Why Do Banks Run a Credit Check for Checking Accounts?

Bank accounts do not necessarily involve debt, so the credit reporting bureaus usually leave them off of a report. However, banks sometimes pull credit on a customer. Credit inquiries related to a bank account usually happen because a customer requests services that require a small loan. Alternatively, banks might run a credit check on all applicants because they want to avoid misuse of the account, such as check fraud.


Handing out a bank account poses risk to a financial institution, even if it is a savings account. A customer can overdraw an account--when an account holder writes a check or uses more money from an account than he has available. Overdraft balances mean lost revenue, and banks sometimes sell overdraft accounts to debt collectors, because collecting on the debt is expensive and involves extra regulation.


Some banks require a credit check or sneak a consent to a credit inquiry into a bank account application to sell the customer other services, such as a credit card. The bank may have to perform a credit check because of a service requested by the customer. Overdraft and bounced check protection, for example, usually requires a credit check because the bank issues a small line of credit to buffer against overdrawing the account.


Ask the bank officer if the account requires a credit check. Not all banks run a report, so you can shop around until you find one that does not. Hard inquiries, which result from the customer asking for a check, damage a credit score by a few points, so it pays to avoid them. Your bank might offer an alternative to services that require a check. You can, for example, link a savings account to a checking account to avoid overdrafts.


A bad ChexSystems report is more likely to prevent you from opening an bank account than poor credit. Since banks cannot report to the major consumer credit reporting bureaus, they have an analogous company: ChexSystems. A ChexSystems report contains negative data from the past five years. Most banks run a ChexSystems report, so you should review yours before applying for a new account.