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.