What To Do If You're Denied A Free Checking Account?

These days, a bank account is a necessary tool for managing income and handling day-to-day expenses. Unfortunately, banks can be very picky about who they approve for accounts, and many people who apply find their applications declined. If you were denied a free checking account, here are three things you can do to recover and get approved.

Check Your Bank History Record

To minimize their risk of loss, most banks check applicants' banking history using third-party companies. Similar to credit bureaus, these companies collect information about how individuals have handled bank accounts in the past. If you've ever had a checking or savings account closed for abuse, fraud, or another negative event, it would get reported to these companies. Other banks would see the entries and base their decision to open an account for you on them.

When a bank denies your application, it's required to tell you whether it pulled a credit or banking history report and who from. You can use that information to request a free copy of your report to see what's on it. Verify the data contained is accurate, and dispute any mistakes or outdated entries (reported accounts must be removed after 5 to 7 years, depending on the company and the type of activity reported).

Once your record is clear or only contains positive information, try applying for a checking account again. You should be approved the next time around.

Look for Banks that Do Credit Checks

Not all banks use reports from bank history bureaus to evaluate your application. Some companies pull your actual credit report. Thus, you can still get approved for an account if you have a good credit score, even with a bad banking history (and sometimes in spite of it). Unfortunately, there aren't too many banks that use credit scores instead of bank history reports, so it may take some digging to find one in your area.

Be aware, though, the credit check will typically show up as a hard pull on your report, which can lower your score a bit. Additionally, if you do poorly with the account, the bank will submit the negative report to both the credit and bank history bureaus, making it very difficult to get credit or another checking account in the future. On the other hand, you'll have an account you can use while you wait for your bank history report to clear up enough to get approved for free checking at the bank you prefer.

Ask About Second Chance Checking

If you can't clear your bank history record and/or other factors (e.g. bad credit) are keeping you from getting approved for a regular checking account, look for banks that offer second-chance checking. These are limited-service accounts designed specifically for people who've had trouble with maintaining bank accounts in the past.

Typically, these accounts come with strict requirements or limitations. For instance, you might have to maintain a minimum balance, have your paycheck direct deposited into the account, or be barred from using overdraft protection. However, if you do well with the account, the bank will eventually lift the limitation after a period of time or you'll become eligible to apply for a regular checking account with the financial institution.

Getting approved for a checking account can be challenging, and there are a number of options available to help you with your situation, such as being added as a user on someone else's checking account. It's best to discuss your concerns with your local bank, who can provide solutions to the problems you're facing. For more information about checking accounts, contact a banking institution in your area.