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Even in a hot real estate market, it’s possible to learn how to buy a house with no money down. The trick is, you need to know where to look. Zero-down home loans aren’t available everywhere and to every borrower, but if you do qualify and can find an area with a zero-down mortgage, homeownership could be much more attainable.

Here’s exactly what you need to know about how to buy a house with no money down.

Can You Buy a House With No Money Down?

You can buy a house with no money down with certain loan programs in certain areas. There are more homeowner resources to help you buy a home than you may realize, and first-time homebuyer qualifications can be more flexible than you know. Here’s where to look for and what to expect on a zero-down mortgage.

Recommended: Learn more about first-time home buyer programs.

How to Buy a House With No Money

Of all the things you need to buy a house, a down payment holds many buyers back. But there are a few avenues you can take to get a mortgage loan and buy a home with no money down.

•   Buy a home with a VA or USDA loan. These loans, from the U.S. Department of Veterans Affairs and the U.S. Department of Agriculture, are no down payment mortgages

•   Receive assistance for your down payment or closing costs from a state or local program or a family member

•   Receive a lender credit

•   Ask for a seller concession

Note: SoFi does not offer USDA loans at this time. However, SoFi does offer FHA, VA, and conventional loan options.

USDA Loan

A USDA loan requires no money down and is intended for buyers in rural areas. There are two ways the U.S. Department of Agriculture loans money:

•   Single-family housing direct loans

•   Single-family housing guaranteed program

The direct loans are issued by the USDA and come with a 33-year term for low- and very-low-income households. (Very-low-income applicants may stretch the repayment term to 38 years.) The guaranteed program is run through approved lenders with a 30-year fixed rate for low- to moderate-income households.

VA Loan

A VA loan guaranteed by the U.S. Department of Veterans Affairs is a zero down payment mortgage with low interest rates for qualified veterans, active-duty service members, certain reservists and National Guard members, and surviving spouses. Most borrowers pay a one-time funding fee, which can be rolled into the loan. Lenders can be more flexible with credit scores, mortgage amounts, and debt-to-income ratios.

Down Payment and Closing Cost Assistance Programs

Many city and state agencies offer different mortgage types and down payment assistance to buyers, especially low- to moderate-income homebuyers, first-time homebuyers, veterans, and people buying in federally targeted areas.

The terms vary. Sometimes the assistance for a down payment is in the form of a second mortgage that is repaid over time. Other terms include deferred payments that are only due if the property is sold, loans that are forgivable if the property is occupied by an owner for a specified amount of time, and even grants.

HUD, the U.S. Department of Housing and Urban Development, steers homebuyers to city, state, and nonprofit programs that offer down payment assistance.

Down Payment Gift From a Family Member

A down payment gift from a family member can also help you buy a house with no money down. The main thing to remember about a down payment gift from a family member is that the money must be properly documented with a gift letter. Your lender will likely provide a template to make sure you have all the crucial elements included.

Lender Credits

Lender credits are what you get when you agree to pay a higher interest rate in return for some money that the lender contributes toward your closing costs. The more lender credits you receive, the higher your rate will be. With some lenders, you can cover your closing costs entirely with lender credits. This is a common practice when refinancing a loan.

Seller Concessions

One strategy real estate agents have used is to ask for a credit from the seller, to be contributed toward the buyer’s closing costs. Making an offer above asking price in tandem with the seller concessions makes this option more palatable for sellers in a competitive housing market.

Recommended: Home Loan Help Center

The Takeaway

Learning how to buy houses with no money takes some research, but could be well worth your time. With a VA or USDA loan, down payment assistance, gift money, or lender credits, it is possible to obtain a no money down mortgage. Qualifying first-time buyers can also still catch a break with a conventional mortgage loan — some lenders will let you put just 3% down.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

Can cash gifts be used as a down payment?

Yes, but certain rules must be followed for the gift to be documented by the lender, usually in the form of a gift letter.

Are there any homebuyer grants?

Sometimes. They’re usually reserved for first-time buyers, veterans, or people buying homes in federally targeted areas. You might start a search for assistance with your state housing finance agency or HUD and then look for city and county programs.

What are down payment assistance programs?

Down payment assistance programs help homebuyers afford down payments and sometimes closing costs as well. This is done in the form of grants and loans and can vary by location.

What credit score do I need to buy a house with no money down?

For a zero down mortgage backed by the USDA or VA, lenders are advised to look at a borrower’s situation case by case. Approved USDA loan lenders usually require a minimum credit score of 640, though the department itself doesn’t have a credit score requirement.

Most VA loan lenders will want to see a credit score above 620, but again, the VA does not have a minimum credit score. Applicants may qualify with a score below 620 when debt, income, and the ability to shoulder future mortgage payments are given a close look.

Down payment assistance programs often require a minimum credit score of 620.

Photo credit: iStock/Paperkites

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q224-1903338-V1

A joint credit card account is a way for you and a spouse, partner, family member, or trusted friend to co-own a line of credit. A joint credit card is in both of your names, meaning both parties are equally responsible for the debt that the card accrues.

Joint credit cards can make sharing finances with a domestic partner easier, but if you’re not on the same page about using the card and paying off debt, it could mean trouble for your credit score and your relationship. Here, learn the full story on joint credit cards and their pros and cons.

What Is a Joint Credit Card Account?

A joint credit card allows two people to fully share in the responsibility of spending with a credit card and paying it off. Each cardholder receives a physical card to use, and each also has full access to credit card statements and payments.

Otherwise, a joint credit card operates just like a traditional credit card — with a credit limit and interest rate on borrowed funds. If you carry over a balance month to month, that balance will accrue interest, and both joint account owners are equally on the hook for paying it back, even if one person is doing most of the spending.

Because a joint credit card is in both owners’ names, it impacts both users’ credit scores. Making regular monthly payments in full and maintaining a low credit utilization could build both cardholders’ scores. On the other hand, late payments and accumulated debt might bring credit scores down.

Recommended: When Are Credit Card Payments Due?

Ways You Can Share a Credit Card

Joint credit card accounts are just one type of shared credit card. Before deciding to apply for a joint credit card, consider whether adding someone as an authorized user on a credit card might be a better option for your situation.

Authorized User

Instead of applying for a credit card with a co-owner, you can make someone an authorized user on an existing credit card. Unlike with a joint account credit card, only one person serves as the cardholder and bears the full responsibility of the card.

The authorized user, on the other hand, can get their own physical card and use it as they see fit. However, the authorized user cannot make larger changes to the card, like requesting an increase in credit limit.

Some, though not all, credit card issuers report authorized users’ activity to the three major credit bureaus. Assuming the main cardholder uses the card responsibly (meaning they make on-time payments and keep credit utilization low), this can reflect well on the authorized user and potentially improve their credit score.

Adding an authorized user can be a good solution for spouses or domestic partners with shared expenses. If one partner has a strong credit score but the other is struggling, the struggling partner might benefit from becoming an authorized user on the other’s card. Additionally, parents who want their children to learn about using a credit card or find comfort knowing their teenage kids have a spending option in emergencies might also benefit from a card with an authorized user.

A caveat: If the main credit cardholder mismanages their credit card and the card issuer reports authorized users to the credit bureaus, this could potentially lower the authorized user’s score rather than helping to build it.

Joint Cardholder

As previously mentioned, joint cardholders share equal responsibility for how the card is used and paid off. Just as there are pros and cons of joint bank accounts, this arrangement can have benefits and drawbacks. A joint credit card enables spouses and domestic partners to approach their finances on equal footing, but a poorly managed card can have major negative impacts on the other.

Sharing a joint credit card requires implicit trust between the co-owners. Partners who disagree about managing finances might not find a joint credit card a good option.

Differences Between Authorized Users and Joint Accounts

Here’s a closer look at the differences between authorized users and joint accounts.

Privileges

Joint cardholders share the same level of privileges on a credit card. Authorized users, however, cannot increase the credit limit or add additional authorized users. On top of that, primary cardholders can sometimes impose spending limits on authorized users.

Number of Users

Two co-owners share a joint credit card account. With an authorized credit card, there is a single primary cardholder and one or more authorized users. The max number of permissible authorized users varies by card issuer. Some may let you add up to five.

Responsibility

Both co-owners share equal responsibility for a joint credit card account. Authorized users are not responsible for payments, but how the credit card is managed can impact the authorized user’s credit score.

Impact on Credit Score

Both joint credit cards and cards with authorized users can impact credit scores of everyone attached to the card. Authorized users just have less control over how the card is managed, so they must put their faith in the hands of the primary cardholder.

Recommended: How to Avoid Interest On a Credit Card

Pros of a Joint Credit Card Account

What are the benefits of a joint credit card? Here are some potential perks of this setup:

•   Equal control: Spouses and domestic partners who want equal control of their finances can benefit from a joint credit card, which affords them equal access to spending, statements, and payments.

•   Convenience of one shared card: If you share finances with a partner, having one credit card with one payment date might be easier than juggling multiple cards and due dates.

•   Potential to boost credit score or get a better rate: If one co-owner lacks a credit history or has a lower credit score, being a co-owner on a well-managed joint credit card could build their score. The person with the lower score might even qualify for a card with a better rate by applying with a joint cardholder.

Cons of a Joint Credit Card Account

There are some drawbacks to joint credit cards, however:

•   Shared repercussions for mismanagement: If one co-owner maxes out the card or misses a payment they said they would make, both cardholders share the burden, which can include late fees, a credit score impact, or growing interest. And if your partner decides not to do anything about the growing credit card debt, you could be on your own in paying off their shopping spree.

•   Difficulty of removing someone: Removing someone from a joint credit card can be challenging. Your only option for getting out of a bad situation might be paying off and closing the card.

•   Possibility of damage to the relationship: If you and a partner do not share the same financial philosophy, entangling your debts might do more harm than good. Couples who already fight about making financial decisions may find that sharing a joint credit card is detrimental to their relationship.

Applying for a Joint Credit Card

Does a joint account sound right for your situation? Here’s how to apply for a joint credit card:

1.    Find a credit card issuer with a joint credit card option: Not every credit card issuer offers joint cards. Understand that your options will be more limited than if you applied for a credit card by yourself. Just as you would if you were choosing a joint bank account, take the time to compare a few options and find a joint credit card you’re both happy with.

2.    Understand the qualification requirements: Read the fine print to make sure you and your co-owner can qualify. It’s not just your own credit score and credit history you have to consider; credit card issuers will be reviewing both applicants to determine if you can get a joint credit card.

3.    Fill out the application: Have all of the necessary information for both applicants handy. It’s a good idea to apply together at a computer, if possible.

4.    Set the ground rules: Make sure both of you are on the same page about how you will use the card and who is responsible for making on-time payments. If you’re not sure where to start, check out these basic credit card rules, which can promote healthy card usage.

The Takeaway

Joint credit cards give both co-owners equal responsibility for credit card usage and payments. Using a joint credit card can be a good way to combine finances and help boost a partner’s credit score. However, applicants might benefit from going the authorized user route instead. Understanding the risks of both options is important before completing a joint credit card application or making someone an authorized user on an existing card.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Do joint credit cards affect both credit scores?

Joint credit cards affect both users’ credit scores equally. A well-managed card that is paid off in full each month might build both users’ scores. On the other hand, regularly late payments and a high credit utilization could bring both scores down.

Can I add someone to my credit card as a joint account holder?

Not every credit card issuer offers joint account credit cards. However, most allow you to add authorized users to existing credit cards. Contact your credit card issuer to learn more.

What requirements are needed to get a joint credit card account?

Requirements for getting a joint credit card account will vary by credit card issuer. Credit card companies typically consider factors like age, credit score, and income to determine whether you can get a joint credit card.

Photo credit: iStock/gorodenkoff

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

SOCC-Q224-1909300-V1

If you finance a home, the lender will have you sign either a deed of trust or a mortgage. A mortgage is an agreement between you and the lender, but a deed of trust adds a neutral third party that holds title to the real estate.

Many states allow either choice. Thanks to an easier foreclosure process, many lenders prefer a deed of trust to a mortgage, so it is important for borrowers to grasp the nuances of these documents.

Mortgage Loans 101

To understand the difference between a deed of trust and a mortgage, it helps to first know some mortgage basics. A mortgage is a loan that’s used to purchase a piece of real estate. First, the borrower applies for a loan from among the different mortgage types. Once approved, they sign a mortgage note, promising to pay the lender back over a specified time with agreed-upon terms. The real estate serves as collateral for the loan.

Note: SoFi does not offer a Deed of Trust at this time.

You may hear a mortgage note referred to as a promissory note. In any case, it’s a legally binding document.

Mortgage Transfer

A mortgage transfer takes place when a borrower assigns what is typically an assumable mortgage to another person. Most mortgage loans are non-transferable. That said, in the case of marital separation, divorce, death, or other unusual circumstance, a mortgage transfer is sometimes permitted.

FHA, VA, and USDA loans, insured by the government and issued by private lenders, are assumable if the buyer qualifies.

Mortgage Foreclosure

When a borrower defaults on making mortgage loan payments as agreed upon, the lender may start legal proceedings to take ownership of the property and resell it to recover funds owed to the financial institution.

A mortgage foreclosure can take place when a borrower doesn’t meet other terms of the agreement, but failing to make payments is the most common reason. A variety of mortgage relief programs help borrowers stave off foreclosure.

What Is a Deed of Trust?

Some states incorporate a deed of trust into their home loan process, while financial institutions in other states can choose to do so or not. A deed of trust is an agreement that’s signed at a home’s closing that states how a neutral third party — typically the title company — will hold legal title to the home until the borrower pays the loan off. (It is not the same thing as the deed to the house.)

Terms to know include the following:

•   Trustor: the borrower

•   Beneficiary: the financial institution loaning the money

•   Trustee: a third party that will legally hold the title until the loan is paid off

Deed of Trust Transfer

If the borrower pays off the mortgage loan, the third-party trustee dissolves the trust involved and transfers the title of the real estate to the borrower.

If the borrower sells the home before the balance owed is paid in full, the trustee takes the sales proceeds and pays the lender what is still owed and gives the borrower/trustor the rest of the money.

Deed of Trust Foreclosure

As with a mortgage, there are clauses in the deed of trust agreement that will trigger foreclosure proceedings. In this case, the trustee will sell the property and distribute the funds appropriately.

Similarities Between a Mortgage and a Deed of Trust

Both a mortgage and a deed of trust are used when someone buys a home and takes out a loan to complete the purchase. Under each structure, the lender has the option to foreclose on the home if terms and conditions agreed upon by the buyer are not met.

In states where either option is allowed, the lender will decide which one to use.

Key Differences Between a Mortgage and a Deed of Trust

Here’s the big one: ease of foreclosure by a private trust company when a deed of trust is in place. But let’s look at how all the differences line up, below.

How to Determine If You Have a Mortgage or a Deed of Trust

Although deed of trust versus mortgage differences may seem reasonably small, it can make sense to be clear about which one you have. Look at a mortgage statement to find your loan servicer and ask.

A longer route: Mortgages and deeds of trust are publicly filed documents, so you could seek out the local government agency that manages these kinds of records and get a copy.

The Takeaway

A deed of trust and a mortgage are the two main systems for securing home loans. One key difference is the presence of a neutral third party in deeds of trust. The trustee holds legal rights over the real estate securing the loan. It’s easy to get lost in the forest of mortgage matters. A mortgage help center can lend a hand.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

Who can be listed on a deed of trust or mortgage?

On a deed of trust, all three parties are listed: the trustor (borrower), beneficiary (lender), and trustee (third party that holds the title until the loan is paid in full). With a mortgage, there is no third party involved.

How are mortgages and deeds of trust recorded in public records?

A deed of trust will be filed and recorded in public records in the county where the house exists. A similar process takes place for mortgage deed recordings. The recorded documents could be located at a county clerk’s office, a public recorder’s office, or an office of public records.

Is your title separate from deed of trust and mortgage?

Yes. A title is a concept rather than a physical document like a deed of trust or a mortgage note, and it refers to a person’s legal ownership of a home or other property. When a property is sold, the title is transferred from the current owner to the buyer.

Does a mortgage involve a trustee like a deed of trust?

No. Deeds of trust require a trustee, but a mortgage does not.

Photo credit: iStock/zimmytws

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q224-1903200-V1

In most cases, it isn’t possible to overdraft a credit card, or spend above your credit limit. If you opt in to over-the-limit charges, it may be possible to exceed your limit. However, “overdraft” usually refers to overdrawing a bank account, not a credit card.

It’s more likely that your purchase will be denied rather than your account “overdrawn.” If the charge does go over the limit, you might get hit with additional fees, and your credit could suffer as a result.

What Does It Mean to Overdraft a Credit Card?

Each time you use your credit card, your balance increases, which is part of how credit cards work. If you aren’t making payments against that balance, it will move closer and closer to your credit limit. Eventually, your balance could get high enough that you run up against that limit.

Usually, though, you won’t be able to go beyond your credit card spending limit. Instead, your card will be declined if you attempt to make a purchase that would put you over the limit. This is the result of the CARD Act of 2009.

Since the CARD Act, you can’t go over your card’s limit unless you specifically opt in to allow overages. In that case, it may be possible to go beyond your credit card’s limit.

The average credit card limit is the U.S. is currently approximately $29,855.

Recommended: When Are Credit Card Payments Due?

What Happens If You Overdraft Your Credit Card

What happens when you try to overdraft your credit card depends on whether you have opted in to over-limit charges. If you haven’t, your card will likely be declined; otherwise, you could incur fees and a hit to your credit.

Declined Transactions

By default, most credit cards today should not allow you to go over your credit limit. Instead, your card will probably be declined.

For example, imagine you have a credit limit of $5,000 with a current balance of $4,800. If you try to spend $250, in most cases it will not result in a $5,050 balance on your card. Because your limit is $5,000, your card will probably be declined when you attempt to complete the transaction for the $250 purchase.

Over-Limit Fees

Since the CARD Act of 2009, you can’t be charged over-limit fees unless you opt in to them. In that case, you will be charged an over-the-limit fee that is usually up to $35. However, the fee is limited to the amount you exceed your limit. For example, if you go $15 over your credit limit, the over-limit fee can’t be more than $15.

The CARD Act also says that banks must disclose over-limit fees in your credit card contract. If for some reason you have opted into over-limit fees, you should be able to opt out of these fees at any time.

Impact on Credit Score

If you go over the limit for your credit card, your credit score might take a hit. While there’s no magic number for credit utilization, the rule of thumb is usually that you should limit your utilization to 30%. Many financial experts suggest keeping it closer to 10%.

Your utilization is your outstanding balances divided by your credit limit. Because your balance for the credit card in question is greater than the limit, your ratio would exceed 100%. That might negatively impact your credit score until you lower the ratio.

One thing to keep in mind is that credit utilization is calculated using all of your outstanding credit. In other words, if you have five different credit cards, your utilization takes all of their balances and credit limits into account. If you have many credit cards and most of them have no balances, going over the limit on one credit card won’t necessarily hurt your credit score significantly.

Either way, it’s best to avoid this situation due to the over-limit fees. This is also why it’s important to discuss spending habits with any authorized users on a credit card to avoid hitting your limit.

Recommended: Pros & Cons of Charge Cards

How to Avoid Overdrafting Your Credit Card

If you go over the limit on your credit card, there are several steps you can take to rectify the situation.

Make Additional Repayments

One of the most important credit card rules is that you should pay more than the minimum amount due each month. Indeed, paying more than you normally pay might be a good idea, especially if the credit card that’s over its limit is a significant part of your total credit picture.

Perhaps you have a minimum payment of $40, and you might normally pay that amount each month. In that case, consider upping your payment to $50 instead. Anything you can pay above the minimum will help you reduce your credit utilization; the more you can pay, the better.

This can also help you from falling into credit card debt, which can be a hard situation to get out of.

Request a Credit Limit Increase

Another way to reduce your credit utilization is to request a credit limit increase. For instance, if you have a total credit balance of $5,000 and a total credit limit of $10,000, your utilization is 50%. If you currently have a credit card you don’t use often with a limit of $3,000 and no balance, your utilization there is 0%. Your total credit utilization is therefore $5,000 out of $13,000, or 38.5%.

You could request an increase to that unused card’s limit to $5,000. In this case, your total credit limit becomes $15,000, and $5,000 out of the new combined $15,000 limit brings your utilization down to 30%. Hence, even if your balances stay the same, your credit utilization ratio will drop.

Contact Your Provider

Sometimes, credit card issuers will increase your credit limit automatically, such as you if you’ve used your credit card responsibly over time. If not, you can call your card issuer and ask them to increase your credit limit. Usually, it’s best to do this after you’ve had the card for at least a few months.

When you make the request, the credit card issuer may review one or more of your credit reports. Keep in mind that this could result in a hard inquiry into your credit history; these checks cause a temporary dip in your credit score. The card issuer may also request proof of income, employment status, or monthly rent or mortgage payments.

Recommended: Tips for Using a Credit Card Responsibly

The Takeaway

It usually isn’t possible to overdraft a credit card. Your card is typically declined if you try to charge above your credit limit. You may be able to go over the credit limit, but only if you opt in to over-limit fees. If you do opt in, your credit could take a hit, and you might have to pay additional fees if you exceed your credit card’s limit.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Do credit cards allow overdrafts?

Credit cards usually do not allow overdrafts. In fact, “overdraft” is usually a banking term that refers to your checking or savings account balance dropping below $0. With credit cards, it may be possible to go over the limit if you opt in to over-limit fees.

Can you overdraft with no money on your card?

With credit cards, your balance increases as you make purchases. Hence, in this scenario, it would only be possible to overdraft a credit card if a single purchase would put you over the limit. And even then, you must have opted in to over-limit charges; otherwise, the transaction will simply be declined.

Can you overdraft a credit card at an ATM?

In most cases, you won’t overdraft a credit card at an ATM. You might be able to overdraft when requesting a cash advance, but even then, it may not be possible unless you have opted in to overdraft protection.

How can you ask for a credit limit increase?

Sometimes, credit card companies will increase your limit automatically. If that doesn’t happen and you want an increase, you can call your credit card issuer directly and ask for an increase.

Photo credit: iStock/AsiaVision

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOCC-Q224-1905540-V1

It’s certainly a frustrating experience to be denied a checking account. The problem could be with your past banking history, an error on your bank reports, or a mistake you made filling out your application, among other reasons. Once you find out what the issue is, you can take steps to remedy the situation and hopefully get approved for a bank account.

A checking account serves as a hub for many people’s financial life. It’s where your paycheck is likely deposited and how you pay your bills. Here’s the information you need to move forward when you can’t open a bank account.

Reasons Why You Can’t Open a Bank Account

There are a few common reasons that can cause you to be unable to open a bank account.

Negative Information on ChexSystems

Typically, banks don’t pull your credit score when you apply for an account. They do, however, usually look into your prior checking account activity via ChexSystems, the most popular banking reporting agency. ChexSystems provides a score reflecting how well you previously handled your banking life. The banks use this information to decide whether to qualify you for a checking account.

Negative items on your ChexSystems report may result in you being denied a checking account. They can cause banks to consider you a high-risk customer for financial services. Negative information can include:

•  Forced account closures

•  Bounced checks or overdrafts

•  Suspected fraud or identity theft

•  Unpaid fees or negative bank balances from a current or closed accounts

•  Too many account applications submitted over a short period

These negative marks on your record can last up to five years.

Errors on Your ChexSystems Report

Just as you may have credit report errors, so too can your ChexSystems report have mistakes. This could trigger your bank account application to be rejected, even if your past checking account management was good.

You can obtain a copy of your ChexSystems report once a year or whenever your application for a bank account is denied based on the report. (Keep in mind that applying for a bank account too many times counts as a black mark against you. If you get rejected, it’s probably a good idea to investigate your banking report vs just putting in more applications.) You’ll find details below on how to access your report.

Bankruptcy

If you have filed for bankruptcy, the bank will likely find out. In fact, there is often a question about bankruptcy on an account application. The bank could decide that your past bankruptcy means you are too much of a risk to offer you a bank account.

Typically, your borrowing capacity will be significantly limited by bankruptcy, as will the number of financial institutions willing to provide you with financial services, such as a checking account.

Your Identity Can’t Be Verified

An application for a bank account may be rejected because there are mistakes on it and/or the information entered does not match the documents you submitted. For example, if you have recently moved, the verification source may not recognize your new address, or you might have answered security questions incorrectly when prompted by the verification system.

Here are other reasons your identity might not be verified:

•  Your submission had an error or typo (perhaps in your Social Security number)..

•  Your credit profile may contain erroneous information.

•  Your credit report could be frozen if there is suspicion of fraud or identity theft.

•  Your documents may have expired.

•  Your documents may be unreadable.

•  You may have submitted a phone number that is not associated with your address.

•  Your proof of identity, such as a copy of your driver’s license or passport, and the information typed into an application don’t match.

What to Do After You’ve Been Denied Opening a Bank Account

If you’ve been denied a checking account, you may well want to apply elsewhere immediately. But a word of warning: Doing so could cause your application to be rejected because you are requesting too many new accounts too often. To maximize your chances of success, take the following steps before you reapply.

1. Find Out Why Your Application Was Denied and Ask the Bank to Reconsider

By law, the bank should tell you why your application was denied. Regardless of the bank’s information from a reporting agency, the bank makes its own decisions when approving account applications. You may be able to overturn the bank’s decision depending on the circumstances. It’s probably worthwhile to make that request.

For instance, in the case of a typo on your application information or a very old issue with an unpaid overdraft fee, you might be able to get the bank to reconsider.

2. Check Your Banking Report

You can obtain a copy of your ChexSystems report once a year and whenever you are denied a bank account if the report is the cause of your rejection. Visit the ChexSystems’ website or call 800-428-9623.

3. Look for Errors and Fraudulent Activity

Read the report from ChexSystems carefully, looking for fraudulent activity or mistakes in information such as your name, address, phone number, or Social Security number. For any errors, contact the agency, and be ready to provide supporting information to ensure the issue gets corrected.

4. Clean Up Your Report

Look at the negative actions on your report and fix them; you can file a dispute for anything erroneous by going to the ChexSystems website. Pay off any debts and unsettled fees. Ask to have the negative activity removed. Otherwise, it can stay on your report for up to five years.

Consider Alternative Solutions

If you have been denied a bank account and can’t quickly resolve the issue, here are a couple of workarounds to consider:

Second-Chance Checking Account

Some banking institutions offer a second-chance account to those denied a traditional checking account. A second-chance account typically provides limited services. It may set a cap on debit card usage, not provide paper checks, and not enable overdraft protection. Nevertheless, this kind of account can help improve your financial life if managed responsibly.

Also worth noting: These accounts often come with higher-than-usual fees, but you may be able to upgrade a second-chance account to a regular checking account within a year or two if you pay the fees and maintain a positive balance. These accounts can help you on your path to building a solid banking history.

Prepaid Debit Cards

If you need a way to spend on daily expenses and pay bills without a bank account, prepaid debit cards could be a good solution. You load a dollar value onto these cards (they’re available at many retailers, such as gas stations and supermarkets), and you can then tap or swipe to use the funds.

Make sure you’re aware of any fees you might incur when using or reloading your card, and know that the usage of these cards isn’t reported. In other words, it won’t build your credit score or your banking history in any way. But it can be a valuable stop-gap measure when you don’t have a bank account and need a convenient way to transfer funds.

Recommended: How Often Should You Monitor Your Checking Account?

The Takeaway

Having your application for a bank account denied is an upsetting experience that can definitely limit your financial life. The root of the problem could be that ChexSystems or another consumer reporting agency has indicated that you are a high-risk customer. Or your application could be rejected because mistakes were made or your identity couldn’t be verified. By taking steps to remove errors and repair damage, you’ll be on the road to get the account you need to keep your financial life humming along.

When you’re ready to apply for a checking account again, check out what SoFi has to offer.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Why am I getting denied to open a bank account?

There are several reasons you could be denied a bank account, including mistakes on your application, negative activity on your checking account history, or errors on your ChexSystems or similar report.

Can you get a bank account if you have committed fraud?

If you have committed fraud, you will likely have a negative history with ChexSystems, and you will likely have your bank account application declined. However, you might get a second chance checking account. If you maintain a positive balance and pay the monthly fees, you can probably upgrade to a regular checking account within a year or two.

Can a bank refuse to let you open an account?

Yes; banks can decide whether or not they want to offer an account to an applicant. They might deny an account if you have negative activity (such as unpaid overdraft fees and account closures) on your ChexSystems report or if there’s a mistake on your application. Banks are, however, required by law to explain why they reject your application.

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SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Eligible Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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