Finding bank accounts with bad credit

A bad credit bank account could be suitable for someone who has been turned down for a bank account by a high street bank.

Some people apply for bank accounts and end up getting turned down because something in their financial history has had an effect on their credit rating.

• In some cases, people have a poor credit rating because they simply failed to keep up with payments to one of their financial commitments, whether it was loan, a mortgage, a credit card debt or a utility bill.

• Other people may have a poor credit rating by no fault of their own – for example, they may have suffered a drop in their income, or their essential expenditure may have increased, which meant they couldn’t afford repayments.

Some bad credit bank accounts don’t require a check on people’s credit ratings, which means that anyone can get an account as long as they can prove their identity. This can be particularly useful for people who have been turned down elsewhere.

*Budgeting – protecting your credit rating*

If you are concerned about your credit rating, you could take steps now to make sure you avoid damaging it in the future. For example, you could improve your budgeting skills.

A budget is a detailed plan that shows how much money you earn/receive, and where your money goes, on a monthly basis.

In order to create a budget, you have to work out your total income (everything you receive/earn) and take away your total expenditure (the money you spend on essentials, such as food, utilities and mortgage/rent repayments) so you can calculate your disposable income.

Your disposable income is what you can use for payments towards your non-priority debts (unsecured loans, credit cards, store cards, etc.) and, if there is anything left, savings and non-essential expenditure.

By budgeting, you can ensure you have enough money set aside each month to make payments to all your financial commitments – thereby avoiding the risk of missing a payment and damaging your credit rating.

Adapted from Think Banking’s Bad Credit Bank Account section.

Debtors’ Rights and Dealing with Collectors

Unmanageable debt is one of the most serious personal finance problems facing UK citizens today and the financial crunch has only served to aggravate the situation. The economic downturn has resulted in unemployment and wage cuts which have prompted many in the UK to accumulate even more in personal debts.
When you are swimming in debt, it is easy to feel distraught. Add to that collectors banging on your door and the situation becomes extremely distressing. However, just because you are up to your neck in debt doesn’t mean your situation is hopeless. Even debtors have rights and knowing what these are should help you manage your financial problems successfully.

Debt Relief Programs

If your debt has become unmanageable then you have most likely opted for debt relief programmes in the form of an IVA or Administrative Order. These programmes are legally binding agreements that help prevent collectors or creditors from hounding you.
If you have entered into an IVA or individual voluntary agreement, your creditors cannot file suit against you or even get in touch with you during the course of the agreement. Under an Administrative Order, your debts are consolidated into a single payment which you will issue to the court. The court will appoint a staff member – likely a bailiff — to collect payments then issue these payouts to your lenders.
As a rule, bailiffs are obligated to transact with debtors in a respectful manner. As a matter of fact, they are required to advise you of their visits beforehand. They may not force themselves inside your home and they may not get in touch with you at your work place.

Credit Card Debts

This year, a rule has been established by the government regarding credit card debt collection. To be specific, the rule stipulates that debtors must be given a period of 30 days before creditors can start collecting the money that these borrowers owe. This rule was put in place in hopes that this will give borrowers sufficient time to devise a repayment plan as well as encourage them to seek professional financial advice.

Other Measures

If you are continually hounded by abusive debt collectors or are often dealt with in an unprofessional manner, you can make a complaint through the Office of Fair Trading (OFT). If the collection agency broke any rules, the OFT can intervene and investigate the practices of such individuals. Should they be found in clear violation of any laws, the OFT is authorised to prevent them from operating their business.