Most consumers know that their credit report can have a serious impact on future opportunities — particularly when it comes to qualifying for loans for major purchases — but did you know that there is another report that may impact your financial future? ChexSystems reports can affect your financial options, particularly when it comes to opening a new bank account.
Merchants use systems like TeleCheck and Certegy to help them decide whether or not to accept a check from a consumer. But they aren’t the only ones interested in your financial history; banks and credit unions are as well. These institutions use ChexSystems to evaluate your checking history when they’re trying to decide whether to open a checking account in your name.
If you’ve been denied a checking account, issues or errors on your ChexSystems report may be to blame. You can take steps to resolve such problems, and this guide will explain how to do so.
Table of Contents
What Is ChexSystems?
ChexSystems is a reporting agency that provides details to financial institutions about consumers’ behavior in regards to their checking account history. The reports they provide includes information such as your Social Security number, contact information, and data from public records. In particular, these reports can highlight issues such as:
- Overdrafts and unpaid bank fees;
- Involuntary account closures;
- Suspected fraud or account misuse;
- Any other account inquiries or applications you’ve sent to other banks;
Such problems may lead to consumers being denied for new checking accounts. ChexSystems reports exist to provide information to banks and credit unions in much the same way that the credit reporting bureaus exist to provide credit information to lenders. Given that opening and maintaining checking accounts costs financial institutions time and money, these reports can help banks make informed decisions regarding who they will allow to hold accounts with them.
How Does ChexSystems Work?
Just as credit reporting agencies assign you a score depending on the quality of your credit history, ChexSystems does the same with your banking history. ChexSystems assigns consumers a score between 100 and 899. The higher your score is, the more likely banks and credit unions are to let you open an account with them or even court you as a potential customer.
ChexSystems calculates your consumer score by getting information on your banking history from financial institutions that you have worked with in the past. Bad records will make your consumer score go down, whereas a responsible and clean checking history will make it go up. Bad marks, such as an unpaid overdraft fee, will stay on your ChexSystems report for five years before being wiped off.
It’s important to keep in mind that, while your ChexSystems consumer score and your credit score are both important financial metrics, they don’t directly affect one another. It’s possible to have a great credit score while having a poor ChexSystems consumer score, and repairing your credit won’t necessarily repair your ChexSystems report.
How to Get Your ChexSystems Report
Since ChexSystems gathers consumer information, they must follow the rules set forth by the Fair Credit Reporting Act (FCRA). This includes giving consumers free access to their ChexSystems report at least once every 12 months. There are several ways to get your ChexSystems report:
Online
You can send a request online through the ChexSystems website. Make sure to have your Social Security number handy, as well as information about any previous addresses you have lived at over the past five years. Once you submit your request, ChexSystems will send you a copy of your report within five business days.
Phone
You can call ChexSystems at 1-800-428-9623 to be put on the phone with an automated system that will gather your information for a ChexSystems consumer report request.
Fill out a Consumer Request for Disclosure Form available from the ChexSystems website and mail it to the following address:
Chex Systems, Inc.
Attn: Consumer Relations
7805 Hudson Road, Suite 100
Woodbury, MN 55125
Fax: (602) 659-2197.
What if You’re “Blacklisted” on ChexSystems?
If you experience difficulties opening a checking account and discover that you have problems on your ChexSystems report — sometimes referred to as being “blacklisted” — you have a few routes to explore. Take the below steps to open a checking account and begin improving your checking account history.
How to Dispute Your ChexSystems Report
Many consumers who encounter issues with their ChexSystems report seek to have it removed. However, ChexSystems does not create reports only for individuals with negative checking histories, and you can’t simply have your report removed upon request. You can, however, dispute any inaccuracies.
It’s important to see a copy of your ChexSystems report from time to time and check it for any errors. Errors on your report could be the result of an honest mistake, or they could be the product of identity theft. If you are the victim of identity theft, then it’s very important that you dispute your ChexSystems report to have the false information removed.
In order to submit a dispute and have information removed from your ChexSystems report, you can either submit a dispute online using the ChexSystems website or fill out a Request for Investigation form and mail or fax it to the address or number above. Be sure to attach any documents that support your version of events.
You should have the error removed, or at least hear back from ChexSystems, within 30 days. If you don’t, you should send an additional letter letting them know that failing to respond is a violation of the FCRA and that you will pursue legal action.
What Banks Don’t Use ChexSystems?
If you need a checking account now, you can still apply for a checking account with a bank that does not use ChexSystems. Here are some examples of financial institutions that offer checking account options for individuals with negative checking histories:
- BBVA utilizes EWS;
- Chime Bank;
- First American Bank;
- Go Bank;
- Navy Federal Credit Union;
- Radius;
- SoFi Securities;
- Suntrust Bank;
- United Bank;
- Wells Fargo.
Note that such accounts may have different terms and conditions than most traditional checking accounts. These alternatives, often called second-chance accounts, typically have monthly fees, mandatory security deposits, and limits on withdrawals and transfers. However, they can be powerful tools in your attempts to establish a better checking history.
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