What is it ChexSystems?

You probably know that not paying a credit card or loan will show up on your credit report and make it difficult to obtain credit in the future, but did you know that mismanaging your checking or savings account could negatively affect your banking options? While checking and savings account activity does not appear on your credit report, most financial institutions report misconduct to a database called ChexSystems. Types of activity that may be reported to ChexSystems include: bouncing checks, overdrawing your account, or committing an act of fraud.

Information can stay on your ChexSystems report for five years. If you owe an outstanding debt, paying it does not get it removed from your report early (unless the financial institution voluntarily deletes it), although your report will show that it was paid.

Positive information is generally not reported to ChexSystems. If you have never had any incidents of mismanagement, you probably do not have a ChexSystems report.

Opening an account with a ChexSystems report
When you apply to open a checking or savings account, most financial institutions will run your name in the ChexSystems database to see if you have a report. Some financial institutions may deny everyone who has a ChexSystems report, while others may only deny people with certain types of activity. ChexSystems itself does not approve or deny applications – it merely provides reports to financial institutions.

If you are denied an account due to having a ChexSystems report that does not necessarily mean you are doomed to keeping your money under your mattress. Ask your financial institution if there are any steps you can take to get an account. If you owe money to your previous financial institution, paying it may do the trick. Some financial institutions will also give approval if you take a course on account management. If the financial institution is unable to give you an account under any circumstances, shop around. Some financial institutions don’t check ChexSystems or have second chance accounts specifically for people with a ChexSystems report. Credit unions in particular are often more forgiving of a ChexSystems report. As a last resort, you may be able to get a prepaid debit card. You can have your paychecks directly deposited onto the card and use it at any place that accepts regular debit cards.

Your rights
Consumer reporting agencies, including ChexSystems, are regulated by the Fair Credit Reporting Act and Fair and Accurate Credit Transactions Act. Below are a couple of the important rights these laws give you:

  • You are entitled to a free copy of your ChexSystems report annually (if you have a report).
  • You have a right to dispute errors in your report. In most cases, ChexSystems must investigate and remove any inaccurate information within 30 days.

Contact information
Chex Systems, Inc.
7805 Hudson Road, Suite 100
Woodbury, MN 55125
(800) 428-9623

About BrightStar Credit Union

BrightStar Credit Union is a not-for-profit, member-owned financial cooperative based in South Florida. If you live, work or go to school in Broward or Palm Beach counties, you can join!

Posted on 02/04/2011, in Financial literacy and tagged , . Bookmark the permalink. 2 Comments.

  1. I believe the rhelm of Chexsystems consumer reports are coming to a end. It’s now late in the year 2014 and I found hundreds of verified banks and credit unions that is viewable at http://infoaviator.org/finance/checking-accounts/2014/05/28/how-to-open-a-second-chance-checking/ that offer “fresh start” and “second chance” checking programs both locally and nationwide. The specially designed programs were created to specifically help people with poor Chexsystems reports obtain a checking account. Many of them come with checks and a MasterCard or Visa debit card.

    Good Luck!

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