Issues Arising When Opening A New Bank Account

A new bank account may not always be opened smoothly. There are things that can come up that may affect your ability to open new bank accounts. Here are some of the common issues and a few ways to overcome those issues.

Past Issues with Other Banks

If your account has ever been closed, due to misuse, you may run in to problems trying to open a new account. Banks review your credit and use their internal system called Chexsystems. Their system is used to review banking history. If you have an account that had returned checks or was closed with a remaining balance, your banking history is negatively impacted. Old banking histories can prevent you from getting a new account. You will want to clear any past accounts before you start to look for new ones.

There are a few banks that offer second chance accounts. These accounts are usually limited, and will only offer a bank account debit card to prevent you from writing bad checks. These accounts usually require a higher opening deposit and higher account fees. The banks see you as a high risk and these extra steps help to ensure you will treat your account seriously.

Improper Documentation

You will need to have a social security card, state or government license or ID card. If you are opening a business account you will need to provide additional information for the business itself. Usually a tax ID number and legal business documents are required. If you don’t have this documentation the bank will likely tell you to come back when you have it.

If you don’t have a social security number you will either need to obtain one or have proper documentation that you are a legal resident. This information is necessary not only to protect the bank, but they need to report open accounts and balances to the IRS. The Patriot Act also requires that all banks gather identifying information to help defray terrorist activities and money laundering.

Poor Credit Ratings

While most banks won’t rely on your actual credit rating, some credit unions and other financial institutions will take this in to account when opening a checking or savings account for you. For business accounts having a credit rating will be important. Some bank products such as overdraft credit lines and other loans will also require the bank to run a credit report. If you have poor credit you may only be able to get savings accounts, or limited checking accounts. It’s best to pull your credit before you start to look for a checking account. This will help you determine what type of account and what products you will likely qualify for.

Opening a new bank account isn’t difficult. There are some things that can come up making it a little more of a hassle. If this happens, just fix the problem and proceed.

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