According to a 2015 survey by the FDIC, approximately 9 million households are unbanked. While this may be due to the lack of access to a bank or inability to pay monthly fees to maintain the accounts, sometimes people don't have checking accounts simply because the banks won't approve them for one. Here is what you should do if you're having difficulty opening a checking account at the banks in your area.
Obtain Your Consumer Report
More often than not, the reason you're being denied a checking account is because there is negative information about you in a consumer database the banks use to help them assess whether a customer will use their checking account responsibly. These databases are similar to credit reporting agencies, except they only maintain information about people's banking account behavior. If you had an account closed because you racked up a few hundred dollars in overdraft fees, that information would be reported to various consumer databases, for instance.
The biggest player in this industry is Chexsystems. However, banks have also been known to use Early Warning System and Telecheck to check consumer bank histories. These companies must adhere to the Federal Credit Reporting Act guidelines. Therefore, if a bank uses a report from one of these companies in its decision-making, you are entitled to receive a free report from the company to check what information they have on file about you.
Like with your credit report, it's a good idea to order your bank history report from these companies to see what they're saying about you. Dispute any erroneous information your file may contain and negotiate with banks to have any correct—but negative—information removed in exchange for payment. If you clean up your report well enough, you may be able to get approved for a regular checking account.
Look for a Second Chance Account
If you're unable to get negative information on your consumer file removed, another thing you can do is look for banks that offer second chance checking services. These accounts are specially designed for people with bad banking histories. They typically have restrictions or special requirements you must adhere to to use them. For instance, you may not have access to overdraft or you may be required to sign up for direct deposit.
Although the requirements may be onerous at first, these banks will often switch users to a regular account after using their second chance checking account responsibly for a period of time. Therefore, it may be worth the effort to sign up for one so you can step up to a standard checking account later.
For more information about this issue or help finding a checking account that's right for you, contact a local bank.