Bank Accounts for people with a bad credit history
You may find yourself choosing between different bank accounts for bad credit for a number of reasons, you may have got into financial difficulty perhaps due to being made redundant and not being able to pay your bills, or perhaps because a failed business venture has left you in debt. Unfortunately, this may have resulted in you being unable to avoid getting a poor credit rating with the credit reference agencies, and the resulting poor credit score could impact on you in a number of ways.
For instance, if you had an overdraft facility with your bank and lost your job for an extended period of time, your income would no doubt reduce possibly causing pressure on your current account to a point where you have may have exceeded your overdraft facility. Of course, it is important that you keep your bank fully up to date with your situation but they may only be sympathetic and supportive for a period of time.
There may come a point whereby your bank start returning direct debits unpaid to stop your indebtedness with them increasing further and may even cancel your debit card to stop you using it. It could even reach a stage when your bank asks you to make alternative banking arrangements.
If that were the case and your credit rating was so poor that approaches to other banks or building societies to open any form of current account were unsuccessful it may still be possible to open a suitable bank account with another financial institution. Fortunately, it’s fairly easy to find out if you have a bad credit score before you enter into the application process.
In this Article
Opening a bank account with a bad credit score
If you can’t avoid getting a bad credit score. then there are a number of financial institutions that provide bad credit accounts. The easiest way to contact such institutions is through the Internet perhaps by keying something like: “ bad credit bank account” into your browser’s search box. This should bring up a number of companies offering such accounts.
The great thing about the companies that provide such accounts for people with bad credit is that they do not carry out a credit reference search on you with the credit reference agencies so, in most cases, it does not matter if you have a poor credit history. In fact, even if you are bankrupt, it should not
prevent you opening what is often referred to as a “Guaranteed Bank Account”.
What are the application criteria when applying for a bad credit account?
The usual criteria for opening poor credit bank accounts is that you are resident in the UK and are at least 18 years of age.
Can I apply online for bank accounts with bad credit?
The application process for bad credit accounts is quick and simple and can often be done either online or over the telephone with very little personal information being required. In some cases an application fee is payable and there is a monthly administration fee payable.
How can I compare and choose the best bank account with poor credit?
Obviously, you will need to check the services provided as they may differ between different companies and there may be charges for one or more of these services. As a general rule, you are able to have your wages, salary, benefits or pension paid directly into your account. Your bills can be paid either by direct debit or standing order.
Will I get a pre-paid debit card with my bad credit bank account?
You will also normally be provided with a pre-paid debit card that, after allowing for the amount required to cover your regular bills, any surplus monies are added to. You can use this card to pay for services and goods in shops, over the phone or on the Internet. You can also withdraw cash at numerous “hole in the wall” machines.
Managing your money
You can usually access your account information online and some companies even provide you with your own personal account manager who can provide you with access to other services such as getting information on insurance-based products.
Will I be eligible for a cheque book or overdraft with my bad credit account?
A no credit check bank account does not normally provide either a chequebook or an overdraft facility.
After a period of time, as your credit rating improves (see article – ‘How to improve your credit score ‘), you may be able to apply to a high street bank and be accepted for a standard current account if you so wish, in order to avoid paying the charges that you would have to pay if you had a bad credit account.