How To Open a Business Checking Account With Bad Credit

Your personal banking history could affect your business account

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When starting your company, opening a business checking account should be a top priority as it’s critical to managing your business finances and establishing your brand. However, this seemingly straightforward task may be more challenging than expected.

For instance, any misuse or infractions in your personal banking activity can raise red flags and negatively impact your ability to open a business checking account. 

In this article, we’ll take a closer look at the impact of personal credit on opening a business account, how your banking activity is monitored, and what options you have if you encounter any issues.

Key Takeaways

  • Your personal credit score and banking history can impact your ability to open a business checking account.
  • Chexsystems is a consumer reporting agency that tracks and records banking activity.
  • Banks use Chexsystems to evaluate personal banking activity and approve or deny a business account. 
  • If your Chexsystems report becomes a roadblock, you can dispute any incorrect issues and/or settle any debts in order to increase your odds of opening an account. 
  • Alternatives to opening a business account at traditional banks include second chance accounts from banks that don’t rely on Chexsystems such as Wells Fargo. 

The Impact of Personal Credit

Your personal credit report is a tool that banks use to determine your creditworthiness. Everything from credit card debt to mortgage payments are reported to credit bureaus like Equifax and Experian, which maintain your credit history and report it using a three-digit number. Lenders and banking partners use that number to assess how likely you are to pay back loans on time. 

Your personal credit score and banking history can impact your ability to open a business checking account. If you have a poor credit score due to account management issues, banks may be less inclined to open a business account. 


Examples of poor account management include bouncing checks, incurring frequent overdrafts, not paying late fees or correcting negative balances, committing check fraud, and having your account involuntarily closed by the institution.

In addition to your personal credit report, which describes how you’ve handled your debt, there’s another equally important report focused on your banking activity that’s issued by Chexsystems.

What Is Chexsystems?

Chexsystems is a consumer reporting agency that tracks and records your banking activity and reports any misuse or infractions that occurred in your personal bank accounts. Services provided by ChexSystems, which is affiliated with Fidelity National Information Services, are governed by the Fair Credit Reporting Act (FCRA).

Banks use Chexsystems reports to evaluate past customer banking behavior, look for patterns of poor account management, determine the level of risk, and choose whether to approve or deny an account.  

What To Do If You Have Bad Marks on Chexsystems

You may not be aware of any issues on your banking report until you attempt to open a new business bank account. Under the FCRA, you can request a copy of your report annually by visiting the Chexsystems website. Doing so might alert you to any reports of overdrafts, property liens, or money owed. 

If the negative information on your Chexsystems report is accurate, then you should take steps to resolve any issues quickly since those infractions will live on your report for five years. The report will show any money owed to the reporting institution, which you can pay off directly or with an agency if the balances have been sent to collections. In some cases, you might be able to settle the debts for less than originally owed. Once the outstanding balances have been paid, you might have a better chance of getting approved for a business bank account. 


In some cases, you might encounter details on the report that are inaccurate and could be due to fraudulent activity (like someone else opening an account in your name). If so, you should contact the Federal Trade Commission (FTC) and obtain an identity theft affidavit, which can help you prove your case. 

You also have the right to dispute inaccurate information with both Chexsystems and the bank that supplied the information. Under the FCRA, both parties are required to work together free of charge to investigate disputes, offer a detailed report of the findings, and update your report accordingly.

How To Open Business Checking Accounts With Bad Credit

If you’re having difficulty opening a business bank account due to your personal banking and credit history, there are some steps you can take to achieve your goal. 

Form a Relationship With a Personal Banker

Ideally, you’d be able to open a bank account where you could form a relationship with a personal banker. These bankers can become business allies once they gain an understanding of your business and cash flow needs. With that in mind, you may also want to look to community banks or credit unions as an alternative to traditional banks. They often have different lending and account opportunities for local clients, so you may be able to receive the best of both worlds, even if you’ve had issues in your personal banking past. 

Form a Limited Liability Company

Businesses operating as sole proprietorships may find it beneficial to file as a limited liability company (LLC) in order to separate the owner from the business. Here are some benefits to forming an LLC: 

  • You will receive an employer identification number (EIN). 
  • You can separate your personal and business credit. For example, your personal credit will not be affected if your business is unable to repay a loan.
  • Protecting your company’s credit will ensure that the business is not penalized for any one partner’s personal financial choices.  (This is especially important if your business includes multiple partners.) 

Try Second-Chance Banking

If you’re unable to open an account with traditional banks, financial institutions such as Wells Fargo, Chime, Radius Bank, and Peoples Bank provide banking services to customers with questionable banking history through “second-chance” checking accounts. With second-chance banking, your Chexsystems report may not necessarily prevent you from opening a business account. 

While these types of accounts may have drawbacks such as higher monthly fees and limited ATM access, they give customers with bad credit or negative Chexsystems reports an opportunity to enjoy many traditional banking amenities and build a positive banking history for their business. 


Not all banks that offer second-chance banking are national. There are digital banks and regional options that may be available to you.

Frequently Asked Questions (FAQs)

How do you dispute Chexsystems?

You can dispute an item on your report directly with Chexsystems as well as with the financial institution that reported the account. 

How long does information stay on Chexsystems?

Even after outstanding balances are paid, accounts reported to Chexsystems remain on the report for five years.

Which banks use Chexsystems?

Most large, traditional banks including Bank of America use Chexsystems. However, there are many banks that either don’t use Chexsystems or offer second-chance banking accounts, including other large, national institutions like Wells Fargo, TD Ameritrade, SoFi, and US Bank.  

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  1. Chexsystems. "Frequently Asked Questions (FAQ's)."

  2. Consumer Financial Protection Bureau. "Chexsystems."

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