3 Reasons You May Be Denied a Bank Account

Bank account application rejected? This might be why.

You have a steady job with a steady paycheck and you want to find a home for your money. What's your next move? It's simple. You apply for a bank account and wait for your account number and debit card to be issued.

But what if your bank account application is unexpectedly denied? Believe it or not, having the money to put into a bank account does not guarantee you'll be given that option. If your bank account application is rejected, it could boil down to one of these reasons.

1. You have a history of being irresponsible with your bank accounts

Many banks use screening services like ChexSystems to get a sense of how responsible account applicants are. These systems are comparable to the credit bureaus that track your credit history. If there's a red flag in your banking history -- for example, writing bad checks or too many overdrafts -- you could be denied a bank account.

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2. Your credit has been frozen

Freezing your credit will prevent a criminal from opening a bank account in your name. But it will also prevent you from opening a new account. If you froze your credit because you were worried about fraud, you'll need to undo it to open any sort of new account, whether it's a bank account, credit card, or loan.

3. You have poor credit

You may be aware that a bad credit score could result in you getting denied a mortgage, personal loan, or credit card. But did you know that having bad credit could mean not qualifying for a bank account? Banks have a right to deny you an account for bad credit -- even if you have enough money to fulfill their minimum deposit requirements.

What to do if you're denied a bank account

You may be shocked to see that your bank account application is denied. If that happens, aim to find out why. If, for example, you're told there's negative activity on your banking history but that doesn't sound right to you, investigate it to find out if there's an error working against you.

If you're denied a bank account because of your credit score, you can work on improving it. The most effective way to do so is to pay all of your incoming bills on time and knock out a chunk of existing credit card debt to lower your credit utilization ratio. Checking your credit reports for errors is important as well, because if one of them contains a mistake that's hurting you, correcting it can help you get approved for a bank account.

Finally, if you're denied a full-service bank account, you can see if you qualify for a second chance bank account. Some banks offer these pared down accounts that let you deposit and withdraw money -- they just don't have all the perks of standard checking accounts. Opening one is a good way to rebuild your banking reputation.

Being denied a bank account can be shocking. If it happens to you, find out why and aim to rectify the problem. There are so many great banks out there offering different benefits, and it's a shame to not be able to take advantage of them.