Bank Account With a Poor
Credit Record
Can I Get a Bank Account With a Poor
Credit Record?
QUESTION
As a teenager in the mid-80s, he had an
account with Barclays but that was closed 10 years ago when he ran up
an overdraft of £500-600 (which was never re-paid).
Some years ago, I asked the local CAB
office for advice and received the names of various banking
institutions which would open restricted current accounts for users
with poor credit ratings but the approaches my son made were
unsuccessful.
He has a Post Office Savings Account
through which he can process his wage cheques but this takes a long
time, causing cash-flow problems, and, in addition, it has no sort
code which is required if wages are to be credited direct.
My son is not looking to borrow money, nor
to run up unauthorised overdrafts, having learnt his lesson the hard
way. He wants a current account with a cheque book and a cash
withdrawal card limited to what is currently in his account, and the
ability to have his wages credited direct.
ANSWER
A number of high street banks have, or are
to, allow bank accounts to be opened by those who have less than
favourable credit histories. Whether we believe this to be a push from
the government or, the banks formatting a strategy to earn high
charges from those who can least afford it, it is a welcome move and a
real incentive for many debtors to join the real world. The account
holders will be given cash cards, phone banking and in some cases
direct debit facilities. The banks are withholding a chequebook and
overdraft facilities until the account holder can upgrade to a full
current account. The banks involved are Nat West, Lloyds TSB, with
HSBC to follow soon.
I think that your son will have to accept
a degree of control over his banking facilities as a way to prove
himself, and the announcement by a number of banks offering minimal
services is at least a way forward. The following suggestions may not
be possible (sizeable deposit), nor may they be totally suitable
according to the bank location (small/big branch), but do try to get
on as much a personal level as possible, and ensure some form of
deposit.
1. Make an appointment with the bank
customer service dept when handing in the application form, and talk
through his needs.
2. Have the biggest deposit possible at
the time of applying for the account. Possibly a cheque from yourself
so that it is recognized that he has support and connection with a
family etc.
3. Ensure he is on the electoral register.
4. A building society savings account is
easy to obtain, and a move to a cheque account after a period can
offer a planned approach.
5. If he does apply to one of the banks
offering the chance of special account make a point of telling the
bank that he is looking for that type of account. I'm not sure if a
participating bank will recommend the special accounts or whether you
have to make the point.
Of course, your son can marry a woman with
a good credit record and apply for a joint account :))
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