With a poor credit history, signing up for loans and bank accounts can feel out of reach, especially with many places requiring a credit check.
Improving your credit rating can seem like an uphill battle, especially when bad credit can prevent you from taking necessary steps for getting out of the red. We’ve got some advice to help you open a bank account or consider an e-money account, even if you have a bad credit history.
Get a basic bank account
Improving your credit score is like climbing a ladder, and the first step is opening an account to help you look after your money. Having a place to manage your income and pay your bills on time will help you get on the way to rebuilding your rating.
There are a few things you should look for when searching for a basic bank account:
A bank account with no credit check
Did you know that a basic account is also known as a no credit check bank account? Bank accounts are financial products so having a bad credit score means that you might not be approved for some of them. However, there are accounts designed specifically for people with poor or no credit history. For these accounts, all you’ll need is proof of identification and address.
A bank account with no overdraft fees
Did you know that the big banks made a whopping £2.4bn from overdraft fees in 2017? That’s a lot of money taken from people who had none!
If you have a poor credit score, the last thing you need to worry about is a bill going out a day earlier than expected, taking you into your overdraft.
New rules introduced by the Financial Conduct Authority (FCA) in April protect you, the consumer, from the banks, with a ban on daily and weekly overdraft fees. However, many banks still charge interest when people go into their overdraft.
Opting for an account that will not charge for an overdraft, or doesn’t allow a bill to be taken if you don’t have enough money in your account, is a fantastic safety net while you’re trying to get back on your feet and build up your rating.
Shop around for an account
While you may think that your options are limited, they aren’t. Most banks now offer some form of basic account so you’ll have a good variety to choose from.
Consider your needs
Not all basic accounts are the same, and we know your situation could be very different to others. For example, some people need the no credit check option due to their own credit rating. Others might appreciate the control over having no unexpected overdraft fees.
To make sure you pick the best basic account, weigh up the features and benefits of each one, including interest rates and features that are best for you. Are there overdraft charges? Is there a minimum deposit on opening an account? These might be the things that help you decide.
Make sure you don’t just look at the big banks – there are alternatives.
Look for alternatives to the ‘big banks’
With traditional banks failing consumers on so many occasions with things like the PPI scandal, government bailouts and banker bonuses, people are now looking at new, alternative ways to keep their money secure.
An estimated 92 percent of the world’s money is digital, so why aren’t our banks following suit? Banking no longer means long queues from 9am, chained down pens and long paper statements. It’s fast, efficient and most importantly, secure.
Many online accounts, like Vox Money, have countless benefits that a traditional bank just can’t compete with. If you have a poor credit history and need to stick to a budget to get your bills out on time, you can set up digital wallets to set your money aside. With a traditional bank, you’d need to set up multiple accounts to move your money around.
You can still use a standard ATM to withdraw money, so you won’t miss out there.
Like the sound of having easy access to your money? We make opening a bank account with bad credit a doddle! Head to our sign up page and find out more about why a Vox Money account is right for you!
