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IN THIS POST
What is ChexSystems and what does it do?
How ChexSystems Reports Work
Are You In ChexSystems & What’s In Your Report?
How To Get A Copy Of Your ChexSystems Report & Score
Finding Banks That Don’t Use ChexSystems
How to avoid being blacklisted by ChexSystems
What are alternatives to a Checking Account
What is ChexSystems and what does it do?
ChexSystems is a consumer reporting agency (CRA) that tracks and monitors your checking and savings account activity. Think of it as a credit agency for banking. It’s akin to credit reporting agencies Equifax, Experian, and TransUnion, which in turn collect data on consumers’ loan and credit card history. When you have overdrafts, excessive withdrawals, bounced checks, this information is collected by ChexSystems. Banks and Credit Unions then use this information to determine if they will approve you for a new checking or savings account.
If you are like most consumers then you were probably not aware that ChexSystems even existed until you were denied for a new account. The good thing is that it does not impact your credit score, or impact your ability to obtain a loan. It is used to determine if a banking institution will allow you to open up a new account. It can also factor into whether or not a merchant will accept a paper check from you (Good thing that most consumers now use debit cards)
When you apply for a new bank account, many financial institutions will run your application through their screening process by checking your banking history with ChexSystems. Approximately 80% of all banks in the US., use ChexSystem for this standard process. There are a few other systems such as TeleCheck, Early Warning Systems, or other CRAs that Banks may use. Second Chance Banks don’t use these systems at all.
If you have read this far, then chances are that you may have been denied a bank account, if so then read on to see how you can obtain a free copy of your ChexSystems report.
How ChexSystems Reports Work
Your ChexSystems is not the same as your credit report. Credit reports identify your debts and how you pay your debts. ChexSystems report to banks; banks report your negative banking activity to banks.
In addition to ChexSystems, banks or credit unions may get account holder reports from another consumer reporting agency called Early Warning Service
If you have ever opened a bank account in the U.S., then you probably have a ChexSystems record. ChexSystems only reports negative information. What does that mean? If you have ever bounced a check, had an overdraft, had a negative account closed, it’s in the ChexSystems database of naughty checking accounts. They maintain records for 5 years.
Are You In ChexSystems & What’s In Your Report?
- Suspected fraud or identity theft: Any type of criminal activity is an automatic red flag. Understanding that writing a check knowing that you don’t have the funds available is considered fraud and it’s a serious offense.
- Debit card/ATM abuse: Who knew that people deposit empty envelopes, but they do. This is fraud. Any type of fraudulent activity that involves your debit card or ATM.
- Excessive account applications: Applying for numerous bank accounts in a relatively short period of time will red flag you as possible fraudulent activity.
- Bounced checks/overdrafts: A bounced check is when you write a check or use your debit card and you don’t have the funds in the account to cover the transaction. If the money is not available, the bank will charge you an overdraft fee. Everyone has made a mistake and had a bounced check. Repeating this numerous times will be reported to ChexSystems.
- Excessive loss of checks/debit cards: Claiming that you lost your debit ATM card numerous times could get you flagged as potential fraud. I’ve lost a debit card a time or two, which always turned up in the wash or kitchen after I reported it lost. Don’t make a habit of reporting your debit card lost or stolen.
- Unpaid negative balances: We all make mistakes. Don’t stress over it, however not addressing these mistakes is what causes additional problems. Do not allow unpaid negative bank accounts to linger. If you get a negative fee, contact your financial institution right away and make arrangements to take care of the balance. Ignoring the issue will not make it disappear.
- Accounts closed for cause: What does this mean. It’s simple, use an account for fraud and the bank will close that account and it will be reported.
How To Get A Copy Of Your ChexSystems Report & Score
Under the Fair Credit Reporting Act (FCRA), you are entitled to a free copy of your report once every 12 months or if you’ve been rejected by a bank in the past 60 days. ChexSystems is not required to provide a free copy of your score, however, so while you can purchase a copy of your score at any time, it will not be included in your free report.
Upon receiving your request, your ChexSystems report or score will arrive by mail within five business days. Below are instructions for obtaining your information.
Submit your request online
Click the following link, Consumer Request for DisclosureTelephone and Interactive Voice Response
Call 800.428.9623
The IVR System is available 24 hours per day. Representatives are available to assist during normal business hours 8:00 am – 7:00 pm Central Standard Time, Monday through Friday.Mail
Complete, print, and mail the Consumer Request for Disclosure Form
Chex Systems, Inc.
Attn: Consumer Relations
7805 Hudson Road, Suite 100
Woodbury, MN 55125
Fax Complete, print and fax the Consumer Request for Disclosure Form
Fax to: 602.659.2197
Finding Banks That Don’t Use ChexSystems
The vast amount of banks and credit unions in the U.S., use ChexSystems to screen potential customers, thankfully there are second chance bank accounts for people who will not be approved due to their record in ChexSystems. BBVA Bank and Wells Fargo are a few options for second chance banking. There are banks that are more lenient when it comes to ChexSystems. Focus on smaller local banks or credit unions or stick with second chance banking. You can always ask a banking institution what their policy is before applying.
How to avoid being blacklisted by ChexSystems
The best way to stay off the naughty blacklist at ChexSystems is to be responsible with your account. These tips are pulled directly from ChexSystems website:
1 – Know your account balance
“If you regularly balance your checkbooks, you’re less likely to write a check for more money than you have available in your account. When balancing your checkbook, be sure to subtract all debit and ATM transactions (and applicable fees) in addition to any checks you’ve written,” ChexSystems advises.
2 – Don’t float checks
3 – Review your bank statement monthly
“It only takes a minute, but it can save you hours of trying to track down mistakes and missed entries,” ChexSystems advises.
4 – Check your account balance regularly
5 – Familiarize yourself with your bank’s fees and policies
What are alternatives to a checking account
Having a negative ChexSystems report is not the end of the road. There are other alternatives to a traditional checking account. Let this be a temporary solution while you are working on getting your ChexSystem profile updated, this may entail you paying off old checking account balances (keep in mind that bouncing checks is considered fraudulent and you could find yourself in trouble with the law if you do not address it.)
Second chance bank accounts
Second chance bank accounts provide you an opportunity to open an account and re-establish a checking account. There may be fees associated with opening a new account, but you have a ton of options.
BBVA
BBVA bank offers checking and savings accounts, credit cards, wealth management, and other financial services for individuals and businesses. It also offers online banking in all 50 states. The BBVA Easy Checking account is designed for those who don’t qualify for a standard checking account. Let Easy Checking give you the opportunity to rebuild your credit
CHIME®
Chime is a mobile banking option with no minimum balance, no maintenance or overdraft fees, and offers direct deposit. Chime does not have physical locations, everything is online. It is FDIC insured and your money is protected up to $250,000. Chime will take you even if you have had poor or bad credit
You can also receive your direct deposit up to 2 days earlier than a regular bank. As soon as your direct deposit hits, it is released to your account, no hold period.
For additional banks that provide second-chance opportunities, check out our list of viable options. You can always contact a bank and see if they use ChexSystems.
Prepaid Debit Cards
A prepaid card is a card you can use to pay for things. You buy a card with money loaded on it. Then you can use the card to spend up to that amount. A prepaid card is also called a prepaid debit card, or a stored-value card. You can buy prepaid cards at many stores and online.
If you still can’t obtain a checking account, then a pre-paid debit card may be the next best option for you while you are rebuilding your credit profile. American Express Bluebird and Navy Federal Credit Union’s Go Prepaid Card may be what you need to keep you on track. Make sure that you check on the fees that may be associated with any prepaid card.
About The Author
Marvette Critney
Marvette Critney is a Real Estate Broker in Metro Atlanta, GA, a Credit Expert, and the founder of 750 Credit Score Blog Resource Site, and the well-known blog site Brag Differently. Her credit advice and knowledge have helped hundreds to become homeowners. She is recognized as a leader in her field. Read more.