address)
  • Bank closures due to fraud or writing numerous bad checks
  • Number of bounced checks and overdrafts
  • Frequency of debit or credit card replacements
  • History of numerous account openings
  • Negative balances towards your bank accounts that have yet to be paid
  • Hard and soft inquiries

Keep in mind that your consumer score and credit card score are not the same. While both scores incorporate some of the same factors (such as negative items including negative balances), they are used differently. Your ChexSystems score alerts lenders of the level of risk you could pose, and depending on the lender, your score could be too low and you could be denied an account. A strong credit score, on the other hand, reflects positive activity like your payment history and credit mix, and is used mainly for taking out new credit card accounts, loans and mortgages.

Your ChexSystems score will not directly affect your credit score and vice versa. However, some activity could overlap. For example, if your credit card issuer reports you to a collections agency due to unpaid bills, ChexSystems may be notified and could add collections to your ChexSystems report.

Steps to take if you're denied a bank account

As part of the application process for a new account, your banker runs your information through ChexSystems. If your name is listed in the system and it reports a low score, your banker will give you a copy of the free ChexSystems report and likely decline your application.

When you're denied an account due to a low ChexSystems score it can be disappointing—but do not lose hope. You have other options to help you open a bank account.

Step 1: Consider a second chance bank account

The first step to take is to consider opening a second chance bank account. This type of account is offered by many institutions with lower minimum payments. Associating positive activity with this account, like making regular payments and avoiding overdrafts, can help improve your ChexSystems score.

When looking for a second chance bank account, be sure to look out for any other additional fees. For example, many of these accounts typically require you to make up-front deposits to secure the account. You could be limited when it comes to other banking activity, such as writing checks.

Step 2: Apply for a pre-paid card

If a second chance bank account isn't in the cards for you, consider applying for a pre-paid debit card. Having this card allows you to get access to money that you load onto this account. Beware of fees, as they could be significant and put you at even more financial risk.

Step 3: Dispute errors

Similar to credit reports, it's possible that a ChexSystems report could contain errors. That's why it's important to review the information on the report thoroughly. If you notice that there's been an error, you can dispute it with ChexSystems on their website or through consumer relations over the phone.

Step 4: Improve your credit score with Chase Credit Journey

Your credit score is a helpful indicator of your financial health. If you have a strong credit score, it likely means that you have few balances to pay off, maintain consistent and health habits, make timely payments and monitor your spending. All of these small but impactful choices amount to a strong portfolio and good credit history, making you a more ideal candidate for credit cards, bank accounts and more.

When you enroll in Chase Credit Journey, not only will you have access to a free credit score that regularly updates, you can use resources to help you better understand and plan your finances. This free online tool simplifies some of the most confusing terminology and guides you through the process of getting your financial habits back on track.