For those who don’t meet approval requirements for other bank accounts, second-chance banking may offer an opportunity to help you repair a bad banking history where you can still have the same features if eligibility requirements are met.
Second-Chance Banking: Can I Still Repair Bad Banking History? (PHOTO: SoFi)
Second-Chance Checking Account
Banks review your banking profile when you apply for an account. If you have declined a checking account due to specific activities on your checking accounts, such as a history of overdrafts or automatic account closure, could impact your eligibility for opening new accounts. This is because when utilizing a checking account, your account is directed to a reporting system called ChexSystems. Financial institutions use these ChexSystems reports in a similar way to lenders examining credit reports when assessing applicants.
Second-chance banking allows a gap in banking that impacts low-income communities, minorities, and those previously incarcerated. Moreover, it functions like a traditional checking account but often comes with mandatory fees, more restrictions, and fewer features. However, they offer an opportunity to those who have struggled with conventional checking accounts to have another chance. You can maintain access to funds in a secure account, including debit card access and online bill pay.
If you manage your account responsibly for six to 12 months, your bank may transition you to a more standard checking account with reduced fees and more features. If the bank doesn’t upgrade automatically, you might need to arrange a request.
How Can I Apply For Second-Chance Checking Account?
To apply for a second-chance checking account, you’ll need to visit a bank branch and talk with a representative or you can use an online application. Either way, you need to indicate that you once had a checking account closed. An agent may ask questions about the account’s closure and your current banking status.
Gather the following information ahead of time to help your application process move more quickly.
- Your name, address, email, and phone number
- Social Security number
- Employment information
- Personal and financial references
Once you’ve gathered this information and the bank reviews your application, it may contact ChexSystems for details about your banking history. However, some financial institutions are willing to supervise an adverse checking history.
The bottom line
Second-chance checking accounts can furnish a pathway for those with a limited or poor banking history to get back on track, offering many of the same features of a basic checking account. If you’ve formerly had trouble with a checking account, a second-chance checking account may be your opportunity to rectify the problem.
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