Bank Accounts for Poor Credit Rating
Getting a loan or a credit card brings with it a huge responsibility – the need to make repayments in time to ensure that credit ratings do not suffer. Many people learn this harsh fact the hard way and by then, it can be quite difficult to undo the damage. This reflects in the attitude of banks that show a marked unwillingness to trust such persons to operate a standard bank account.
Is there any difficulty in getting a bank account?
A poor credit rating may be a result of several unfortunate circumstances – late payment of credit card bills, missed or late payments of loan instalments, going bankrupt, or an unfavourable ruling by the County Court Judgement. Wary of such situations, some people seek to avoid borrowing money. However, this is not a guarantee of a good credit rating. The logic is simple – if someone has never taken a loan or used a credit card, a prospective lender has no means of assessing his or her ability to repay. Whatever the cause of a poor credit rating, the outcome is identical – most banks close their doors when approached for a bank account.
Best Bank Accounts for Poor Credit Rating
Faced with such a situation, the only option is to ask for a basic bank account. As the name implies, this account offers only the most basic of features – an everyday banking facility that is free of cost. However, such bank accounts for bad credit history do not allow access to a cheque book or to loans of any kind, or overdrafts. Besides, there will also be restrictions on where and how much money a person can withdraw from such an account.
Although several banks may offer the basic bank account, not all of them give it much visibility because clients with poor credit rating are seen as high-risk customers. According to feedback from those in the know, Barclays Cash Card does a reasonably good job of helping clients with credit rating problems, provided they can submit a valid ID and address proof documents.
Although this account does not allow access to overdraft facility, it allows a buffer of £15. Think Money also offers a personal account for people with credit rating issues, although they may need to pay a fixed amount as fees for it. Having such a basic bank account is perhaps one of the best ways to get a budgeting system in place to ensure meeting the financial commitments month after month.
Tips on Improving Credit Score
Access to a basic bank account for bad credit can be a temporary measure at best, and it is vital to take steps in the right direction to raise credit ratings. To start with, check if you have inoperative credit agreements and close them to avoid a negative impact on your rating. Check that all the information is correct including inquiries made against your credit file.
If someone involved in a joint finance with you has a poor credit rating, this influences you too; get out of such partnerships and inform the credit agencies of such events.
Your credit rating may work against you when you want to borrow money, as you may find the only people willing to lend to you are those who charge exorbitant rates of interest. Do not let this stop you – take small loans and pay them back on time to prove you are a responsible borrower. This will not only enable you to get more loans in the future, but it will also work wonders for your credit rating. As a result of the improved credit rating, banks would then be more forthcoming about offering you loans at traditional interest rates.