Finance Blogs » Banking » Is bank account screening unfair? Is bank account screening unfair? By David McMillin · Bankrate Wednesday, October 8, 2014 Posted: 6 pm ET 1 in Share . Email If your application to open a new checking account has been denied, you arent the only one whos concerned about it. Richard Cordray, director of the Consumer Financial Protection Bureau, is worried, too. He voiced his frustrations in a forum today about the reporting process that banks and credit unions use to evaluate a consumers financial history. © LARRY DOWNING/Reuters/Corbis © LARRY DOWNING/Reuters/Corbis Consumers need access to accounts that allow them to move their money around securely and efficiently, Cordray said at the forum in Washington, D.C., which covered access to the banking system. The information used to determine their eligibility for an account needs to be accurate so that the account screening process does not unfairly restrict their access to the banking system. We need to move from screening processes designed to make banks safe from consumers to ones designed to make them safe for consumers, he said. Cordray highlighted some of the serious challenges that exist in the world of specialty consumer-reporting agencies. Most readers are likely familiar with the big three credit reporting bureaus -- Experian, Equifax and TransUnion, but there are other agencies focused on specific types of information like medical history, employment and checking account history. For banking customers, these agencies maintain a catalog of information about an individuals past behaviors such as overdraft penalties, bounced checks and fraudulent activity. Banks and credit unions routinely rely on these credit reports to determine whether a checking account application should be approved. According to Cordray, there are some big problems with these reports -- issues with the accuracy of the information, hurdles to consumers who want to dispute the information and how financial institutions are actually using them. Cordray raised an interesting comparison to credit reports in his initial statement. It seems understandable for banks and credit unions to use credit reports to prevent granting loans to consumers who may not be able to repay them. However, Cordray highlights that checking accounts pose significantly fewer risks. For most consumers, checking accounts are not inherently credit vehicles, but instead are products for depositing and transferring funds, Cordray said. So it is troubling then that banks or credit unions may use a credit report to exclude some consumers from these basic financial services. While the CFPB may not be able to change checking account application evaluations immediately, some unbanked consumers can still gain access to traditional banking services. Check out Need a second chance checking account? to learn how. Related posts: 1.Bank arbitration stymies consumers 2.KeyBank offers no-overdraft account 3.Bank Transfer Day a success? 4.Fighting mad about bank fees? 5.Snap a photo, open a bank account « Is Wal-Mart the future of banking? Secret tapes: Fed staff, bank cozy » Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other peoples opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused. By submitting a post, you agree to be bound by Bankrates terms of use. Please refer to Bankrates privacy policy for more information regarding Bankrates privacy practices. Read more: bankrate/financing/banking/is-bank-account-screening-unfair/#ixzz3G43pMohw Follow us: @Bankrate on Twitter | Bankrate on Facebook
Posted on: Mon, 13 Oct 2014 21:54:21 +0000
Trending Topics
Recently Viewed Topics
© 2015