Beyond keeping more of your own money, opening a bank account provides many other benefits. Second Chance Banks are specifically designed for people who need a second chance to prove they can manage a bank account responsibly.
A Second Chance Bank may be right for you if you have ChexSystems records, EWS records or even bad credit. Most banks use ChexSystems, EWS or both to verify new accounts. It’s tough to get around ChexSystems unless you find a second chance bank.
ChexSystems is a consumer reporting agency that keeps track of your past banking account history. Excessive overdrafts, bounced checks, fraud or too many bank fees can get you blacklisted from banking.
If you think you don’t need a bank account, think again.
Save money with a Second Chance Bank
People with bank accounts save more money. It’s estimated that people without bank accounts spend 5% of their net income on unnecessary fees. Not having a bank account forces you to use costly alternative financial services like check cashing stores or prepaid debit cards. Get banked and save up to $40,000 over your lifetime.
Do Second Chance Banks use ChexSystems or EWS
Second Chance Banks may also use ChexSystems or EWS to verify new accounts. But it doesn’t matter if you’ve had trouble banking in the past, through a Second Chance Bank, everyone can get banked. Second Chance Banks give you a fresh start at banking. You get a chance to start over no matter your Chexsystems or EWS record.
Financial Benefits of a Second Chance Bank
When you use check-cashing stores or prepaid debit cards, you’re missing out on the many benefits of managing your money with a bank account. Families without a bank accounts, lack the ability to access affordable credit needed to buy a car, buy a house, get a student loan or open a small business.
Establishing a bank relationship with a second chance bank will benefit your financial stability.
Bank accounts can help you access credit
Banks and credit unions can help you access credit to purchase a home, car, student, personal or small business loan, because banks tend to favor their existing customers. A history of managing your accounts well is the foundation of building a long-term banking relationship and taking advantage of the many financial products banks offer.
How to open a Second Chance Bank Account
Similar to regular bank accounts, to open a second chance bank account you will need to provide your name, address, a minimum opening deposit along with the following:
One Valid Photo Identification
State-Issued Driver’s License or Identification Card
Military Identification Card
One form of a 2nd Identification
Social Security Number
Individual Taxpayer Identification Number (ITIN)
Matricula Consular Card
7 second chance banks that you can open today
BBVA Compass ClearConnect Checking
If you want great customer service open a free checking from a leading U.S. Bank. BBVA Compass ranks among the top 25 largest U.S. commercial banks. BBVA’s Mobile Banking App was recognized as a 2017 Mobile Banking Leader for Ease of Use by Javelin Strategy & Research.
- Apply with only $25 opening deposit
- No monthly Service Charge
- Complimentary Online Banking and Mobile Banking, Bill Pay and Online Statements
- No ATM withdrawal fees at any BBVA Compass or Allpoint® ATM
- Compass Bank, Member FDIC
- Mobile check deposits
- Available in ALL States except Alaska and Hawaii
- Online customers will have 24/7 access to a team of professionals focused on your needs via text, email, or telephone.
Bank of America Safe Balance
The SafeBalance account is an alternative bank account that helps you avoid overdrawing your account. There is no check writing but there are many convenient ways to make purchases and payments.
- Apply with only $25 opening deposit
- $4.95 Monthly Maintenance Fee
- No Check Writing
- Visa Debit Card
- Available in All States
Capital One Essential Checking®
With an online checking account, your money is always just a click away. Send cash and pay bills from your tablet, desktop or smartphone.
- Minimum deposit to open account is $50 opening
- $8.95 Monthly Service Charge
- There’s no charge for Online Banking or Bill Pay with this account
- No ATM withdrawal fees at any Capital One branded ATM
- This account does not earn interest
- Deposit your checks from your phone
Citibank Access Account – Affordable Access Banking
- Access to full range of Citi digital products and services
- $10.00 Monthly Service Charge
- No overdraft fees
- No paper checks
- Available online in all states
OneUnited Bank - U2 Checking
OneUnited Bank’s U2 Checking account is for people with a less than perfect banking history and want a second chance. Online accounts are available to people in all states.
- Minimum opening deposit of $50 for checking
- Minimum opening deposit of $10 for Holiday Savings
- Monthly service charge of $12.95 for checking
- No monthly service charge for Holiday Savings
- Free mobile banking, online banking and bill pay
- Convenient personal service phone
- Compass Bank, Member FDIC
US Bank Safe Debit Account
The Safe Debit Account provides a safe, affordable way for customers to deposit money, withdraw cash, pay bills and manage their account through mobile or online banking. It’s like a checking account, without the checks.
- U.S. Bank Visa® Debit Card
- No-fee transactions at U.S. Bank ATMs
- Monthly service charge of $4.95
- Online and Mobile Banking with mobile check deposit, bill pay
- Discounts on money orders
- Free Credit Score Access -See your VantageScore® 3.0 credit score and ranking.
Washington Savings Bank
- Direct Deposit from payroll or government benefit is required for this account
- NO harsh CheckSystems® requirements! (Less stringent requirements)
- NO minimum balance!
- Deposit Money through direct deposit, mobile check deposit or mail!
- FREE online banking & bill pay with online budget tools!
- FREE mobile deposit! (only available with direct deposit and after 3 months)
- One low flat monthly fee of only $9.95 with direct deposit of government benefit or payroll.
- Direct Deposit is required.
Overhaul your finances
Opening a second chance bank account is the first major step to get financially fit! The next step is to understand your credit score and ensure your credit reports are accurate. A healthy credit score means you’re more likely to be approved for mortgage, car, personal, student or business loans. Healthy credit scores also improve the terms and rates on those loans.
Empower your finances by ordering your credit report and scores. You are entitled to a free credit report from each of the major credit three credit bureaus once every 12 months. But a free credit report will not come with credit scores.
Many people subscribe to free sites to get their credit scores but don’t realize they are not getting access to the credit scores used by 90 percent of banks and lenders. To first understand your credit score you should get your real FICO scores. Experian gives you access to a credit report and FICO score for $1. You can also get FICO scores for the 3 major credit bureaus at myFICO.com.
How to Remove Credit Report Errors
Once you get your credit report and scores, it’s time to look for possible errors. The reason you want to spot and correct or delete errors is the impact an error could have on your credit scores. Remember, credit scores are a major component to financial fitness just like having a bank account.
Credit bureaus are required by law, the Fair Credit Reporting Act, to only report accurate information on your credit reports. However, it is up to you to spot errors on your credit reports. Once you spot an error on your credit report take steps to dispute it.
Start saving money with your second chance bank account
The key to getting financially fit is saving money. Whether you’re saving for your first house or an investment property or a major purchase, maintaining a healthy savings goes a long way. Most bad credit is a result of not having an emergency fund to rely on when life happens — job loss, illness, major repairs, you name it.
Good techniques for effective saving include:
- Put your savings on automatic with direct deposit from your employer. Allocate a portion of your income to go directly to a savings account. What you don’t see, you don’t miss.
- Keep track your spending. Online banking offers tools and alerts giving you 24/7 access to your accounts. Download a mobile app that keeps track of your spending. Know where your money goes.
- Get the family involved. It is easier to save when everyone is excited and working towards the same goal.
- Get the most for your money with a high interest savings account.
Use your new bank to become a homeowner or investor
You may already own a home, but if not, once you open a second chance bank account make homeownership your number one goal. Your home may be your greatest asset. Now that you’re saving money start to prepare your credit files for homeownership. Homeownership is a dynamic experience that requires a tremendous amount of care and attention.
Some things you can do immediately to prepare for owning a home are the following:
- Reduce your debt. If your debt-to-income ratio is too high, your bank will likely not consider you for a mortgage loan; or, any type of loan. High debt, even when it’s paid on time, is considered high risk. In fact, mortgage lenders say high debt, not credit scores is the number one factor in denying mortgage loans.
- Save a downpayment. It’s tough to save money when using a check cashing store or piggy bank. A second chance bank gives you access to a safe place to store your money while earning interest. The down payment is one of the most significant components to purchasing a home. It used to be that a 20% downpayment was required to purchase a new home but times have changed.
- Homebuyers can buy a home with as little as three to five percent down. If you do put less then 20% down, you will probably have to purchase private mortgage insurance, which will cost you between .5% to 1% of the loan amount until your equity reaches the full 20%. Keep in mind that the more you put down, the less your mortgage payment will be.
- Don’t take on new credit obligations. Don’t aggressively open new credit accounts while preparing to purchase a home. The last thing your bank wants to see is that you are taking on new debt. Unless you have no positive credit accounts reporting in your credit files, refrain from opening new accounts. If you need to open new credit cards make sure you keep the balances to less than 30% of your available credit. In fact, for the best credit scores consider keeping your balances at 10% or less of your available credit.
- Consider FHA Mortgage Loans. Your second chance bank may offer FHA loans. FHA loans are easier to qualify for when people have less than perfect credit. Credit scores can be as low as 500 for FHA loans, however, most banks will want you to have at least a 620 credit score.
Most banks require that total housing costs not exceed 28% of gross monthly income, and total debt payments per month (including the mortgage) not surpass 36%.
But FHA has is less stringent requirements. FHA require that total housing costs not exceed 31% of gross monthly income, and total debt payments not exceed 43%. But there are exceptions to FHA general guidelines. Total debt payments can be as high as 50% for certain borrowers, particularly those with good credit and other “compensating factors.
Here is a sample chart of required credit scores for FHA Mortgage Loans and Compensating factors for high debt.
Image: Compensating factors for debt ratios in manual underwriting. Source: HUD Handbook 4000.1
As you can see there are many benefits to building a banking relationship. Access to credit is one of the unique benefits of establishing an account at a second chance bank. Access to credit and homeownership is not part of banking at a check cashing store or using a prepaid debit card.
Get back on track with a second chance bank today to get financially fit. Find more second chance banks in your state.