What to do if you can’t open a bank account

Banks reject checking account applications all the time, and it has nothing to do with your credit score. About 6-7% of U.S. households are “unbanked” (no checking or savings account), often due to past banking problems flagged in their ChexSystems report.

The good news? Being denied once doesn’t mean you’re locked out of banking forever. There are clear steps to fix the underlying issues and specific banks that offer second-chance accounts designed for people in exactly your situation.

Why banks reject checking account applications

Banks don’t typically explain denials in detail, but the reasons fall into three categories:

•ChexSystems red flags: Unpaid negative balances, bounced checks, suspected fraud, involuntary account closures in the past 5-7 years. To fix it, you should get your ChexSystems report, dispute errors and pay your outstanding balances.

•Application errors: Misspelled name, incorrect SSN, address mismatch. To fix it, you should double-check all information and reapply.

•Identity verification issues: Typos that flag fraud alerts, inability to verify identity. To fix it, contact the bank for specific issues and provide additional documentation.

Banks use ChexSystems (and similar services like Early Warning Services) to screen applicants. If you’ve had an account closed due to unpaid fees, bounced checks or suspected fraud, that information stays on your ChexSystems report for 5 years and can block you from opening new accounts at most mainstream banks.

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