Written by Ian Williams (last updated December 2, 2011)
The rules surrounding finance and banking can really vary from country to country. This article was written specifically for a UK audience, aiming to help people in the United Kingdom who are dealing with bad credit and looking for ways to lessen the impact on their financial situation.
Your credit rating in the UK
There are ways to improve your credit rating, such as making sure you're on the Electoral Register at the correct address and that your bills or debts aren't listed at another address. Remaining in the same job—and/or the same house—for a number of years can improve your credit rating too.
However, even with those 'bonus points' on a credit rating, it's still possible to have a lower score because of a CCJ (County Court Judgment), insolvency, bill arrears, a loan default, or even lots of unsuccessful credit applications in a short space of time.
Bad credit and the bank
A bank could end up closing an account if it isn't managed well. People who have problems with money—such as difficulties paying bills, using an unauthorised overdraft, or finding payments are returned—may find their account ends up being closed. The associated bank charges for this kind of issue can sometimes even send people further into debt.
If the relationship between a customer and their bank breaks down, sometimes it's necessary to open another bank account. So how easy is it to open another bank account with a bad credit history?
Opening a bad credit bank account
Bank accounts come in all shapes and sizes. For many people with a bad credit history, a bad credit bank account may be the best option. Some bank accounts have no credit check, which can be really helpful if you've run into money problems in the past. These accounts are also known as 'basic bank accounts'.
Some basic bank accounts will require a credit check when you apply—but this doesn't necessarily mean you'll be turned down just because of a bad credit history.
Many banks do provide bank accounts that have just the 'basic' facilities—so you won't get an overdraft or credit card, for example, with an account like this.
However, some bad credit bank accounts come with extra features. They may, for example, provide some practical help to make sure the bills get paid—which could be useful for people who want some assistance budgeting for their essential costs.
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