No Credit Check Articles

No Credit Check Banks

It's possible to do business on a cash only basis, so no credit check banks are often unnecessary. I'm not convinced that banks are necessary for the wealthy, but if you're in a lower income bracket, then bank accounts become even less important.

One of the reasons that not having a bank account is a good solution for people with lower incomes is because most of them charge a monthly fee if you don't maintain a certain minimum balance. But if you're poor, you probably don't have enough money to maintain that minimum balance, so you're stuck paying the fee.

Another reason to not have a checking account is that the fees for making mistakes are exorbitant. Suppose you have a medical emergency, and you write a check to cover it, even though you know you don't have enough funds in your checking account to cover it. Many banks will charge you a $35 fee.

Worse still, you could face collection and prosecution efforts for the check you wrote. And your credit rating gets hurt too.

The fees required to cash a payroll check aren't usually so absurd as to make living life without a bank account impractical. So consider this as an option.

On the other hand, you might like the convenience of a bank account, and you don't mind paying for it. The rest of this article is for you.

Why might you be unable to open a bank account?

The most common reason is a bad credit history, which includes:

NSF (insufficient funds or bounced) checks on the rolls of another bank.
A record with one of the check-cashing services used by merchants, such as Chexsystem or Telecheck.

How Does a Bank Know?

No Credit Check Banks Unless you walk into the bank with a sign announcing you have a history of bad credit, how will a brand-new bank determine whether you qualify to open an account?

Any financial institution is required by federal law to obtain the following identifying information from each new customer requesting an account in order to comply with anti-terrorist legislation:

Your full name
Your physical address
Your mailing address
Photo ID
ID number
Proof of US Citizenship or Resident Alien Status
Social Security Number
Birth date
Occupation and (optional) employer

As it happens, this is exactly the same information needed for any organization to check the credit history of any individual with which they are considering doing business. So banks can easily check your credit history prior to approving you for an account. They also have nearly instant access to the major check verification services to see if you have written any bad checks from other banks. So if you are turned down for an account, or expect to be turned down due to flaws in your credit history, you may wish to seek a banking alternative.

One Alternative: No Credit Check Banking Service

One option is an online banking service clearinghouse which takes your application information and submits it to one or more participating FDIC (Federal Deposit Insurance Corporation) insured financial institutions who will in turn issue an offer of a bank account to you. When the offer is made, you will have the choice of accepting the particular bank's standard fees for services.

Once you agree to establish an account with any bank, you will be expected to make a deposit in order to activate the account, and you will need to either order checks or a debit card (or both) in order to have the ability to use your account to pay bills and make purchases. Additionally, you can set up a direct deposit arrangement with your employer if you choose--in fact, some banks issuing no credit check accounts insist upon this.

Before you agree to open an account, you should ask some questions about their terms:

Do they charge a monthly fee, and if so, how much is it?
Do they charge withdrawal fees, and if so, how much are those fees?
Are you required to maintain a minimum account balance, and if so, what is that minimum?
What is the bank's policy on holding large deposits?
Are your deposited funds are available for immediate use?
Is interest paid on your balance, and if so, how much?
What is the cost of ordering checks?
How long it takes to receive your check orders?
How long it takes to get a debit card?
What debit card policies and regulations are in place?
How does the bank handle overdrafts and how much are overdraft fees?

If the bank information does not clearly state that it is FDIC insured, ask how your money is protected. If you would like the option of banking at a physical location, make sure that the bank has a local branch.

Ask questions if any of these items are not covered in the information the bank sends to you. Understanding the fundamentals is the key to handling your finances.

One consideration with allowing a clearinghouse to shop around for your bank account is that your personal information (including your Social Security number) will be shared with several institutions, compromising your privacy. Banks have the reputation of carefully handling such sensitive personal information, but you may choose to search elsewhere for no credit check banking alternatives.

A Second Alternative: Prepaid Plastic

You might not think that your hard-earned cash can be safeguarded by plastic, but the pre-paid debit card industry has developed a popular method for converting all your cash directly to plastic and bypassing banks altogether.

With many pre-paid card alternatives from which to choose, among them iBankUP, All Access, Account Now, Rush Card, and Wallmart money card, you will find it a fairly easy matter to research the pre-paid industry.

Some of the positives in using a pre-paid debit card as a banking alternative are:

• Absolutely no credit check
• Anyone is eligible (for some uses you must be over 18)
• Fast online application
• Fund your card online, by phone, or at a common retail store
• Instant online tracking of transactions
• Instant balance check at any ATM

Another positive about using a pre-paid card for paying bills and making purchases is that it is virtually impossible to spend more than you have. While a bank will charge anywhere between $20 and $50 for an inadvertent overdraft error, the ATM will charge a couple of bucks if you try to get money that isn't there.

However, getting and keeping a pre-paid card funded involves a bit more than signing up. There are a few delays and complications which you should expect prior to making the decision to purchase any of the pre-paid cards available, such as:

• You can apply online, but the card must be sent through the mail, so there is a several-day delay
• You have to pay a service such as GreenDot MoneyPak to “load” your card with funds
• While you can add MoneyPak funds at any of several common retailers, there can be a delay of up to one hour while the funds are loaded
• You must add between $20 and $500 at a time ($1000 is the limit at Walmart)
• Services such as GreenDot monitor all of your transactions and reserve the right to block any transaction and ask for your identification during any transaction
• If you lose your card, there is no way to recover your cash
• If you want a refund from the service, it takes several days for a check to be sent to you

Another downside to be aware of in using a pre-paid card and funding service is that you will be paying both for the service ( $5 or so) and a per month fee to your card provider--albeit a negligible one of around $2. Be sure you know what fees are involved before you decide to use a pre-paid card banking option.

Of course, when you open only a checking account or purchase a pre-paid card, you preclude the option to save any of the money you earn. A wise consumer would use either of these banking alternatives as a temporary measure and make plans to begin saving a percentage of earnings as soon as that becomes feasible.