The good news is that you can still get a bank account if you have bad credit. I will say it again: you can get a bank account even if you have bad credit.

If as you read this, your mind says “no, that’s not true,” then hear me out.

Banks turn down applicants for accounts when they believe that the person poses too much risk. To gauge that decision, they utilize information from other banks and from credit bureaus. Many banks subscribe to registries that provide a list of people who have written bad checks or who have outstanding debts on closed checking accounts. Some of the most well-known companies in this space include ChexSystems and Early Warning Systems.

Why do they worry about risk?

They want to keep their money, and due to the powers inherent in checking accounts, they take a risk with each new client. The main problem unfortunately a fundamental one. Checking accounts have checks.

There is no way to verify that a check will be good. A check is simply a message, written on an old-fashioned analog non-digital piece of paper, that instructs your bank to pay money from one account to another.

Writing a bad check is only one way that a person can end up with a negative balance in their account. When you authorize a company to pull money out of your account electronically, the bank must honor your request and make the payment. Because time usually passes between the moment when the request for payment occurs and the actual transfer of funds, no one can be sure that good funds will be on hand when the time comes to execute the transaction.

The bank has the same challenge with verifying good funds for a signature swipe at the point-of-sale.

As a result, Americans pay approximately $15 billion in overdraft fees every year.

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