If you have got a poor credit history the chances are you won’t be able to get a current account. For many decades, this problem didn’t affect the majority of the UK population, as they tended to spend their money frugally and to sensibly balance incomings and outgoings. Unfortunately, the situation has drastically changed over the past few years, sometimes on account of excessive spending, sometimes on account of the generally unfavourable economic climate. Today, people who previously earned a good wage have found themselves without the means to get a current account following a divorce, illness or being laid off. The consequences are shocking: Without a bank account, many debtors or bankrupts can not find new employment and are passed further down the debt spiral. Thanks to recent developments in the banking sector, however, bad credit is no longer a reason for not being able to get a bank account.
Basic bank accounts and guaran teed bank accounts
In fact, there shouldn’t be anyone who can’t get at least some form of bank account, no matter how bad their credit. Basic bank accounts, for example, have been around for a while and they have the advantage of closely resembling the kind of current account you may be used to. Mostly, they are free, too. Unfortunately this type of bad credit bank account might require a credit check which might still mean you can’t open one. In some cases, you may even need a recommendation from someone who is already a customer of the bank you are applying to. This means that many applicants for basic bank accounts have been turned down.
If you’re prepared to pay a small fee, on the other hand, you can opt for a guaranteed bank account instead – a bad credit bank account for those who have been turned down for even a basic bank account. The disadvantage of the fee is usually more than compensated for by the fact that the account allows you to search for a new employment, receive payments and conduct some of the essential basic banking facilities required in daily life.
Bad credit bank accounts are better than you might think
You may not be familiar with all of the providers on the market for guaranteed banks, since most of them are still fairly new and operate slightly differently from standard banks. This, however, should not prevent you from working with them. Their main field of action is to offer accounts to people with a poor credit history. These accounts will be very basic, with no credit facility or cheque book. But they will allow you to deposit and withdraw money, set up a direct debit and standing orders, go shopping with your card, get cash back and withdraw money from the ATM. You may no longer be associated with one of the big brands of banking, but that need not be a disadvantage per se – by allowing you to conveniently manage your finances online, some of these guaranteed bank accounts are actually more up to date than some of the conservative alternatives.
When applying for a bad credit bank account you will need to complete an application form. Make sure that you do this well as a mistake may mean you could be turned down for a bank account when you would have ordinarily been accepted.
Turning bad credit into good credit
Another way to help the situation is to try and repair your credit history. There are some prepaid credit cards which will go some way to improving your credit score. The bank that issues your card will report your spending patterns to the credit reference agencies who will make a note of it on your credit history report. The other thing you should do is check for inaccuracies on your credit report as you may well be penalized for something you haven’t done. An example of this is when someone who lived at your address ran up bills that they then didn’t pay.
The debt problem may not yet be over, unfortunately, but the market has thankfully responded with costumer-friendly new products, which mean you could soon be on the road to recovery again. Bad credit is still a major issue, but at least you can do something about it.