It’s disappointing to be turned down for a bank account, particularly when the reason behind the rejection isn’t explained. Financial institutions may refuse applications for a number of causes, including identity verification issues or past problems with a person’s banking record. Knowing what caused the denial gives you a chance to correct the problem and look for a different way to get an account.
Why banks deny applications
You do not get automatic approval for a new bank account. A bank might refuse your application if your banking record raises a warning sign. Reasons include a past of too many overdrafts, accounts closed while owing money, or unpaid charges from the bank itself. When that happens, the bank lacks confidence that you can maintain the account without issue.
Another frequent reason is identification. If you can’t provide appropriate ID, or the bank can’t verify your identity with the ID you do provide, your application can be rejected. Banks may not always give a precise explanation for the denial.
How banks check your history
Banks don’t check your credit report when you apply for an account, unlike credit card issuers. Instead, they rely on banking-specific reports like ChexSystems or Early Warning. These reports track your banking history, showing unpaid fees, overdrafts, and bounced checks.
You aren’t without options just because you got turned down. The process outlined here can still get you an account after rejection.
Check your ChexSystems report for errors
Banks and credit unions frequently rely on ChexSystems to examine your banking history. Should you think the rejection was not warranted, begin by reviewing this report for inaccuracies. ChexSystems offers guidance on how to request a report for yourself or another person.
Before you can obtain your report, you need to complete a one-page form and supply the following details:
- A notarized Power of Attorney, or
- A notarized copy of specific written instructions signed by the consumer
- Correspondence must include the consumer’s full name, current address, date of birth, and Social Security number
Several documents are required to request a report on a minor, which makes the process more complicated than usual.
Pay past-due bank fees
Applications can be denied because of past-due bank fees listed on your record. Paying those fees may change the result. You can also inform the bank that you have settled the charges and inquire how long you should wait before attempting to apply again.
There is no guarantee that paying the fees will change anything, but it is worth attempting, particularly if you are eager to open that specific account.
Consider a second-chance account
When an application gets denied and no solution resolves the issue, a second-chance bank account is worth considering. These accounts exist to give people with checkered banking histories another opportunity.
Second-chance accounts come with downsides. Fees tend to be higher, benefits fewer, and restrictions greater than those found on standard accounts. Still, they offer a way for consumers to establish a better banking record, one that can then support opening a standard account down the line.
Banks that skip ChexSystems
Some banks skip checking ChexSystems altogether when they approve applications. Among those that don’t consult the report, several offer low fees along with generous rewards, including SoFi, Capital One, Chime, and Varo Bank.
Having a request turned down can feel discouraging, yet it doesn’t close the door on getting an account. Review your records, settle any past charges, and weigh your choices. Taking these actions might put you back in banking.
Source: finance.yahoo.com
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