Forex Accounts

• When a person opens a Forex account with a brokerage, he will generally provide the brokerage with access to a bank account to cover the cost of trades or else deposit money directly with the brokerage. If a person deposits money with the brokerage, his credit rating will generally not matter, as the brokerage is not extending the borrower credit. However, brokerages that draw money from bank accounts may demand that borrower have good credit, to avoid being stiffed.
  
  

Qualifications

• Many brokerages will not examine a person's credit score before allowing them to open an account. In fact, many brokerages will demand no financial information from the individual and only a minimum of identification. Often, a person can open a Forex account simple by providing a name and depositing money into an account. However, rules about what information a brokerage will require will depend in part on in what country the brokerage is based, as different countries have different laws regulating trading.
  
  

Trading on Margin

• Some brokerages allow clients to trade on margin. When an individual trades on margin, he is essentially borrowing money from the brokerage for a short period to make trades. In most cases, if a person wishes to borrow money from a brokerage, the brokerage will either demand that the individual have an excellent credit rating or else provide the brokerage with a form of collateral that can be redeemed in the event he defaults on the loan.
  
  

Considerations

• Whether a person can open a Forex account with bad credit will ultimately depend on the policies of the company with whom she is seeking to open an account. In addition, a person may have the option of opening an account with poor credit, but will have difficulty borrowing money to trade, as lenders will consider her too much of a risk. This will limit the amount of money that she can use to trade.