Why is it difficult to get a bank account sometimes?

5 April2011

In this day and age, having a bank account is very important - not just because it`s somewhere to keep your money safe, but because without one, it`s impossible (or virtually impossible) to access a whole range of other financial products, from mortgages to overdrafts.

This isn`t the only reason a bank account is seen as a necessity. If you`re employed, it`s likely your employer will want to pay your wages electronically (probably through a system called BACS - Bankers` Automated Clearing Service) into your bank account. The days of being paid `cash in hand` are fast running out, so without a bank account, your chances of landing a job in the future may be seriously reduced.

Yet despite their importance, some bank accounts are hard to get. You may have found that applications you have made for several different accounts have been turned down. Frustrating as this is, it`s important to understand why it might have happened - so you can take steps to improve your chances of being accepted in the future.

Why might my application have been turned down?

Being told your application for a bank account has been turned down can be quite disheartening - but it doesn`t mean there aren`t any options available to you. Click here to read more about your options.

There are different reasons your application may have been turned down. The first - and most obvious - reason relates to your credit report.

Credit rating

Your credit report is a record that potential lenders can access before they say `yes` or `no` to any application for credit/a service they provide. Your credit rating will let your potential lenders know how much risk they would be taking if they offered their services to you. It does this by showing them how you`ve managed your finances in the past.

If, when you applied for your bank account, your credit rating wasn`t as `healthy` as it could have been, this may well have had an impact on the bank`s/building society`s decision.

So, when you apply for financial products in the future, it`s a good idea to request your credit report before you make your application. Your credit report is available from three different Credit Reference Agencies for as little as 2 (and sometimes for free, through special offers). Each Credit Reference Agency will hold different information about your financial past, so it may be worthwhile to request a report from all three.

Eligibility

Your credit rating doesn`t have to be poor for you to have your application turned down. It may be down to something as simple as the fact that you don`t meet the bank`s/building society`s eligibility criteria.

Some accounts may require you to have a certain level of income paid into the account each month, while other accounts may only be available for business purposes.

Then there are bank accounts like cash ISAs (Individual Savings Accounts) - which are tax-free savings accounts. As HM Revenue & Customs (HMRC) tells us, you`re only allowed to invest money into one cash ISA per tax year... so, if you`ve already invested in a cash ISA this year, you won`t be allowed to open another one until the new tax year (in the UK, tax years run from 6th April one year to 5th April the next year). The same applies to stock and shares ISAs.

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