Welcome to the new world order. Even if you want just a plain vanilla savings or checking account, be ready to impress the banker.
As you might imagine you’re going to need to show identification – a driver’s license, or government issued identification, and those all important digits your Social Security number, your date of birth, your address and proof of residency, like perhaps a utility bill. If you’re opening an account online, you could also be asked to print out a signature document and mail it in, along with copies of identification. And, of course you’ll need some cash.
The process is a bit tougher if you’re opening an account for your business. They’ll want more paperwork. Not only will they want your Social Security number but the EIN for your company. Just to make sure you’re legit the bank or credit union will want a copy of your business license or your certificate of incorporation. However, if you’re flying solo and are a sole proprietorship what’s required may be different, it’s worth your time to find out before you make the trek to the bank to find out exactly what you need. Similarly, the bank may want to see your DBA (Doing Business As) of FBN (Fictitious Business Name) if you want to accept electronic fund transfers and checks in your business name. You will need register the name, and file it, before it can be used. Be prepared to answer any number of questions, as banks are under increasing pressure to know who they are dealing with, especially in this environment of heightened terrorism.
What to expect
But for sure, nothing is simple any more. There are all sorts of things that cause hiccups in the process and keep you from getting an account. What matters most? "When processing applications, banks will take a look at your banking history, including if you have any outstanding checking account-related debts to other banks," says Greg Cunningham, vice president in customer experience for U.S. Bank. "We have resources online to help people address these issues."
If your history shows that an institution previously closed your account for a reason like unpaid overdrafts; that would be a blemish for sure. It’s problematic too, if you were suspected of fraud related to a checking account or had a joint account with someone else who had these types of problems. The bank or credit union will typically pull your credit report.
"While consumers have generally become more aware of the importance of credit scores and credit reports, relatively few have thought about the services that report on their bank account activity," said Keith Ernst, an associate director of the FDIC’s Division of Depositor and Consumer Protection in charge of consumer research, in a prepared statement. "So, when people are denied an opportunity to open a new deposit account, often they are surprised to learn that negative information about a past checking account can be shared."
There are few secrets any more. ChexSystems keeps track of all your sins. If your bank account is closed for "cause" ChexSystems’ database likely has that info because your bank ratted you out. Some banks will tell you straight up they will not open a checking account for you if you have one or more incidents reported to ChexSystems.
Just like you need to check your credit report annually, you can access your ChexSystems report for free once a year. You want to see if you’ve been reported or if there are any errors. If there are mistakes, you can write them and request verification of the record and removal if it cannot be verified.
Don’t despair though, there is something called Second Chance Checking accounts were an institution will open an account with the notion of trusting that you’ll do better this time around. Shop around for accounts that may be most suitable for you (CFPB's consumer guide).
Know too, that some banks and credit unions will require you to pay any old, unpaid charges and fees before you are allowed to open a new account. For help when you’ve been denied an account, go here.
You don’t want to be without an account. Says Cunningham, "Having a bank account is an important step in taking control of your money, and using it to achieve your goals."