frustrated woman

Can I Open a Bank Account With Bad Credit?

Are you looking to open a bank account, but don’t have a great credit score?  The good news is that even with bad credit there are good options available for you.  The key is to find the right bank or credit union for your needs.

There are three types of financial institutions that offer checking and savings accounts to people with bad credit: traditional banks, credit unions, and second-chance bank accounts. Each has its own set of requirements, benefits, and drawbacks.

Bank Account Options

Traditional Banks

Traditional banks, such as Wells Fargo, are for-profit institutions that are subject to state and federal regulations. They typically offer a wider range of products and services than a credit union, but they also have higher fees.

In order to open a checking or savings account at a traditional bank, you will need to meet their minimum deposit requirements. This can range from $25 to $100, depending on the bank.

You may also be required to maintain a minimum balance, which can be anywhere from $50 to $1,000. If you fail to meet these requirements, you will be charged a monthly maintenance fee.

Traditional banks also tend to have higher interest rates on their products. This includes both savings accounts and loans. If you are looking to open a bank account with bad credit, you may want to consider a traditional bank that offers free checking accounts. These typically have no minimum balance requirements and no monthly maintenance fees.

Credit Unions

Credit union refers to not-for-profit institutions that are owned and operated by their members. They are subject to state and federal regulations, but they have more flexibility than traditional banks. This allows them to offer better rates and terms on their products.

To join a credit union, you must first become a member. This typically requires that you meet certain eligibility requirements, such as living in a particular geographic area or being employed by a certain company. Once you are a member, you can open a checking or savings account.

A credit union typically has lower fees than traditional banks—and they tend to offer lower interest rates on their products. If you are looking to open a bank account with low credit, a credit union may be a great option.

Second-Chance Bank Accounts

A second-chance account is a type of checking account designed for people with bad credit, bad payment history, or a checkered financial past. Second-chance accounts come with certain restrictions, like limits on how much money you can withdraw each day.

But they can also help you in rebuilding your credit. Eventually, you might be able to get a regular checking account.

To open a second-chance checking account, you’ll need to provide the bank with proof of your identity, such as a driver’s license or passport, as well as proof of your current address and Social Security card. You may also need to make a deposit to open the bank account.

Once the account is open, you’ll be able to use it just like any other checking account, including writing checks and using a debit card. Like credit cards, debit cards allow you to make purchases online and withdraw cash from an ATM.

Debit card purchases are a convenience that’s virtually a necessity in the modern age. Not only can you do business online, but you can also make “swipe and go” purchases in stores without carrying cash or writing a check.

Second-chance banking can give you access to these necessities and help you rebuild your credit by reporting your account activity to the credit bureaus. As you use the account responsibly, over time, your credit score will improve, making it easier to qualify for loans and other money-related products in the future.

Methods Banks Use to Determine Bad Credit

Banks use a number of methods to determine whether an applicant has bad credit. One of the most common is to check the applicant’s credit score.

Credit Report

A low credit score indicates that the applicant has missed payments or otherwise mismanaged their finances in the past and is therefore a higher risk for the bank.

Other factors that banks may consider include the applicant’s employment history and income, as well as any bankruptcies or foreclosures in their past.

When banks check your credit score, it’s typically a “soft pull”, meaning it won’t impact your score. However, if you’re denied for an account, the bank may do a hard pull on your credit, which could ding your score.

ChexSystems Report

Another method banks use to determine an applicant’s credit rating is to check their ChexSystems report. ChexSystems is a nationwide reporting agency that collects information on consumers’ banking history.

This includes information on bounced checks, overdrafts, and fraud. If an applicant has a negative mark on their ChexSystems report, it may be difficult for them to open a new bank account.

Know your Financial Institution

It’s important to note that not all banks use the same criteria to determine whether an applicant has a low credit rating. Some use the ChexSystems report system, and others do not.

Some banks may be more lenient than others when it comes to credit ratings, for example. That’s why it’s always a good idea to shop around and compare offers before you apply for a bank account.

A low credit score may make it hard to open a bank account, but it certainly isn’t impossible. There are a number of institutions that offer special bank accounts for people with questionable credit. These can be good options for those who need access to banking services but don’t want to risk being denied a traditional account.

What to Look For if You Have a Bad Credit Score

When you have bad credit, opening a bank account can feel like an impossible task. But with the right approach, you can be successful in your endeavors. Here’s what to look for in a checking account if your credit is bad.

No Credit Check Required

One of the most important things to look for in checking accounts if you have a low credit rating is that the institution does not require a credit check. This way, you can open an account without worrying about your credit score affecting your application.

Low Minimum Balance Requirements

Another important thing to look for is low minimum balance requirements. Many banking institutions and credit unions require you to maintain a certain balance in order to open an account, but there are some that don’t.

Look for a second-chance banking account that doesn’t have this balance requirement, so you can open an account even if you don’t have a lot of money to deposit.

No Monthly Fees

Another fee to watch out for is monthly maintenance fees. These fees can add up, so it’s important to find an account that doesn’t charge them. Many checking accounts for those who have less-than-perfect credit don’t have monthly fees, so this is something to look for.

Direct Deposit Required

One way to avoid monthly fees is to set up direct deposits with your employer. Direct deposit allows your paycheck to be deposited directly into your account. Plus, you won’t have to worry about banking fees. If you have an online bank, direct deposit is a must-have feature.

Mobile Banking

Online banks let you access your account with a mobile app. Mobile banking is incredibly convenient, as it keeps you from having to physically go to the bank. You simply download the mobile app to your smartphone or tablet. From there, you can access your direct deposit and banking history.

Overdraft Protection

Another way to avoid fees is to find an account that offers overdraft protection. This way, if you accidentally spend more money than you have in your account, the bank will cover the difference. This can help you avoid costly overdraft fees.

These are just a few things to look for in a checking account if you have a low credit rating. There are plenty of financial institutions that offer accounts for people with less-than-perfect credit, so don’t give up hope. With a little bit of research, you should be able to find an account that’s right for you.

Shop Around

When you’re ready to open a checking account, start by shopping around. There are plenty of financial institutions that offer these types of checking accounts, so take your time and find one that fits your needs. You should be able to find an account that’s right for you and that doesn’t put a strain on your finances.

Tips to Repair Bad Banking History

Whether you’ve been reported to ChexSystems or have had a string of NSF (non-sufficient funds) fees, you may think that repairing your bad banking history is out of reach. Fortunately, that’s not the case.

There are some steps you can take to improve your relationship with banks and creditors so that you can open a new account or get access to loans and other financial products in the future.

Review Your Credit Report

The first step is to get a copy of your credit report from all three credit reporting agencies (Equifax, Experian, and TransUnion). You’re entitled to one free copy per year, so take advantage of that. Once you have your reports, go through them carefully to look for any errors. If you see anything that’s not accurate, dispute it with the credit agency.

If you have a bankruptcy or other serious blemish on your credit report, there’s not much you can do to remove it. However, time heals all wounds, and eventually, even the worst credit problems will fade into the background as your good credit history grows.

Work on Building Good Credit

If you don’t have any credit at all, or if your credit is very bad, you’ll need to take some steps to build good credit. This can take a while, but it’s worth it in the long run. You can start by getting a secured credit card.

This is a credit card that’s backed by a deposit you make with the issuer. For example, if you put down a $200 deposit, you may get approved for a $200 credit limit.

Become an Authorized User

You can also become an authorized user on someone else’s credit card account. This won’t help your credit much if the account owner has bad credit. That said, it can provide a boost if they have good credit.

Another option is to get a credit-builder loan from a credit union or other financial institution. With this type of loan, you usually make small deposits into a savings account each month. Once the loan is paid off, you get your money back plus interest. This can help you build a positive credit history.

Pay Your Bills on Time

One of the most important things you can do to improve your credit is to pay your bills on time, every time. That includes rent, utilities, credit card bills, student loans, and any other type of debt you may have. Set up automatic payments if that will help you remember to pay on time.

If you have trouble keeping up with your bills, contact your creditors to see if they can work out a payment plan or give you some extra time. The sooner you reach out to them, the more likely they are to be willing to work with you.

Keep Your Balances Low

Your credit utilization ratio is the amount of credit you’re using compared to your credit limits. For example, if you have a $1,000 credit limit and a balance of $500, your credit utilization ratio is 50%.

It’s best to keep your credit utilization ratio below 30%, but below 10% is even better. If your balances are high, pay them down as quickly as you can. You may also want to ask your creditors for a higher credit limit. This can help lower your credit utilization ratio, as long as you don’t use the extra credit and run up your balances again.

Be Careful With New Accounts

Every time you apply for a new loan or credit card, the lender will do a hard inquiry on your credit report. This can temporarily lower your FICO score. Therefore, it’s best to avoid opening new accounts unless you really need them.

If you do need to apply for new credit, shop around for the best terms first. See which banks offer the lowest interest rate and fees and apply only to them.


If you have poor credit, it’s important to take steps to improve it. This will make it easier for you to get approved for loans and other financial products in the future.

But even with a bad credit score, you may still be able to open a second-chance checking account. Just be sure to shop around and compare your options to find the best account for your needs.

You can then work toward building up your credit so that you can qualify for even better financial products in the future.

Josh Dudick

Josh is a financial expert with over 15 years of experience on Wall Street as a senior market strategist and trader. His career has spanned from working on the New York Stock Exchange floor to investment management and portfolio trading at Citibank, Chicago Trading Company, and Flow Traders.

Josh graduated from Cornell University with a degree from the Dyson School of Applied Economics & Management at the SC Johnson College of Business. He has held multiple professional licenses during his career, including FINRA Series 3, 7, 24, 55, Nasdaq OMX, Xetra & Eurex (German), and SIX (Swiss) trading licenses. Josh served as a senior trader and strategist, business partner, and head of futures in his former roles on Wall Street.

Josh's work and authoritative advice have appeared in major publications like Nasdaq, Forbes, The Sun, Yahoo! Finance, CBS News, Fortune, The Street, MSN Money, and Go Banking Rates. Josh currently holds areas of expertise in investing, wealth management, capital markets, taxes, real estate, cryptocurrencies, and personal finance.

Josh currently runs a wealth management business and investment firm. Additionally, he is the founder and CEO of Top Dollar, where he teaches others how to build 6-figure passive income with smart money strategies that he uses professionally.