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What Are Bad Credit Bank Accounts?
By Adam J. Heist
If you have a bad credit rating, then you know restoring your credit to a good or excellent rating is essential in order to get the best rate on loans possible. The higher your credit score, the lower your interest rate charges will be for loans. The lower your credit score, the less likely youíll be approved for a loan in the first place. One way to start building up your credit is to create a bank savings account; please read on to learn how a bad credit bank account can work to your advantage.

A bad credit score can really hurt. Youíll pay more for a car loan, have difficulty obtaining a mortgage, and credit card providers will really sock it to you. Moreover, youíll have a much more difficult time borrowing money from anyone. One way to counter all of this is to establish a savings account at a local bank. By regularly adding funds to your account, letís say $10, $15, even $25 per pay period you can show creditors that you have assets on hand. For the moment, a creditor will consider your savings account to be a bad credit bank account, but that can all change as you build up funds.

A bad credit bank account can also help you establish credit. By applying for a secured credit card, your savings account acts as a lien on the amount of money that you borrow.


Every time you borrow money and repay what you owe, this works to your advantage. You show creditors that you can be trusted and your funds act as collateral in the event that you eventually default. Naturally, youíll want to keep paying at least the minimum amount owed each month and you want to pay that amount on time. By linking your secured credit card with your savings account you can also authorize monthly withdrawals to ensure that the credit card is paid every month.

Keep it up for a year or two and you will soon find that your credit score has improved provided you pay your rent on time, are up to date with your utility bills, and have no other outstanding debts that are late. Run a free copy of your credit report at to make certain that your credit rating has improved. Once it has, then go ahead and apply for a mortgage, car loan, or other personal loan as your bad credit bank account is now considered to be a good credit bank account.


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This page was updated on Nov 2009 and is Copyright © 2003 by Global Com Consulting Inc.