Bad credit is a problem that could happen to anyone, but it doesn’t mean you’re a bad person. In fact, millions of people struggle with bad credit. According to Experian, 25% of Americans have a poor or very poor credit score.

Yet even though bad credit may not be a reflection of bad character, a low credit score can still make many financial tasks difficult or more expensive. So, if you have bad credit, you might worry whether you’ll face problems when you try to open a new bank account.

The good news is that your credit doesn’t usually affect your ability to get a bank account. But another type of consumer report — your ChexSystems report — might come into play if you have a history of negative banking activity,

Here’s what you need to know.

Can you open a bank account with bad credit?

There’s no question that your credit score plays an important role in your financial life. But financial institutions, like banks and credit unions, typically won’t check your credit report or your credit score when you apply to open a new deposit account. As a result, a bad credit score isn’t necessarily an obstacle that will prevent you from opening a bank account, such as a checking or savings account.

Yet it’s important to understand that there are other tools financial institutions may use to manage risk. Instead of reviewing your traditional credit reports from the three major credit bureaus, banks will often review a different consumer report called ChexSystems when you apply for a new deposit account.

ChexSystems is a consumer reporting agency similar to Equifax, TransUnion, and Experian. Yet rather than collecting information about how consumers manage credit obligations, ChexSystems gathers details about consumer deposit accounts and banking habits.

If your ChexSystems report contains derogatory information, you might have a more difficult time qualifying for a new bank account. Negative information on a ChexSystems report could include items such as bank accounts with unpaid negative balances, bounced checks and overdrafts, or involuntary account closures.

Read more: Can overdrafting affect your credit score?

What to do if you’re denied a bank account

If a bank denies your application to open a new deposit account because of negative banking history, try not to panic. There may be steps you can take to fix the problem and alternative banking solutions to consider in the meantime.

• Request a copy of your ChexSystems report. The Fair Credit Reporting Act (FCRA) gives you the right to request a free copy of your ChexSystems report once every 12 months. If you discover any errors on your report, the FCRA also allows you to dispute mistakes and ask ChexSystems to correct them or remove incorrect information from your report.

• Fix negative information. If you have negative — but accurate — bank history on your ChexSystems report that’s keeping you from opening a new bank account, it may be in your best interest to try to correct the problem. ChexSystems’ policy is to keep reported information on file for a period of five years. But if you are able to pay off or settle the offending item, like a bank account closed with a negative balance, it might resolve the issue and put you in a better position when you reapply.

• Consider a second-chance bank account. Some banks may be willing to work with you even if your past banking history is less than perfect. These types of accounts are often referred to as second-chance bank accounts. In general, second-chance checking accounts tend to feature higher fees and more restrictions compared to standard checking and savings accounts. But these options could be worth considering if a standard deposit account isn’t available for your situation.

Read more: Does closing a bank account hurt your credit score?

Frequently asked questions (FAQs)

Can you be denied a checking account because of bad credit?

Banks and credit unions will not typically deny you for a checking account because of a bad credit score or poor credit history. In fact, many financial institutions will not review your consumer credit reports and credit scores at all when you apply for a new deposit account.

Do banks run credit checks to open an account?

Many banks and credit unions do not perform traditional credit checks when you apply for a new deposit account. But financial institutions will often review a different type of consumer report, called your ChexSystems report, to check your banking history. Reviewing your past banking history may help a financial institution assess your risk as a potential new customer.

Why would a bank deny opening an account?

A bank might deny you a new deposit account due to negative banking history that causes the financial institution to view you as a risky customer. Financial institutions often review banking reports, such as ChexSystems, to see if any previous banks or credit unions have reported you for unpaid balances, bounced checks, or other negative information.