Second chance banking

second chance banking

Going through life without making a mistake is hard, especially when we’re talking about money. It isn’t fair that you cannot open a bank account if you slipped up a few times and didn’t or couldn’t repay your bank on time. 

Banks and even fintech companies refuse to open a bank or a checking account for customers seen as a bad risk. You could fight the system and even sue credit reporting companies like EWS, TeleCheck, or ChexSystems, but that takes a lot of money and time. 

The time that’s better spent earning money and taking care of your family. For that reason, we’ve compiled all the digital banks on the US market that don’t perform credit checks when you’re opening an account. 

They’re listed in no particular order as all of them are good e-money or banking institutions that have your deposits FDIC insured and let you open an account online in a couple of minutes. Find more digital banks here

second chance banking infographic

Chime

chime bank
  • No credit check
  • No interest or monthly fees
  • No minimum security deposit
  • Automatic payment settings
  • Other features for credit building
  • Monthly credit reports only show payment and balance, not card usage

Chime is a challenger bank that already has more than 12 million customers. Frankly, it’s easy to see why. But what’s more important for this review, they don’t check your credit score when you apply. And in fact, they can help you build it or rebuild it with their Credit Builder credit card. 

It’s not only a second chance bank; it’s a great option for everyone.

Although Chime isn’t a bank but a financial technology company, that should make no difference. Their banking services are provided by The Bancorp Bank or Stride Bank, N.A., Members FDIC, and your deposits will be insured up to $250,000. 

So, how does their Credit Builder Program work? To be eligible to apply for Credit Builder, you need to have the Chime Spending Account and have received a qualifying direct deposit of $200 or more within the last year of your application. 

You’ll have to move money from your Chime Spending Account to the Credit Builder Account. It can all be done within the Chime app. This is the money you’ll have available to spend. You can choose an amount, and it’ll automatically be transferred, or you can do it manually every time.

Now you’re ready to rebuild your credit score. The only thing you have to do is to spend money with your new Credit Builder Visa card wherever Visa is accepted. Gas, groceries, and all other everyday purchases count. You can even use that money to automatically pay for monthly spendings like subscriptions.

To make sure you don’t mess up and be late with a repayment, turn on Safer Credit Building, and you’ll automatically pay your balance on time every month. The consistent use of Credit Builder can help you build payment history, increase the length of your credit history over time, and more. 

Chime will report to all three major credit bureaus, Experian, Transunion, and Equifax, to help you build credit history over time. They’ll inform your payment status, account age, amount past due, and your current balance – nothing more, nothing less. 

Building up the credit score takes time and will not happen overnight. You’ll have to be consistent and repay dues on time. 

Read our full Chime review here or our Chime Credit Builder review here

SoFi

sofi
  • Easy to set up online
  • No credit check
  • No monthly fees, no overdraft fees
  • Up to 0.25% APY
  • 55,000+ ATMs
  • Federal deposit insurance up to $1.5 million

SoFi is another fintech company with skin in the game. Social Finance was founded in 2011 by Stanford business school students who introduced a two million dollar pilot at Stanford that was all about connecting recent grad students with alumni.

Ten years later, SoFi has had 1,8 million members with $50+ billion in funded loans and $22+ billion in debt paid off by members. 

You might have noticed that I’m mentioning members and not customers. That’s because even though SoFi offers many of the same products and services as traditional financial institutions, SoFi is not a bank. 

When you enroll with SoFi, you not only get the core financial product that you signed up for but also:

  • Financial planning, 
  • Referral bonuses, 
  • Member rate discounts,
  • Experiences and events, 
  • An exclusive online community,
  • Personalized career advice, 
  • Draft your will for free,
  • Unemployment Protection Program,
  • And much more.

SoFi money doesn’t use ChexSystems to approve accounts, but that’s just one of the pros for this multi-faceted financial institution. They offer:

  • SoFi Money – a cash management account that earns interest
  • SoFi Relay – credit score monitoring and money tracking app
  • SoFi Credit Card
  • Personal Loans
    • Home Improvement Loan
    • Credit Card Consolidation
    • Relocation Assistance
    • Medical Loans
  • Home Loans
    • Mortgage
    • Mortgage Refinancing
    • Cash-Out Refinance
    • Home Equity
  • Private Student Loans
    • Undergraduate Student Loans
    • Graduate Student Loans
    • Law & MBA Loans
    • Parent Student Loans
  • Student Loan Refinancing
    • Medical Resident Refinancing
    • Parent PLUS Refinancing
    • Medical Professional Refinancing
    • Law & MBA Refinancing
  • SoFi Investing
  • SoFi Protect Insurance

Although SoFi is a second chance bank, some of the products mentioned above do need a relatively good credit score. 

SoFi’s Money account has no overdraft fees, no minimum balance fees, no monthly fees, and you can withdraw cash at 55,000+ fee-free ATMs. SoFi keeps your money secured in partner banks, and for that reason, it is FDIC insured up to $1.5 million.

With SoFi Relay, you can track all your money in one place. But also do credit score monitoring, and see spending breakdowns, financial insights, and more. All at no cost for your wallet or your credit score. 

Varo Bank

  • Early direct deposit
  • Overdraft protection
  • No monthly fees
  • Checking account
  • Debit card
  • Savings account
  • Early Direct Deposit
  • $100 Instant Cash
  • Free ATM Withdrawals

Varo was founded in 2015 in San Francisco. Fast forward to 2020, and Varo was getting their banking license – the first for a digital bank in the US.

Varo offers its customers a no monthly fee bank account, no minimum balance, offers no fees on overdrafts, no fees on transfers, no fees at Allpoint ATMs, and no fees to replace your debit card. The only fee is for out-of-network cash withdrawals.

Varo was founded to “make a powerful impact on systemic financial inequality that Americans have experienced for generations.” They may request identity documentation, but Varo won’t check your credit report, history, or FICO score. Varo says that their focus is to help everyone make progress in their financial lives regardless of net worth or past decisions. Therefore it’s a good option for “second chance banking.”

When you open a Varo bank account, you’ll get a Visa debit card, an early payday feature, the ability to deposit cash at 90,000+ retail locations using Green Dot Reload @ the Register, and a way to connect all your other financial accounts so that you can manage all of your money and make transfers easily. 

You can also apply for the Varo Believe Credit Builder Program that’s coming soon. You’ll get a credit card that will build up your credit score when making everyday purchases. Varo reports your payment history to the three major credit bureaus, and you get to see your credit score slowly rise from the dead. 

To qualify for Varo Believe, you’ll need to have a minimum of two direct deposits totaling $1000 or more in the past 90 days and active use of your Varo Bank Account without any negative balances within the last 90 days.

To keep using the Varo Believe Credit Card, you need to make on-time payments because late payments may cause the company to drop you from the Program.

In addition to their checking account, Varo offers a savings account, ideal for those who prefer to have their checking and savings accounts in the same place. The savings account also has no fees and is notable for its high APY. Varo’s APY is the highest of its kind, making this an excellent option for savers who meet the criteria.

Read our full Varo Bank review here.

MoneyLion

moneylion
  • Free online account
  • Early paycheck
  • Zero ATM fees at Allpoint
  • Price protection
  • Rewards on spending
  • $250 fee-free overdraft
  • $19.99 /mo Credit Builder Plus
  • $1,000 Credit Builder loan
  • ETF and crypto investing

MoneyLion is a challenger bank founded in 2013 that’s been offering financial subscriptions and memberships since 2018. They’re based in New York and offer banking, personal finance, and investment services for a monthly subscription fee. Its founders are Diwakar Choubey (CEO), Chee Mun Foong (CTO), and Pratyush Tiwari (CIO).

They offer a range of products:

  • Mobile banking account
  • 0% APR cash advances
  • Investing and auto investing 
  • Credit Builder Plus

MoneyLion is a second chance bank account because they let you open an account with them without checking your credit history or score. And, applying for a RoarMoney account won’t affect it either. 

Plus, their Credit Builder Program, or loan, to be more exact, is a great way to get some money and build credit history with each on-time payment. You can get a loan of up to $1,000 that you’ll repay over 12 months. MoneyLion will report each on-time payment to all three credit bureaus each month to help you boost your credit score. 

This program isn’t free, though. It comes with a price tag of $19,99 per month or $4.60 per week. But apparently, more than half the members raise their score by 42+ points within 60 days. It’s not typical, of course – it could be more for you, but it could also be less.

What else does this all-in-one mobile bank offer apart from their credit building program?

RoarMoney is what their checking account is called. It has precisely zero fees, which is what we like to see from a bank account. And it doesn’t have a monthly fee this time around. 

You can get paid two days early if you connect direct deposits. You also get cashback rewards but with a twist. Namely, they get invested into a fully managed investment portfolio where you get to let it grow or withdraw if needed. 

You can also invest more money and not just your cashback rewards. Invest in a personalized portfolio where you can choose how aggressive or conservative its strategy should be. And, the thing that we loved is you can choose a theme for your portfolio. For example, you can invest in innovators disrupting the world or make your investments socially or environmentally responsible. 

There are also the unavoidable crypto investments that are coming soon. All in all, MoneyLion is an excellent choice if you need a second chance bank with all the bells and whistles.

Read our full MoneyLion review here.

Current

  • Free online signup
  • 30-day trial
  • Fast Direct Deposit
  • Free overdraft $100
  • Points and cashback
  • Instant Current transfers
  • Cash deposits at 60,000 stores
  • Free ATM withdrawals
  • Gas hold refunds
  • Mobile check deposit
  • Teen Banking

Another digital bank that offers second chance banking is Current. You might have seen the Current card in the hands of Mr. Beast or some of the other influencers and YouTube personalities. 

What makes it a second chance bank is that they won’t check your credit or FICO score. They only need your SSN and a photo ID to verify your identity. They don’t have a credit building program yet, so if you want that feature, you’ll have to look at some of the other second chance banks on our list.

They offer a free basic checking account and a premium one which costs $4.99 per month. There’s also a teen account that costs $36 per year. 

The checking account is easy to sign up for and easy to use. You get a free debit card and the ability to withdraw cash at 55k ATMs for free worldwide. A big plus is that you can deposit both cash and checks. Cash deposits are instant at 60,000 stores, and you can add cheques by taking a photo of them in the app.

There’s also cashback, early payday, and money management.

If you go for the $4.99/m Premium Account, you’ll get everything that the Basic account has, plus an exclusive black debit card, early direct deposits, three saving pods, and gas hold refunds.

There’s not much more to Current. It’s a modern checking account with no frills. Easy to open with no credit score checks and easy to use. Straightforward. 

Read our full Current review here.

GO2 Bank

  • No monthly fees with eligible direct deposit
  • No minimum balance
  • Overdraft protection up to $200
  • 1% APY paid quarterly on savings up to $5,000
  • Up to 7% instant cash back
  • Early payday option
  • Cash-in cheques from the app
  • Credit builder card
  • FDIC insured

GO2bank is a brand name of the Green Dot Bank and shouldn’t be confused with GOBank, another Green Dot brand. Green Dot Bank has been in the business for more than 20 years and has served over 33 million customers. 

The GO2 was only started in January 2021 and is aimed at underserved and underbanked folks that don’t have a checking or savings account (5.4% of households in 2019). That’s why they don’t do a credit score check when you want to open their account. Even if you have bad credit – you’re in!

There are no minimum balance requirements with a GO2bank account, and you can even apply for a credit card at some point when you get eligible. Otherwise, you get a Visa debit card that you can use basically everywhere.

The monthly fee is $5 per month but can be waived if you receive a payroll or government benefits direct deposit into your account. 

Their credit building program comes with a Visa Secured Credit Card with no annual fees and no credit checks. The credit limit can start as low as $100, and all your purchases are reported to the three major credit bureaus to build your score.

To qualify, you’ll need to:

  • Set up ASAP Direct Deposit on your GO2bank account
  • Receive direct deposits totaling at least $100 in the past 30 days
  • Make an initial refundable security deposit of at least $100 to set your credit limit

You can check your credit-building progress with a free monthly VantageScore check. 

There are a few things that you should know about depositing money. Cash deposits are $4.95, and cheque deposits are from $0 to a minimum of $5 per cheque, depending on if you want the cash to be available in minutes or 10 days. ATM withdrawals are free and $£ for out-of-network ones, and there’s a 3% foreign transaction fee.

All in all, GO2bank is an excellent second chance bank that is easy to open and use with transparent fees, cash back, 1% APY on your savings account, overdraft protection up to $200, and more. 

Acorns


  • 55,000+ fee-free ATMs
  • Investment account
  • Retirement account
  • Checking account
  • $3 per month

Walter and Jeff Cruttenden, father and son duo, founded Acorns in 2012. Since 2019, notable investors in Acorns include Jennifer Lopez, Alex Rodriguez, Bono, Ashton Kutcher, and Kevin Durant.

The $3 Acorn account includes checking, investment, and retirement accounts. What’s important for this overview is that the company doesn’t perform a credit check when you want to join them. It’s an excellent choice for a second chance bank. 

You’ll get a metal debit card as well that has a matte green finish and your signature custom-engraved on it. When you spend with it, your spare change goes into investing account. 

There are no fees and no minimum requirements, but you have to have funds in your account to start spending, investing, or saving for retirement. If you have kids, there’s an investment account for them as well. 

All your deposits are FDIC insured for up to $250,000, just like other second chance accounts on our list. 

What is a credit score?

A credit score is a three-digit number that aims to measure your creditworthiness. An institution will usually look up your credit score when you apply for any type of credit (like a credit card or loan) to determine how likely you will repay them.

The credit scores are based on three major credit bureaus: 

  • Equifax, 
  • Experian, and 
  • TransUnion. 

These credit bureaus collect information like what kind of credit you have and how often you pay off your debts on time.

The FICO score is calculated by the Fair Isaac Company and plays a role in over 90% of lending decisions in the U.S. 

  • POOR – Less than 580
  • FAIR – Between 580 and 669
  • GOOD – Between 670 and 740
  • VERY GOOD – Between 739 and 799
  • EXCEPTIONAL – 800 or more

credit score - second chance banking

As you can see above, more than 35% of your score depends on your payment history. Make sure to make at least the minimum payments on credit cards and loans every month to maintain a good credit score. 

After the payment history, the current amount owed to financial institutions or the credit utilization makes up 30% of your credit score. Keep your credit utilization below 30% to maintain a good score. 

Why is your credit score important?

Your credit score is fundamental, but you already know that; otherwise, you wouldn’t be reading this article. 

It’s used by landlords, utility providers, and prospective employers, among others, but also by lenders, to review your credit applications and determine your creditworthiness which might influence if they are willing to extend credit and at what terms.

What is second chance banking?

If you have a bad credit history or your credit score isn’t high enough to open a bank account in a traditional bank or a big bank, you’ll be glad to know that there are other options on the market.

The digital banks on our list offer so-called second chance banking to people with such bad credits. They’ll enable you to open an account with them regardless of your credit history because they’re not performing a credit check anyway. 

They are primarily focused on the unbanked or underbanked people in America, of which there are plenty, unfortunately. And if you’re one of them, all of the above challenger banks are an excellent option for a second chance bank. Not only that, they’re a superb banking choice in general as they’re fighting the norm and going against the grain of most modern banking beliefs. 

What is a credit builder?

Now that you’ve opened a bank account, you might as well build up or rebuild your credit score so you get a better chance at loans, credit cards, or renting an apartment. To do that, you can enroll in a credit builder program with one of the challenger banks on our list.

These programs range from free to $20 in the case of MoneyLion. It could take months or years before you see any real progress, but you’ll simply be doing what you would do anyway – spending money. 

The bottom line

I sincerely hope that we opened your eyes to this important topic, and I’m confident that one of the banks on the list will be your second chance bank to help you get out of financial peril and into a better future.