Second chance banking is a topic that is rarely discussed. But, it’s an important account opening consideration for many people.
In this article, we’re going to be providing an overview of second-chance banking and answer common questions we receive from individuals impacted by ChexSystems.
This article is part of our series on banking basics, ranging from opening different types of bank accounts around the world to understanding how various aspects of the banking system operate.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
Second Chance Banking
Second-chance banking refers to banking for individuals with bad credit, previous banking issues, or people that have run into financial difficulties. In the United States, it often involves opening accounts with non-ChexSystems banks or banks that specifically cater to individuals searching for credit repair banking.
That said, it’s important to distinguish between the different reasons why someone may need second-chance banking. In most cases, it is due to their banking and financial history as documented by ChexSystems or one of the major credit bureaus.
The ChexSystems history takes into consideration the individual’s specific banking activities and assesses the risk of opening a bank account for a potential customer. On the other hand, credit bureaus look at a potential customer’s creditworthiness for various credit products.
Depending on the bank and the type of account being applied for, it’s possible that both ChexSystems and credit bureau reports will be used during account opening. However, banks that cater to individuals needing fresh start banking will allow accounts to be opened without certain reports being reviewed.
In the following sections of the article, we’re going to answer specific questions about second-chance banking and help you navigate your account opening options.
Do All Banks Offer a Second Chance Checking Account?
No, not all banks offer a second chance checking account. Instead, second-chance checking accounts are typically offered by banks that specifically cater to individuals looking to rebuild their banking relationships and credit history.
Do Banks Offer Second Chance Credit Cards?
Yes, certain banks do offer second-chance credit cards. These credit cards tend to be referred to as secured credit cards or credit builder credit cards. In most cases, the cardholder needs to make a qualifying deposit, which will be held with the bank as a security deposit against the card limit.
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Frequently Asked Questions
Below are a few of the most common questions we receive from people looking into what second-chance banking is. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
Do Banks Give You a Second Chance?
Certain banks do offer customers a second chance when it comes to their basic bank services. These banks offer what is known as second-chance banking options. Second-chance banking caters to individuals looking to rebuild their credit history, establish suitable credit scores for major life purchases, and generally improve their relationship with financial institutions.
How Long Does ChexSystems Stay on Your Record?
ChexSystems will maintain a record of any reports tied to your identity for a period of five years. However, it’s important to note that it is possible to request removal from the ChexSystems, which can be enforced by law. Such removal requests can result in any record on the ChexSystems being removed in a much shorter time frame.
Do All Banks Go Through ChexSystems?
No, not all banks go through ChexSystems when reviewing account opening applications. Likewise, certain banks offer prospective customers second-chance banking options, which do not require customers to have a clean ChexSystems report.
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