Updated on 3rd Jan 2024
Are you considering bankruptcy but worried about how it will affect your future financial opportunities? Keep reading ways to cope with bad credit, how an attorney can assist individuals with bad credit, and last but not least, which bank accounts you can use even if you have a bad credit score.
How to cope with bad credit?
Coping with bad credit can be challenging, but there are steps you can take to improve your situation and manage your finances more effectively. Here are some tips to help you cope with bad credit:
Understand Your Credit:
Obtain copies of your credit reports from major credit bureaus (Equifax, Experian, TransUnion) and review them thoroughly. Check for errors, inaccuracies, or fraudulent activities. Dispute any incorrect information to the credit bureaus to have it corrected.
Create a Budget:
Develop a realistic budget that outlines your income, expenses, and debt payments. Prioritize essential expenses and allocate funds to paying down debt to avoid further damage to your credit.
Pay Bills on Time:
Payment history significantly affects your credit score. Pay all bills, including credit cards, loans, and utilities, on time to prevent further negative impacts on your credit.
Reduce Debt:
Focus on paying down high-interest debts first or consider debt consolidation to make managing payments more manageable. Aim to keep credit card balances low relative to your credit limit, as high credit utilization can negatively impact your score.
Avoid Opening New Credit Accounts:
While it may be tempting to apply for new credit, especially if you've been denied credit elsewhere, avoid opening multiple new accounts as it can indicate financial distress and negatively affect your credit score.
Communicate with Creditors:
If you're struggling to make payments, contact your creditors and explain your situation. Some creditors may be willing to negotiate new payment plans or temporarily lower payments to help you manage your debt.
Build Positive Credit Habits:
Over time, establish positive credit habits by using credit responsibly. This includes making timely payments, keeping credit card balances low, and only applying for credit when necessary.
Consider Secured Credit Cards or Credit Builder Loans:
These financial products can help you rebuild credit by establishing a positive payment history if used responsibly.
Seek Professional Advice:
Consider consulting with a certified credit counselor, financial advisor, or bankruptcy attorney. They can offer guidance on managing debt, debt relief, improving credit, and creating a plan tailored to your financial situation.
Be Patient and Persistent:
Improving credit takes time. Stay committed to your financial goals, monitor your credit regularly, and track your progress as you work towards rebuilding your credit.
Remember, there's no quick fix for bad credit. Patience, discipline, and responsible financial habits are key to improving your credit score over time. By taking proactive steps and managing your finances wisely, you can gradually rebuild your credit and improve your financial health.
How can a lawyer help you with bad credit?
Lawyers can assist people dealing with bad credit in several ways:
Credit Report Disputes:
If there are inaccuracies or errors on your credit report that are negatively affecting your credit score, a lawyer can help dispute these errors with credit bureaus. They can guide you through the process of providing evidence and communicating with the bureaus to have incorrect information corrected or removed.
Debt Collection Defense:
If you're facing aggressive or unlawful debt collection practices, a lawyer can help protect your rights. They can advise you on your rights under the Fair Debt Collection Practices Act (FDCPA) and represent you in negotiations with debt collectors.
Bankruptcy Advice and Representation:
If you are considering filing for bankruptcy, a lawyer specializing in bankruptcy law can help you determine whether bankruptcy is the right option for you. Bankruptcy attornies can assist in navigating the complex legal procedures involved in filing for bankruptcy and represent you in court proceedings.
Credit Counseling and Negotiation:
Some law firms, like DebtStoppers, offer credit counseling services or negotiation with creditors on behalf of their clients. They may negotiate with creditors to settle debts, create repayment plans, or explore debt relief options.
Legal Advice and Guidance:
A lawyer can provide legal advice tailored to your specific situation. They can explain your rights, obligations, and options for improving your credit, managing debt, and protecting yourself from unfair practices.
Legal Protection:
In cases where your rights have been violated, such as illegal repossession or harassment by creditors, a lawyer can represent you and take legal action against the offending parties.
It's important to note that while lawyers can provide valuable assistance with credit-related issues, they may charge fees for their services. Before seeking legal help, consider researching and consulting with lawyers who specialize in consumer law, credit law, or bankruptcy to determine if their expertise aligns with your needs.
Can You Open a Checking Account With No Credit Check?
While banks and credit unions typically do not check your credit score when you apply for a new checking account, many will screen your past banking activity. This is often done by running a ChexSystems report.
However, some banks and financial institutions don't check your bank history when you apply for a new checking account. So if you're looking for a new bank and have been turned down due to your bad score, keep going. There may be another option out there for you.
What is ChexSystems?
ChexSystems is a consumer-reporting agency that keeps track of your past banking history, good and bad, for banks and other financial institutions. Unlike your credit score, which is based on your borrowing and repayment behavior, a ChexSystems report includes information about your closed bank accounts, such as unpaid negative balances, overdrafts, bounced checks, and instances of fraud or identity theft.
Banks use ChexSystems reports to help them decide whether to approve new applications. Some banks will deny your application for a new account if you have a bad score on your ChexSystems report. Other banks will direct you to open a secured account instead, which requires a deposit.
The Top 10 Bank Accounts for Bad Credit
These banks won’t require a credit score check. Here are ten of the best bank options for people with a bad score:
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Chime - Chime checking offers features such as no service fees and no minimum balances.
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Current - A Current account does not require a minimum balance. There is a free tier available, as well as a premium option that costs $4.99 per month.
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Varo - A Varo checking account does not require a minimum balance or a monthly fee.
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Money Lion - Money Lion accounts do not require minimum balances. However, there is a $1 monthly fee that also gives you access to other features, such as crypto and investments.
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Aspiration - An Aspiration “cash management account” can be opened without meeting a minimum balance requirement. There is a free option, but you can also choose to open a Plus account for a monthly maintenance fee.
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Betterment - You can open a Betterment account without maintaining a certain balance or paying any monthly fees.
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Axos - An Axos checking account requires an opening deposit of at least $50. However, there are no monthly fees.
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SoFi - SoFi offers an array of financial products, including checking and savings accounts. There are also no balance or maintenance fee obligations.
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Chase Secure Banking - Unlike other types of Chase checking, the bank doesn’t run customer ChexSystems reports for Secure Banking applicants. There is no minimum balance requirement, but there is a monthly service fee of $4.95.
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Wells Fargo Clear Access Banking - If you can’t open a traditional checking account due to your banking history, Wells Fargo offers Clear Access banking. There is a $25 required opening deposit and a $5 monthly fee that is waived for customers under the age of 25.
When you are struggling financially, you might wonder if bankruptcy is the right option. Bankruptcy is an effective way to get out of debt and start over, but many people worry about how it will affect their credit score.
Fortunately, you can open plenty of bank accounts even if you have bad credit. If you still have concerns, Schedule a free consultation with an experienced DebtStoppers bankruptcy attorney today. We’ll help you make a plan to get your finances back on track without impacting your ability to get a checking account.
By DebtStoppers | Published December 07 2022 | Posted in Illinois
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