Having problems with debt can have a far-reaching effect on your finances. If you’ve missed multiple monthly repayments, made them late, or had to enter a debt management plan or a form of insolvency, it’s very likely that your credit rating will have been damaged as a result.

However, your credit rating won’t always be affected in the same way: it all depends on your overall finances. For example, if you’ve missed just one or two payments, it may not have much of an impact, whereas entering a formal insolvency solution, such as an IVA (Individual Voluntary Arrangement), will – and it’ll be recorded by credit reference agencies for six years.

If your credit rating is stopping you from getting access to the financial services you want, let’s look at what alternative banking options could be available.

Bank accounts for bad credit
If you’ve applied for a standard bank account and been turned down because of your current debt problems – or ones you’ve had in the past – all isn’t lost. Even with bad credit, it’s still possible to open a bank account with the right provider.

Basic bank accounts can offer many of the same services you’d get with a standard bank account – from a debit card to internet banking and SMS text message alerts – without requiring a credit check. So a basic bank account could be an ideal option for someone who can’t open a standard current account.

It’s worth remembering that all accounts are different, so it’s important to work out exactly what you want from your bank account. Bear in mind that bank accounts for bad credit don’t usually offer overdrafts or pay much interest on your balance, so if these features are important to you, you might want to find out what you’d have to do to get a standard current account, so you can get one as soon as possible.

Banking your way out of debt?
A lot of people face debt problems because they’ve lost control of their finances – and found themselves with an unmanageable level of debt as a result.

Some bank accounts could actually help you to get out of debt, by helping you to manage your money and realistically budget for all your costs. For example, some basic bank accounts let you split your money up into separate accounts – one for all your essential expenses, such as Council Tax, gas bills and food costs, and one for your ‘spending money’.

This could really reassure you that you won’t accidentally spend more than you can sensibly afford, and that all your priority costs are being met.