Why do banks do credit checks when opening an account?
In order to open a bank account you’re asked to: * prove who you are * prove where you live * prove student status, if relevant * fill in an application form * in some cases pay some money into your account You need to prove your identity in order to help in the fight against money laundering whereby criminals try to open accounts – often in false names or using stolen identities – with money made from or intended for illegal activities. By law banks must check to make sure they know their customer before letting you open an account or buy their financial products or services. For accounts that allow you to borrow or go overdrawn, the bank may want to run a ‘credit check’; in other words to get references from previous banks or lenders that you are a reliable customer before opening the account. Some banks do this as a matter of principle, just in case in the future you do need to borrow or go overdrawn.
