A:

Establishing a checking account with a bank requires more than an initial deposit or verification of a customer's identity. A financial institution wants to be assured that a banking customer has a strong, positive track record with previous banks and accounts before establishing a relationship. Bank account history reports and credit reports shed light on a potential customer's financial past and present data on why a financial institution may want to restrict access due to less-than-ideal financial tendencies. A bank customer can be denied a checking account based on a bank history that shows a record of account closings or a credit report with negative financial information.

Data Included in a Bank History

The data included in an individual's bank account history is gathered over the course of a banking relationship. Banks voluntarily report information to data clearinghouses, and records for a specific individual are requested each time a customer attempts to open a new bank account. Banks can see if any previously held bank accounts were closed for cause and if money is owed to other financial institutions due to those account closings.

An Individual is given a record when activities associated with a checking or savings account create risk or loss for the bank, including fraud, writing bad checks or accruing substantial insufficient fund fees without payment. A record often means a new checking account application is denied due to the high risk of loss.

Data Included in a Credit Report

In addition to bank histories, a checking account application can be denied after review of an individual's credit report. Data included within a credit report details how well credit has been managed in the past and current debt obligations owed to other institutions. Late payments, accounts that have been charged off, and debts currently or previously in collections are all indicate high risk for banks, and each could trigger a denial of services.

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