Are you looking for banking accounts for bad credit? When you open a regular current account, you will be subjected to a credit check.
If it comes back and reveals that you do not meet the requirements of that particular bank, your application may be refused.
Perhaps you have a CCJ (county court judgment) against you because you have failed on previous loans and Credit. Don’t be alarmed if you are turned down. You are not the first, and you will not be the last, person to be denied a standard bank account owing to poor Credit.
If this occurs, you have two practical alternatives. Basic bank accounts and pre-paid bank accounts are easy to obtain and may boost your chances of obtaining a conventional current account in the future.
What exactly are basic bank accounts?
Basic bank accounts are intended for anyone unable to create a conventional bank account and are frequently referred to as bank accounts for bad credit. This might be because you’ve had financial problems in the past or have a low, or even non-existent, credit history.
Basic bank accounts offer many of the same benefits as regular accounts, but not all. Banks’ offerings will vary slightly, but on the whole, this is what you can anticipate from a basic account.
You’ll gain the following benefits:
- Have your earnings deposited into your account.
- Cash and checks can be deposited for free (excluding foreign currency)
- Withdraw money from a cash machine or over the counter.
- Set up recurring payments and Direct Debits.
- A debit card that may be used in stores as well as online.
- Provides free banking (no monthly fee)
- Check your balance in the person, online, or on your smartphone at a cash machine.
- You won’t receive these features.
- A permitted overdraft facility
- Interest is charged on any credit balance in your account.
- Chequebook
Who is eligible for a basic bank account?
Most people are eligible for a basic bank account; but, if you have been convicted of fraud since banks have the right to refuse you. If you have a fraud conviction, you cannot open an account.
If you do not satisfy the requirements for a conventional current account, some banks will immediately propose a basic bank account. However, even if you match the requirements for a standard bank account, you may be unable to obtain a simple one.
With terrible credit, how can I get a simple bank account?
Almost anybody may open a basic bank account, and each bank has its unique application process. Some will allow you to apply online, while others may need you to visit a branch.
To open one, you’ll need a form of identification, such as your passport or a photographic driving license, as well as evidence of residencies, such as an energy bill or benefit book.
A basic bank account is not a credit product because it does not allow overdraft. This implies that you should not be required to pass a credit check to create an account.
However, some providers will still want to perform a check, so double-check this before applying since it will appear on your credit record.
Also Read: Credit Score Required for Yamaha Financing
Are there any costs associated with basic bank accounts?
While you should always verify with the issuer before opening an account, most basic bank accounts are fee-free. The UK’s ten central banks all provide fee-free basic bank accounts, and many others do as well.
You may still be charged if a direct debit bounces owing to insufficient funds in your account or if you make purchases and withdrawals overseas. Always double-check these terms with your account provider.
Is it possible to be rejected a basic bank account?
It is conceivable that you will be denied a basic bank account. Basic bank accounts are intended for poor credit, and some banks may deny you if you are otherwise eligible for a standard account.
You may also be denied a basic bank account if you have a criminal record for fraud (other criminal convictions will not permanently disqualify you) or if you fail to complete the application process.
This might include failing to give enough identification or proof of address or refusing to do a credit check. You are not required to pass a credit check, but the bank may choose to do it anyway.
Pre-paid bank accounts are what they sound like.
A pre-paid bank account, which is an alternative to a regular current account, allows you to deposit and withdraw money, including your salary or other types of income.
A pre-paid bank account allows you to spend just what you put in, so you won’t have access to an overdraft and won’t be able to fall into debt. You may also set up direct debits and withdraw money from cash machines.
However, these may involve additional fees. You could also have to pay a monthly account fee.
How to Open a Prepaid Bank Account if You Don’t Have Credit
Pre-paid bank accounts are not often offered by significant account providers, such as large banks. However, there are options available to you.
Pre-paid bank accounts are a fantastic alternative if you have a low credit score because no credit check is performed during the application process.
This is because there is an almost slight possibility of you incurring debt. After all, you are only permitted to spend what you have already invested.
Most pre-paid accounts should be available for application online. Once you’ve been accepted, your account should be activated right immediately, but you’ll have to wait for your card to come in the mail.
Can I create a bank account online even if I have terrible Credit?
Many bank accounts are available for application online. If you have a low credit score, you may be advised to open a basic bank account instead.
Many providers enable you to create a basic bank account online, but others may need you to visit a branch, apply over the phone, or by mail.
If I wish to create a current account, will a bank run a credit check?
Banks will do a credit check on you to create a regular current account. Because typical current accounts have access to an overdraft, which is a sort of Credit, this is the case.
Because basic bank accounts and pre-paid bank accounts do not have credit features such as overdraft protection, you should not be required to pass a credit check to obtain one. However, certain account providers may still do a credit check.
Can I receive an overdraft even if I have terrible Credit?
Because everyone’s credit condition is unique, the best place to begin is by speaking with someone at your bank. Discuss your case and inquire about your prospects of being approved for an overdraft. They could even be able to do a mild credit check on you.
This will not go on your record or have any effect on it, but it may give you a better indication of whether you’ll be accepted or not.
If you have a low credit score and are looking for an overdraft, you should only apply for what you need. The smaller the overdraft limit you request, the more likely your application will be approved.
If you can demonstrate that you are responsible with a lower amount, you may extend it in the future.
If you can only get a basic bank account, you won’t get an overdraft.
