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An account with a bank or credit union (whether savings or checking) is vital for your cash management. These accounts offer convenience in making purchase transactions; meeting normal, recurring living expense and purchase requirements; and providing a safety net to meet unexpected expenses or to take advantage of unanticipated opportunity. However, if you have a negative ChexSystems report, you may be denied by the bank or credit union to open an account with them.

If you have a negative ChexSystems report, you should understand how you could get it deleted from your record. If deletion is not feasible than what other options you have to open a checking account? If you do not have any negative ChexSystems report, then you should understand how the ChexSystems work to keep yourself out of its database.

What is ChexSystems?

While opening new checking account banks and credit unions verify the credentials of the applicant to find whether the applicant have any past history of account mishandling. ChexSystems provide these services to its member banks and credit unions. Its database keep track of negative information such as not-sufficient funds (bouncing checks) and unpaid overdrafts regarding checking and savings accounts, etc. and share this information with member institutions to help them assess their risk while deciding on a new account. In turn, these member institutions feedback information on account mishandling by the account holders to the ChexSystems database.

ChexSystems is like any other credit bureau and is governed by the Fair Credit Reporting Act (FCRA) and other laws. The only difference is that the information it keeps and reports pertain only to banks and credit unions. Another point, which you should understand is that ChexSystems, is only an agency providing information to aid the decision process of the banks and credit unions. It neither accepts nor rejects new account applications.

What information is included in ChexSystems consumer report?

The ChexSystems consumer report contains personal information and reported information. The personal information include your full name and any alias name, date of birth, your social security number and driving license number, your current and prior address and any business you signed on in past 5 years. This information is kept to ensure that a complete and accurate search about you has been made to identify all information in the database pertaining to you. The reported information include information about any account mishandling by you, such as:
  • Information on whether you were forced to close your accounts as a result of nonpayment, bounced checks or overdrafts
  • Information on whether you reported lost or stolen checks. This information is shared with banks to prevent losses against a closed account.
  • Any attempt by you to open more then one account within a period of three months. This is used to verify account theft and money laundering.
  • Any outstanding debts, checks and payment plans
Understand what is ChexSystems and what kind of information is included in ChexSystems consumer report to better manage your savings and checking accounts. Be careful to avoid any situation that may lead to negative ChexSystems report.

Have a bad ChexSystems report? Have you been refused by banks and credit unions to open a savings or checking account? Do not get discouraged. With proper planning and discipline you can open and operate a new checking account. Follow the simple steps outlines here.

Get a copy of your ChexSystems report

Obtain a copy of your ChexSystems consumer report through mail or Internet from ChexSystems. The fee is minimal and you may qualify for a free report. You are entitled to a free copy if you:
  • Within 60 days of denial of checking account, credit, insurance or a job
  • Believe that your report is wrong because of fraud
  • Are unemployed and will be applying for a job within 60 days
  • Are on welfare/public benefits

Verify your report and get it corrected

Verify every piece of information in the report and seek corrections immediately if you find any discrepancies. You can dispute the discrepancies either with the reporting agency or directly with ChexSystems. If the dispute over the information is not resolved to your satisfaction, add a brief statement to your file describing your version to the dispute.

Request the bank/credit union to remove the negative report

If you have just received a negative entry in your ChexSystems report, try to get it removed by making a request to a reporting bank or credit union. Do not close the account. Keep the balances above the minimum required. Pay all overdraft charges to the bank/credit union as soon as you can. Make good on all your checks. Once you have cleared all overdraft charges and satisfied everyone who got your bounced checks, request the reporting bank/credit union to remove the negative entry from your ChexSystems report.

A negative entry in ChexSystems report stays in your file for a period of five years. The record can be removed from your file if the bank or credit union that filed the report makes requests for its removal to ChexSystems. However, if the report was accurate, they are under no obligation to get it removed even after you clear the dues. They are only obligated to report that the account is paid and your report will reflect that. If the reporting agency does not agree to get the negative entry removed from your file, get a brief statement added to your file. The negative record is not removed from your file even if you file for bankruptcy. Take extra care to avoid your entry into ChexSystems as it takes a long time to redeem your reputation with the banking system.

Options available with negative ChexSystems report:

If you have a negative ChexSystems report, dont worry. You can still open a checking account. Just follow the steps given below:
  • Banks and credit unions can approve your new account even if you have negative ChexSystems report, if they are convinced that your negative report was a genuine mistake on your part and that your business is worth the risk.
  • Try credit unions. If you are employed by a certain employer or industry, they may open a checking account for you even with bad report.
  • Tell the account manager that you are willing to purchase a one-year CD at their bank in exchange for a checking account. Most probably he will agree. Negotiate for amount of CD.
If nothing of the above works, approach a bank or credit union that is not member of ChexSystems network. About 20% of banks and credit unions in US do not participate in the ChexSystems network.

Do not get discouraged. Follow the above guidelines and learn to be disciplined to avoid any future traps.

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Contact Us | Disclaimer | December 15, 2018