Opening a current account with poor credit

There are current accounts available for those with low credit ratings

Switch current accounts today

  • Compare a range of current accounts

  • Choose the right current account for you

Compare accounts now

A bad credit score doesn’t have to stop you from opening a bank account to help you manage your finances

Ready to compare?

How can I get a current account with bad credit?

You may still be able to qualify for a basic bank account as they are designed for people with poor credit scores. This is because they don't offer overdraft facilities or interest if you're in credit. They are simply a place to store your money and pay bills by direct debit and is a suitable bad credit bank account.

There are several other options available to you if you have a poor credit history due to serious defaults, bankruptcies, or CCJs (County Court Judgement) declared against you. As current accounts continue to be the most popular type of bank account used in the UK, there are a number of alternatives on offer other than basic bank accounts such as credit union accounts, post office card accounts, and fee-paying accounts as current accounts continue to be the most popular financial product.

Commonly held financial services products

Surveyed 1,990 internet users, data sourced from Mintel, accurate as of December 2018.

What are basic accounts?

Basic accounts, also known as bad credit bank accounts were designed to help those with a poor credit rating, giving you a way into the banking system with minimal risk. They let you store, deposit, and withdraw money while avoiding certain checks and balances associated with regular current accounts.

Here are a few reasons you may want to consider opening a basic bank account:

  • You won’t have to undergo a credit check
  • You’ll only need to provide a form of identification to set up your account
  • You’ll usually be provided with a debit card depending on the provider
  • Opening a basic bank account is usually free
  • Some providers offer a cash incentive though these will require a credit check
  • You can open a bank account online with bad credit

While a basic account lets you set up direct debits, pay in and out of the account, and give you a place to store money, there are a few things you should consider:

  • The interest rates are usually very low
  • Some providers require you to maintain a minimum balance on the account – you’ll be charged a fee if your balance drops below this
  • You won’t have access to an overdraft

How many people in different financial situations own a current account?

Surveyed 1,990 internet users, data sourced from Mintel, accurate as of December 2018.

Eligibility for basic bank accounts

Bad credit bank accounts are meant to be easily accessible, there are only a few restrictions in place:

  • A criminal record could negatively impact the likelihood of being authorised for a basic bank account depending on the provider in question, especially fraud
  • If your ID doesn’t pass the checks made by the bank provider

What is a credit union?

A credit union is a community savings and loan provider and provides you with a bank account to manage your finances. You will however have to pay a monthly fee of £2 to £5 as well as maintain a minimum balance in your account as part of the contract. The advantages of signing up for a credit union include:

  • You may be eligible to some cashback at select retailers
  • You can take out small loans up to £3,000
  • As a member, you can attend member meetings and be involved in the decision-making processes

Eligibility works a little differently - you’ll need to have a connection with an existing member of the union to be eligible to apply. This is usually a friend, family member or an employer who’ll then be able to recommend you.

What are Post office card accounts?

A post office card account provides you with a card where your benefits, pension and/or tax credits can be paid into. This means you can withdraw money until the balance of the benefits you’re receiving runs out – much like a prepaid card. You won’t be able to set up direct debits or have access to an overdraft as the account is only meant to receive benefits, pension and tax credit payments.

To sign up, you’ll need to contact the governmental body that is paying you to set the account up on your behalf and fulfil a few eligibility terms:

  • You need to be in receipt of certain government benefits, pension or tax credits
  • You'll need to provide identification such as a driver’s license or passport
  • You’ll need to provide a proof of address such as a bank statement or utility bill

What are prepaid bank accounts?

A prepaid account lets you store money, where you can withdraw and pay into when you need to. You’ll also be able to direct your salary income onto your card and top-up the card at pay points, post offices and via BACS (a direct credit).

Depending on the provider you can also pay your bills via the card and introduce a number of controls for you to manage your spending. Eligibility terms aren’t strict as there are no credit checks made; as long as you’re 18 you can apply.

There are also a few drawbacks when using a prepaid bank account:

  • You may need to pay monthly charges for the holding of the account
  • If you use the account to pay bills, there may be extra charges to each direct debit or standing order you set-up
  • There may be a cash withdrawal fee

How do I improve my credit ratings?

There’re a lot of things you can do on your end to improve your credit rating which will make it easier to get accepted for loans and credits as well as qualify you for the most competitive offers on financial products. Here are a few tips to get you started:

  • Prevent future debt through budgeting and avoid using your overdraft
  • If you can repay even a fraction of your loans and debts, your negative reports may be retracted
  • If you aren’t already, register to vote – if you get yourself on the electoral roll, lenders can both verify your identity and are assured of your financial stability
  • Try not to miss repayments – setting up direct debits can make sure you’re able to keep track of it better               
  • You may be on record to be financially linked with someone you no longer are – their finances reflect on your profile so make sure your paperwork is updated e.g an ex-spouse
  • Don’t apply for more financial products than you really need as these leave a footprint on your credit file

How many people in different socio-economic groups have a current account?

Socio-economic group

Description

Current accounts

A

Managerial, administrative and professional

84%

B

Intermediate, managerial, administrative and professional)

90%

C1

Supervisory, clerical and junior managerial

91%

C2

Skilled manual workers

89%

D

Semi-skilled and unskilled manual workers

94%

E

Casual labourers, pensioners and the unemployed

83%

Surveyed 1,990 internet users, data sourced from Mintel, accurate as of December 2018.

Compare current accounts

Compare current accounts with the MoneySuperMarket tool to get a list of the most competitive deals to date. You can compare a range of products and prioritise the perks that you find most suitable for your spending habits. You can filter your results by overdraft options, switch incentives and more as well as browse through a range of bad credit bank accounts.

If you’ve found the right current account for you, select the deal you want to be directed to the provider where you can get the application process started. We make it easy to see which current account providers and packages are perfect for you and your needs so you can make an informed decision from the get-go.  

Ready to compare?

Did you enjoy that? Why not share this article

Current accounts. Trust us to explain them simply

  

Guides