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Bad Credit - Getting A Bank Account

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  • Bad Credit - Getting A Bank Account

    Many people in the UK don’t have a personal bank account. Some of those people find it difficult to open a standard current account with a full function debit card, cheque book and overdraft facility because of either a previous bad credit history or a low credit score due to them not being in full time employment, not being on the electoral register or not owning their own home, for example.

    To overcome this problem UK banks are obliged to offer stripped down versions of their current accounts without the overdraft, cheque book or fully functioning debit card. These accounts are called basic bank accounts. Many of them still come with debit cards (real time authorisation type) and most of the facilities that the standard accounts provide such as online/telephone banking and direct debits/standing orders. Banks don’t really publicise these accounts as they are not a profitable service to offer. Despite the accounts being easy to obtain, the banks are still required to carry out identity and residency checks which could still be an issue for some individuals.

    There are even accounts available to undischarged bankrupts. However, anyone with a CIFAS fraud flag on their credit file is still likely to be refused by all the high street banks.

    But don't let this put you off because a lot of the large high street banks will offer a full bank account (or basic) regardless of how bad you think your credit history actually is. The information on this page outlines what we feel the best account is, how you can increase your chances of getting accepted for a full account and what to do if you keep getting refused an account.

    So what is the best bank account?

    We get asked this question a lot on our forum but that totally depends on what it is you're looking for and what your credit profile looks like. If you're looking for a full bank account purely to get yourself back on the credit ladder and have a bank report your conduct to the Credit Reference Agencies (CRA's) each month, then any type of current account should suffice as they all report your account conduct, whether it's a full or basic account. Your chances of acceptance will vary with each provider so try and avoid applying with the premium banks such as First Direct, Nationwide & M&S Bank and instead focus on the standard providers such as Barclays, HBOS, Natwest etc.

    If your credit file has adverse data on it, such as defaults or CCJ's then don't think you can't apply for, or won't be accepted for a full current account as this is simply not true. There are plenty of examples riddled throughout the forum showing how members with defaults have successfully applied for a full bank account (some with overdraft, others without). A few of the high street banks will also automatically assess your account conduct at regular intervals and if you don't breach the terms of the account they openly invite you to upgrade; Barclays is probably the most well known for upgrading basic account customers after 12 months of running their basic account properly and within the terms (i.e. no bounced payments / overlimit etc).

    Plus nowadays most the high street banks give a full debit card (some with contactless and others without) so your basic account will act just like a full account with the exception that all transactions but be authorised, so your card may not work on a plane or train where there is no direct connection to authorise the payment with your bank. This has little effect on contactless payments but it will mean that you'll require authorisation for each transaction. On the other hand, you could be offered a full account with cheque book facility but with a basic card that requires authorisation (with or without contactless) - but after a few months it is fine to request a full card which doesn't require authorisation at point of sale and so you could go overdrawn, for instance.

    Due the many options and features associated with bank accounts it's best that you check out a comparison service to establish what you are looking for and what you're expecting from your next bank account before randomly applying.

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