Choosing a bank account with no credit check

20 September2011

You may be aware that when you apply to borrow money, a lender will 'credit check' you: first of all, to see whether you owe money to anybody else and secondly, to see how you have handled your finances in the past.

You may also be aware that bank account providers tend to run a credit check when you apply for a bank account - particularly if that bank account comes with an overdraft facility.

The problems with not having a bank account

Imagine you had no bank account and all the problems that would cause. How could you benefit from Direct Debit discounts on your utility bills? How would you ensure your money was somewhere safe? What would you do if you needed your money in an emergency but couldn't go to a cash machine?

If you owe money to your bank and you are finding it difficult to repay that debt, your bank could end up 'offsetting' your credit balance against your debt. There are safeguards to protect borrowers, but it's still something to bear in mind.

How many people are there without bank accounts?

The EU Commission recently estimated between 6 and 7 million 'adult consumers' in the EU have been turned down when they applied for a bank account. Social Finance estimates that 1.5 million people in the UK are without a bank account.

This is a serious issue, so much so that the EU Commission has recommended that bank account access is improved for everyone.

A bank account with no credit check

It is possible to open a bank account with no credit check. Often these accounts simply allow you to do 'basic' things, like receive and make payments with Direct Debits or standing orders, as well as making cash withdrawals. Having said that, quite a few basic bank accounts come with a debit card, allowing you to make online purchases, among other things.

Getting a bank account with no credit check

A financial crisis in your past, such as a default, a CCJ (County Court Judgment), or even bankruptcy, could be stopping you from opening a bank account now.

The thinkbanking bank account doesn't require a credit check. It also comes with a 'Money Manager' service and there are no fees for accidentally going overdrawn - as there's no overdraft facility, and the Money Managers try to make sure customers don't accidentally overspend. It will not charge for bounced Direct Debits either.

All of this is available for 14.50 per month after an initial set-up fee of 25.

Applying for a bank account

If you're trying to open any bank account in the UK, you'll need to provide proof of your ID, because of strict anti-money-laundering policies in the UK.

However, applying for a bank account without a credit check can work out simpler than applying for another account, which might turn you down because of financial problems you've run into in the past. With thinkbanking, you wouldn't have to wait while we carry out a credit check: your account could be approved within minutes.

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