When planning to open a bank account, you may be curious what information banks use to determine if you’re a suitable customer. Like credit card companies and loan providers, banks can check on financial history before accepting individuals as customers. Policies vary between banking institutions, but it is common practice for banks to do their due diligence and research you.
Banks can check your credit report, your credit score, and your banking history before opening your account.
Under the Fair Credit Reporting Act, banks can check your credit report and credit score when you try to open account; this is justified as a legitimate business need. If there are worrisome items in your report, such as bankruptcy, multiple accounts in collections, or other red flags, the bank will take this into account when considering you as a customer. The same goes for your credit score –a noticeably underperforming score will give most banks reason for hesitation.
Just as frequently, banks will rely on your specific banking history when you attempt to open a new account. Frequently, banks will run a bank history report, which is considered one of the best indicators of your viability as an account holder. This report is frequently pulled from the ChexSystems database, a service which is used by eighty percent of U.S. banks and credit unions. When an account is closed for unfavorable consumer behavior – such as check fraud, excessive overdrafts, or unsettled debts – the record of this activity will likely wind up in the ChexSystems database, and can be viewed by any bank or credit union that uses the service.
Chances are, banks will check on your background before they decide how to proceed with your request to open an account. If you have a troubled financial history and can’t get an account opened, you may have other options – many banks have accounts with restricted features or privileges for consumers with poor banking or financial history. If you’re in this position, changing your financial behavior will ensure that you won’t be restricted by your records forever – but for some time, your ability to maintain a traditional bank account could be limited.
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