If you have bad credit, you may think it’s going to be difficult to open a bank account, but it’s not. There are bank accounts that you can apply for that are designed for people with bad credit. They won’t give you all the perks of having a standard current account, but they’re better than no account.
If you’ve got bad credit but want to open a bank account, read on to find out how to go about it. We cover almost everything you need to know about bank accounts for bad credit.
Table of Contents
Can I Get a Bank Account With a Bad Credit History?
Yes, you can get a bank account with a bad credit history. You do have options which we’ll discuss in more detail below. The key thing to remember is that having a bad credit file won’t stop you from having a bank account.
What is a Bank Account for Bad Credit?
A bad credit bank account is one that’s specifically designed for people with a poor credit history. They’re usually referred to as basic bank accounts. As these basic bank accounts don’t offer overdrafts, they’re less risky for the bank. That’s why your credit score doesn’t matter.
Like standard current accounts, basic bank accounts give you a place to store your money. The table below shows you what you can and can’t do with a bank account for bad credit.
| What you can do | What you can’t do |
| Pay money into them Use a debit card to pay for things Draw cash out at cash machines Pay bills by direct debit | Go overdrawn Have access to package bank accounts that offer various benefits |
What Should I Know Before Applying for a Bank Account for Bad Credit in the UK?
If you have bad credit, there are a few things you should know before applying for a bank account in the UK.
- Although bad credit won’t affect your application you still need to prove who you are and where you live. Make sure you check with the bank for what documents they accept.
- Be willing to have a credit check done. Even though your credit score isn’t a key factor, the bank is still likely to run a check on you.
- Make sure you understand the terms and conditions of the account before you apply. This way, you won’t be surprised by any hidden fees or charges.
How to Apply for a Bank Account if I Have Bad Credit?
If you have bad credit, there are a few things you’ll need to do when applying for a bank account.
- First, compare the accounts offered by the different banks. There are a lot out there so make sure you understand what they offer. Fee-free bank accounts are offered by most high street banks so they’re a good place to start.
- Second, gather all the required documentation. You’ll need to provide proof of your identity and your address. The documents they’re likely to accept are in the table below.
| What you need to prove | What documents can be used | What documents could be used if you don’t have standard ones |
| Proof of your Identity | Passport Driving License | A letter from the Department of Work and Pensions A letter from HMRC A letter about your state pension |
| Proof of your address | Driving License Utility bill Bank Statement Credit Card Statement | One of the above letters or: A letter from your GP A letter from your landlord |
- Once you’ve found the right account and gathered all the documents you need, you can submit your application. You can do this online, or some banks offer this service in person.
What are the Benefits of Having a Bank Account for People with Bad Credit?
Having a bank account for people with bad credit has got its benefits. Here are a few.
- Having a basic bank account can help to improve your credit score. You can use it to show you’re responsible with money by paying bills from it on time. This will help with future applications for loans like short term loans, small loans, and credit cards.
- A bank account provides a place to store your money safely. You won’t have to worry about losing cash or having it stolen, and you’ll always have access to your funds.
- You can quickly view your transactions with online access to your bank account. Most banks have an app you can use too.
- A bank account can help you to save money. Many banks offer features like automatic transfers to savings accounts. This can help you achieve your financial goals.
Do Banks for Bad Credit Run a Credit Check When Opening an Account?
Yes, most banks that offer accounts for people with bad credit will do a credit check when opening an account. This is because banks are regulated by the FCA and they have to follow the FCA guidelines.
However, if you apply for a basic bank account, they won’t use your credit score. A soft credit check or a hard credit check will only help them verify who you are. Apart from this it won’t have any impact on your application.
Can a Bank Account for Bad Credit Help in Improving my Credit Score?
Yes, a bank account for bad credit can help you improve your credit score. When you have a bank account, your financial activity is reported to the credit reference agencies. The three main ones in the UK are:
Anything that helps show that you’re responsible with money will help your credit score. And this in turn helps you to get approved for future loans and credit cards.
Can I Get a Bad Credit Bank Account if I’m Unemployed?
If you’re unemployed, you can still open a bank account, but it will most likely have to be a basic one. Not having a regular income won’t be a problem with a basic bank account.
You might be wondering whether it’s worth having a bank account if you’re unemployed. Having even a basic bank account is worthwhile, here are some reasons why.
- If you’re receiving benefits, you’ll be able to get them paid straight into your bank account.
- You’ll be given a debit card. This makes paying for things easier, especially if you want to buy anything online.
- If you apply for a new job, they may want to pay your salary into your bank account. This can make things difficult if you don’t have one.
- Paying for your bills by direct debit from your bank account will help improve your credit score. That’s so long as you pay for them on time.
What is a Basic Bank Account?
A basic bank account is a ‘no-frills’ type of bank account. The main difference when compared to a standard bank account is that you can’t have an overdraft with them. But the bonus is that your credit score doesn’t matter. This makes them perfect if you’ve got bad credit but need a bank account.
You can open a basic bank account with most high street banks. The table below shows you some of the banks who offer them and what they call them.
| Bank or Building Society | Name of the basic bank account |
| Barclays Bank | Basic Bank Account |
| Lloyds Bank | Basic Bank Account |
| Royal Bank of Scotland | Foundation Account |
| Nationwide Building Society | Flexbasic Account |
| HSBC | Basic Bank Account |
| Halifax | Basic Bank Account |
There are a lot more banks and building societies who offer basic bank accounts. Before you apply to open one, make sure you read up on what they’re offering on the account. Most of them should be fee free for example but check to be sure.
Features of a Basic Bank Account
A basic bank account is a great solution for anyone with bad credit. Here are some reasons why they’re good option.
- Although the banks may still run a credit check on you, your credit score won’t matter. Having a good credit score isn’t a requirement to open a basic bank account.
- Paying your bills from your basic bank account can help you rebuild your credit score.
- Most of these accounts have no monthly fees.
- You can do everything that you can with a standard bank account. You can pay bills, pay in money, withdraw cash, and have a debit card.
- If you’ve been managing your basic bank account well, you can upgrade it to a standard bank account. The bank may even review your account themselves and offer this to you.
How to Open a Basic Bank Account?
Opening a basic bank account is a fairly simple process, here’s what you need to do to open one.
- Choose the right bank for you. Here’s what you might want to consider.
- If you’re going to need a branch to pay in cash, check if there’s one near you. Some banks let you pay cash into your account at the Post Office.
- Have you already got debts with the bank? If so, you may want to open your basic bank account with another bank or building society. This is because banks can use the money from your bank account to pay off money you owe in another account.
- Once you’ve decided on a bank, find out what documents they need. You’ll need to provide identification and proof of your address. If you can’t provide this information, you won’t be able to open an account.
- Apply online or in person. The bank’s website will tell you the best way to open your account.
Can I be Refused for a Basic Bank Account?
Most people can open a basic bank account without any problems. But there are some rare cases where you may be refused. The reasons why you may not be able to get a basic bank account are as follows:
- If you’ve been convicted of fraud, or the bank suspects that you may use the account for fraudulent activity.
- If you can’t prove your identification or address.
- If you’re eligible for a standard account.
Tips for Managing Your Basic Bank Account
There are a few things to keep in mind when managing your basic bank account.
- Keep track of your balance and make sure you have enough money in your account to pay for things.
- Set up your bill payments so that they go out when your salary is paid into your account.
- Set up text or email alerts to let you know if your account is running low. That way you can cancel payments before they’re due if you don’t have enough money in your account.
What Alternatives are There to Basic Bank Accounts?
If you don’t want a basic bank account or can’t get one but you have a bad credit score, you do still have options. You can either take out a pre-paid card account or apply to a Credit Union.
1. Pre-paid Card Account
You can have a pre-paid card with bad credit. It lets you pay for things like you would with a normal debit card. You just have to load money onto the card before you use it. There are advantages and disadvantages for using a pre-paid card account. The table below gives you some of them.
| Advantages of a pre-paid card account | Disadvantages of a pre-paid card account |
| No credit check needed. | Most of them charge a monthly fee or charges for transactions you make |
| Great for budgeting as you can only spend what you load onto your card. | You can’t use them everywhere. |
| More secure as, if you lose the card, a thief can only use the money that’s already loaded onto the card. | You may have a limit on how much money you can load onto your card. |
| Your money is ring-fenced by the company to protect it. | Your money on the card isn’t protected by the Financial Services Compensation Scheme (FSCS). This offers people in the UK protection on their money held in banks or savings accounts. If the bank goes out of business, up to £85,000 of your money’s protected. |
2. Credit Union
You may be able to get a basic bank account from a Credit Union. They may charge a monthly fee to use the account, but you can have one if you have bad credit.
You need to have a ‘common bond’ with the Credit Union to take out an account with them. This means you need to be living in a particular area or work in certain profession.
If you want to look into having a bank account with a Credit Union, then you can search on ‘Find Your Credit Union‘.
Conclusion
Bank accounts for bad credit are a great way to rebuild your credit score and improve your financial situation. If you’re looking for a basic bank account, makes sure you choose one that’s fee free. Don’t let bad credit stop you from having a bank account. Use the account wisely and budget your money so that it helps to build your credit score.
Disclaimer: We are not providing financial advice. These are just tips for informational purposes. Also, we are not affiliated to any of the external parties linked here, they are provided for reference only.