What To Do If You’ve Been Rejected For A Checking Account?

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If you’ve been rejected after applying for a new checking account, it’s likely because of information that was revealed during a review of your banking history. Banks and credit unions may run a bank history report on you. Like a credit check, this report highlights the consumer’s financial behavior, but for bank accounts instead of credit cards.

If the report shows you have a record of mismanaging other bank accounts, the institution could refuse to open a new account. If your bank account application is rejected, you can confirm your application is accurate, review your ChexSystems report and consider a second chance checking account.

Confirm the information in your application 

Start simple. Review the application you submitted with the bank to confirm all information is accurate. If you accidentally gave the wrong social security number or made a typo, this could have resulted in a denial. 

Review your ChexSystems report

When a potential customer applies to open a new checking account, the bank or credit union may ask ChexSystems (or another checking account reporting company) to run a search against the service’s database to see if any problems have been reported. Upon denial, you can ask your bank to provide you with the name of the checking reporting company that supplied your information.

You can request a free report once every 12 months from ChexSystems or other verification services. 

“In cases of denial of a bank account, it’s important for the consumer to find out the reasons for the denial and to correct or address the causes for the denial,” says Roland Chow, a financial planner and portfolio manager at Optura Advisors. 

“For instance, if there is outstanding debt because of an old overdraft account, it would be a good idea to pay that off and then ask the bank to update the ChexSystems report. Some other options include opening an account with a credit union or an online bank where they may have more lenient policies,” adds Chow.

Look for errors in your report so that you can have them corrected. Just like with a credit report, if you find any errors, you have the right to dispute them. You can dispute information by filing a dispute directly with the reporting company. 

Consider a second chance checking account

Some banks have second-chance programs, which generally have more limitations. For example, a consumer may be able to open an account but may not have access to checks or overdraft protection.

A second-chance checking account can be a good option for people who are unable to open a traditional checking account, but it’s important to make sure the financial institution is reputable. Stick with a bank that’s insured by the Federal Deposit Insurance Corp. (FDIC) or a credit union that’s insured by the National Credit Union Administration (NCUA). You may be able to qualify for a standard checking account after a specific timeframe of using the second-chance account without any negative activity.

Open a savings account

Some experts recommend opening a savings account and building a relationship with the financial institution while repaying outstanding items. A savings account at an FDIC- or NCUA-insured bank or credit union is a safe place to keep your money, and if you opt for an account that earns interest, your money can grow as well.

Just keep in mind that since many savings accounts don’t come with a debit card or the ability to write checks, you may have limitations accessing your funds. Some savings accounts also have transaction limits as well.

Bottom line

Getting rejected for a checking account due to negative banking history can be difficult news, but it doesn’t mean you have to be unbanked. There are federally insured second-chance account options to explore, so you can store your deposits somewhere, while you get closer to approval for a standard checking account.