If you have made financial mistakes in the past, you may find it difficult or even downright impossible to open a checking account. If you find yourself in this position you may be wondering what you can do about it. After all, it can be very hard these days without a checking account to pay bills with.

Before you can start fixing the problem, it is important to understand what the real issue is. Many people think the problem lies with bad credit, but that is not the whole truth. The mistakes you may have made in the past may have resulted in a bad credit score, but the truth is that banks do not, and cannot, use your credit report when making a decision to allow you an account. Instead they have their own sort of agency that maintains a list of people who have written bad checks, and/or have unpaid fines or fees due to a bank. This company is called ChexSystems and if you have gotten on this list for any reason, you will find it very hard to open a checking account at a major financial institution.

If you are reading this article then you probably find yourself in that position.

So then the question is; what can you do to acquire a checking account?

When approaching this problem you essentially have two options.

Option #1 - Work With the Bank

This is the more difficult option but is often worth the extra effort. What you need to do, essentially, is convince the bank to give you an account. This is easier than it sounds. You will need to actually visit the bank and speak with them in person. The goal here is to sell yourself and if you have a good stable job, then that will help. If you can provide direct deposit that can often push things over the edge. If that isn't enough, and you really want to deal with that bank, then you will need to provide some security to the bank. None of this is a guarantee but the lower the risk you are to the bank the better. Ask the bank if they will give you an account if you secure it with a deposit that they hold, or perhaps with a 6-month or 1 year CD.

This is the preferred option in my opinion. The advantage to this option, and why I recommend it, is because it can allow you to be more flexible. By this I mean you can quite possibly open an account at a major local bank rather than being forced into a lesser known, or inconvenient bank.

Option #2 - Non ChexSystems Bank

If option one doesn't work for you then your only other choice is to find a bank that doesn't use ChexSystems. There are banks out there, but you will need to do some research. When you are looking for a bank under this option then it is important to protect yourself. Don't be so focused on finding a bank that you get taken advantage of. Here are a few things to watch out for.

Banks Requiring a Direct Deposit

If you want to do a direct deposit, then that is your choice, but be wary of a bank requiring you to do this in order to open an account.

Extra or Unfair Fees

Sure banks charge fees, but watch out for banks that are charging extra fees just because you are in a bind. Do your research and see what sort of fees are generally charged by local banks in your area, and then when shopping a non-ChexSystems bank don't let them charge you differently.

by guest author - Jon Ochs

 This is one of my most favorite articles that I have written because it addresses so many questions that people have about credit. I love watching the eyes of my clients widen when they find out the truth about some of these most common myths.

 You will be hearing some things that will most likely be the opposite of what you currently believe. Keep in mind that credit and credit reports are not widely understood, and even those in the financial and credit industry, often do not have a good understanding. With that in mind, let's get started

 Myth 1: Paying off collection accounts, tax liens, judgments, or late payments will remove the negative item from my credit reports.

 This is simply not true. In fact, by paying off an old collection account, you can actually lower your credit scores. The reason for this is because more recent negative items will hurt your score more than older negative items. If you pay off an old collection account, not only will the collection account remain on your reports as a paid collection, but it will now show a current date, and cost your more points. I am not suggesting that you should not pay off your delinquent accounts, only that you need to understand the consequences so that you can factor that into your decision.

 Myth 2: If I pay my total credit card balance every month, I will raise my credit scores.

 Keep in mind that the credit system is designed by the creditors, to help them determine if you are a good credit risk, and if you are an optimal credit user (one who uses the system in such a way that it will generate revenue for the creditors). By paying off your accounts every month, you are not establishing a history of optimal credit usage. What your creditors want to see, is someone who pays slightly more than their minimum monthly payment every month, on time, with only occasional balance pay-downs. This behavior will optimize your credit scores.

 Myth 3: Repairing credit is illegal.

 This is far from the truth. In fact, credit repair is legal for you to do on your own, or hire anyone you choose to do it for you. Repairing your credit is a right protected under the Fair Credit Reporting Act (FCRA).

 Myth 4: Consumer Credit Counseling will improve my credit.

 We have all seen the statements made by credit counseling companies that state that their program will improve your credit. I can tell you that this is false. When you enroll into a credit counseling program, one of the first things that happens is a statement is inserted into your credit reports for each account included in the program. This statement will say something like "payments made through credit counseling", or "client in CCCS". This statement itself may not cost you any points; however it is looked at by the lending industry as very negative. It is like putting a sign on your forehead that says, "I can't pay my bills!" In addition, most credit counseling programs will make your payments late, and this will then cause you to have late-pays, which will cost you many points on your credit.

 Myth 5: Negative items have to stay on my credit for 7 years because that is the law.

 This is also false. There is no law that dictates the duration that an item must remain on your credit reports. The only thing that dictates that an item must remain on your credit report is that it can be proven to be 100% true and accurate.

 Myth 6: If you make a lot of money, you will have great credit.

 Your income does not play any direct roll in determining your credit scores. In fact, statistics show that large percentage of high-income earners have sub prime credit. Your credit scores are made up of several factors including payment history, account balances, types of credit in use, etc.

 Myth 7: I must have excellent credit because I have never been late on a payment.

 Your timeliness of payments does make up 35% of your credit scores, but the other 65% is made up of other factors that are not related to making your payments on time. It is important to understand all those factors to maximize your scores.

 Myth 8: Your credit reports from all 3 major credit bureaus will be the same.

 This is not true. In fact, most of the time, all 3 of your credit reports will differ from one another. The reason for this is that each of the credit bureaus is a separate independent company, and the processes at each are different. Also, some creditors may only report to 1 or 2 bureaus, but not all 3. In my experience, your reports will very rarely be exactly the same.

 Myth 9: Once you are married, you and your spouse share the same credit.

 False! This is something that many believe, but it is absolutely not true. Every individual has their own unique credit reports. You may share some credit items with your spouse if you have joint accounts.

 Myth 10: Closing credit card accounts will increase your credit scores.

 This is one of the biggest surprises that I see happen to people all the time. You go to your mortgage lender and they instruct you to close some accounts in order to qualify for a loan. You do as you are told, but only to see your scores plummet almost immediately; sometimes by more than 100 points. What happened? The reason for the drop was because you just closed some of your oldest and most valuable accounts as far as your credit scores were concerned. Remember, the longer you have had an account in good standing, the more positive points it will provide. It is not advised to close a long-standing account unless you have good reason.

 Armed with this new knowledge, you can now get started putting it into action to improve your credit, as well as share it with others.

 Jon Ochs is the founder/CEO of NCA Credit Repair Inc., a nationally recognized and trusted Credit Repair Company. For more information about building your credit, or credit repair, visit the website at http://www.ncaCreditRepair.com

How To Increase My FICO Score  Part 3 | Why and How Do Companies Use Your FICO Score

The FICO Score (calculator) Simulator is a powerful tool to help you determine how actions can affect your FICO® score– for better and worse.

There are two options for simulating how certain actions might affect your FICO® score:

If all of your accounts and account balances stay the same, this will help you determine which action to take that will have the best outcome on your FICO score. The choose your own action, option will allow you to choose an action and then the FICO score calculator will show you how this action will affect your FICO score. If you choose to take two separate actions, and each would bring your FICO score up 20 points, doesn’t really mean that your score will go up 40 points.

When you purchase Score Power® you will gain access to your Equifax Credit Report™ at no extra charge. This report will show all the information on your credit file as of the date of purchase, and is available for 30 days.

Most of the financial institutions use FICO scores to make all of their credit decisions. This includes most major mortgage providers. Lenders use the FICO score to see how well you have managed your credit obligations in the past, and to determine whether they should extend credit to you. Lenders usually take into consideration the information on your credit application as well. These credit scores range from 300 to 850, the majority of scores falling between the 600s and 700s.

There is no cutoff used by all lenders each has their own criteria, but they are not far off from one another. The lender may be able to tell you how they use your information for giving credit. Most lenders use FICO scores to help with their lending decisions and each has their own strategy including what the risk factors are.

The FICO  simulator can be a great tool to help you determine the actions you can take to increase your FICO score. This is a way for you to try different strategies before you actually put them into practice.