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ChexSystems denied checking account? Here's what to do.
Based on your checking account history and the information in your ChexSystems report, you may be denied an account if the bank sees you as too much of a risk.
If you can't open a bank account because of ChexSystems, there are actions you can take to resolve issues, starting with requesting your ChexSystems Report and ChexSystems Consumer Disclosure.
Reviewing this information for errors and disputing the errors can help you clean up your ChexSystems consumer profile.
At Credit Union of Southern California (CU SoCal), we make opening a checking account easy!
Call 866.287.6225 today to schedule a no-obligation consultation and learn about our mortgages, home equity lines of credit, auto loans, personal loans, checking and savings accounts, and other banking products. As a full-service financial institution, we look forward to helping you with all your banking needs.
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What is ChexSystems?
ChexSystems® is a national consumer-reporting agency under the Fair Credit Reporting Act (FCRA) that compiles and maintains files on problems that consumers may have had with checking and savings accounts (e.g., account misuse, fraudulent activity, bounced checks and unpaid negative balances).
This information retained by ChexSystems is stored in a report that's unique to each consumer, which may be shared with financial institutions when you try to open an account.
How does ChexSystems work?
ChexSystems collects information regarding applications for new checking accounts, checking account openings or closings, and check-writing history (including bounced or returned checks). This information, along with a "risk score,” is provided to credit unions and banks every time you apply for a new account.
ChexSystems provides all consumer disclosure reports and consumer score reports free of charge.
- ChexSystems Consumer Score. Your ChexSystems Consumer Score is based on information contained in your consumer file. By reviewing the key factors that impact your score, you can gain a better understanding of your score. You may submit a request for your consumer score.
- ChexSystems Consumer Disclosure. Under the Fair Credit Reporting Act (FCRA), you are entitled to a free copy of your consumer disclosure report, at your request, once every 12 months. You can request a report to learn what information, if any, is listed in your consumer file at ChexSystems.
In addition to check writing history, ChexSystems compiles and maintains files on consumers on a nationwide basis relating to medical records or payments, residential or tenant history, employment history, and insurance claims.
Why was I denied a checking account?
If you have recently been denied a checking account, here are some of the most common reasons why this may have occurred:
Involuntary account closure. This is when a financial institution closes your account without warning you first. This could happen due to account inactivity, a negative balance, fraud, or account activity the bank considers high risk.
Excessive overdrafts. If you’ve consistently tried to withdraw money from your checking account and found that you don’t have a sufficient balance to cover the withdrawal, that’s called an “overdraft.” When an overdraft occurs, credit unions and banks charge overdraft fees as a penalty for overdrawing your account. This activity can be reported to ChexSystems by your credit union or bank. Overdraft protection and CU SoCal’s Courtesy Pay can cover your transactions.
Unpaid fees or negative account balances. A financial institution may deny an account to anyone with a record of negative account activity.
Suspected fraud. To protect its revenue and clients, a financial institution may deny an account to anyone linked to financial fraud, as determined by a credit report, ChexSystems Report, or other information.
Applying for too many bank accounts over a short period. Too many applications in a short period of time could look suspicious, causing financial institutions to turn you down for an account.
How to check your ChexSystems reports
Under the Fair Credit Reporting Act (FCRA), you are entitled to a free copy of your consumer disclosure report, upon your request, at a minimum once every 12 months and more frequently under certain conditions.
Request your Consumer Disclosure Report.
Your ChexSystems Consumer Score is based on information contained in your consumer file. By reviewing the key factors that impact your score, you can gain a better understanding of your score.
Request your ChexSystems® Consumer Score.
How to open a checking account with bad ChexSystems
If you’ve been denied a checking account here are some steps you can take to resolve the issue:
Dispute errors. Request your report and score and examine your records for errors. If you find errors,
you may dispute them with ChexSystems and the financial institution that reported the information.
Ask creditors to update their information. If you owe money to a financial institution, the easiest way to clear your report is to pay off the debt and ask the creditor to report that you've paid the debt. When ChexSystems receives an account status update from the source of the information, the report will be updated, but the record will remain on file.
Apply for a second-chance bank account. Some traditional banks and online banks offer second-chance bank accounts to people with low credit scores, bad credit, or dings on their ChexSystems Report.
Use a prepaid debit card. A prepaid debit card contains only the amount of money you paid for it (less any fees) and cannot be used at an ATM.
Open a savings account. Even if you have a negative ChexSystems report, you may be allowed to open a savings account, which isn’t as big of a risk to banks as checking accounts.
FAQs
Can you get yourself removed from ChexSystems?
If you have a report in ChexSystems, the record can remain active for five years. Start by requesting your free ChexSystems Report and Disclosure. If you find erroneous information you must successfully dispute the information with ChexSystems and/or your financial institution that reported the information to ChexSystems.
According to ChexSystems, the source of the information is under no obligation to remove an accurate report of account mishandling, even after payment of monies owed. However, the source of information is obligated to update the report with a paid in full or settled in full status and date when applicable. When ChexSystems receives an account status update from the source of the information, the report will be updated, but the record will remain on file.
How often can I get a copy of my ChexSystems report?
Under the Fair Credit Reporting Act (FCRA), you are entitled to a free copy of your consumer disclosure report, at your request, once every 12 months. ChexSystems provides all consumer disclosure reports and consumer score reports free of charge.
How long does a bad checking account stay in ChexSystems?
ChexSystems retains records of reported information for a period of five years from the report date unless the source of the information requests its removal or ChexSystems becomes obligated to remove it under applicable law or policy.
What's a good ChexSystems score?
ChexSystems Consumer Scores range from 100 to 899, with a higher score indicating a lower risk.
Are credit reports part of ChexSystems?
No, credit reports are not part of ChexSystems.
Why savvy consumers choose CU SoCal
For over 60 years CU SoCal has been providing financial services, including mortgages, Home Equity Loans, HELOCs, car loans, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Member Services specialist.
Get Started on Your Checking Account Today!
