Having issues opening a bank account? Then you may have a record on ChexSystems, a database that banks use to check whether potential customers have outstanding accounts at other banks. You also may have a ChexSystems report if you have a history of bouncing checks or mishandling your accounts.
When you apply for a new account, banks and credit unions will run your name through ChexSystems and may choose not to open an account for you based on the information they find. The good news is that if you find that you have a history on ChexSystems, there are ways to clear up your report.
Obtaining a Copy of Your Report
You can obtain a copy of your ChexSystems report by visiting its website and requesting one. The Fair and Accurate Credit Transaction Act entitles you to one report per year.
This report will show the banks that have reported you to ChexSystems. There will be a list of accounts that have been closed by the bank, as well as any money you still owe. The account history will stay on your report for five years, but you can pay off outstanding balances owed to the banks. Once you do this, many banks may consider opening an account for you.
Paying Off Balances at the Banks
Once you see what you owe and to whom, you then can begin to make debt payments to pay off any balances owed. You may even be able to get some of the balances lowered. Try visiting the bank and talking to a customer service representative. They may be willing to waive all or some of the charges for you, depending on the circ*mstances. If nothing else, they can explain what the charges were and how long your account was in the negative.
Keep in mind that you will need to contact each bank separately and work with them to pay off any balances. You can either save up to pay off each balance in full or talk to the bank about setting up a payment plan. Once the balance is paid off, request that each bank report to ChexSystems that the account has been paid in full.
Disputing a Fraudulent Account
There is also the possibility that someone opened an account in your name without your permission or knowledge, also known as identity theft. If that person mismanages the account, it could show up on your ChexSystems report. You need to take several steps to dispute this and have the account removed from your ChexSystems report. You also should pull a copy of your credit report and check for signs of identity theft there, as well.
If you find evidence of identity theft on your ChexSystems or credit report, take the following steps to remediate the issue:
- Contact the bank and explain that you did not open the account. You should also ask for basic information about the account so you can file your police report.
- File a police report, and explain that you did not open the account and that your identity was stolen. You will need a copy of this report for your own records, and one for each bank or credit card company where an account was opened fraudulently.
- Send the police report to the bank, and then contact the credit bureaus and ChexSystems, explaining that the account was opened as a result of identity theft. You will also need to dispute the account and fraudulent charges, which ChexSystems allows you to do online, via mail, or by fax. Keep in mind that this process can take up to 30 days.
Living Without a Bank Account
If you have a report on ChexSystems, you may not find a bank or credit union willing to open a checking account for you until you clear up the issues. It can be difficult to live without a checking account and takes careful planning. You may not even qualify for prepaid credit or debit cards. To pay your bills, you may need to use money orders. You will also have to find a place that will cash your paychecks for you. It's not easy, but it can be done.
If you are careful to budget and save money each month, you can begin to fix the situation. Once you clear up your outstanding balances, you may be able to clean up your ChexSystems report.
Once you get your report in better shape, you can open a checking and savings account, which will make managing your money that much easier. Be sure to keep your account in good standing so you don’t find yourself in the same situation in the future.
Frequently Asked Questions
How long does ChexSystems information stay on your record?
ChexSystems usually keeps reported information on record for five years unless the original reporter requests its removal.
How do I find out if I'm in ChexSystems?
Just as with your credit reports, you're entitled to one free ChexSystems report every 12 months and any time you're denied banking services due to information in your report. You can request a report online, via phone, or by mail.
What banks don't use ChexSystems?
There are many banks that either don't use ChexSystems or are lenient about information that shows up on your report. These second-chance banks are good places to start if you're having trouble opening an account.
Updated by Rachel Morgan Cautero.
FAQs
ChexSystems maintains a report of certain account activities and reasons accounts were closed. Most banks and credit unions use this information to determine whether to allow you to open an account with them. Examples of items that can show up on your ChexSystems report include: Involuntary account closure.
How do I fix my ChexSystems report? ›
How to clear up your ChexSystems report
- Get a copy of your ChexSystems report.
- Dispute errors in your report.
- Settle your debts.
- Request an updated report.
- Other possible actions.
- Consider a second-chance checking account.
After you've paid off any debts that are causing a negative report, you can request that the credit union, bank, or collection agency remove the record from your ChexSystems report. Ask creditors to update information.
How do I lower my ChexSystems score? ›
- Request your report.
- Dispute errors.
- Pay off debts.
- Ask creditors to update information.
- Wait until the record drops out of the database.
To view and manage your security freeze, log in to the Consumer Portal or register for an account using the buttons above. Using the portal, you can schedule a temporary lift, remove a temporary lift or permanently remove your security freeze. If your existing PIN is not available, click here to request a replacement.
Can banks override ChexSystems? ›
While most banks and credit unions use ChexSystems or another consumer reporting agency, there are several that offer what's called second-chance banking. These financial institutions either don't check your ChexSystems report at all, or they're willing to look past some negative items.
How long will I stay on ChexSystems? ›
How long does the closed account stay on ChexSystems file? Our current practice is to retain record 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 do banks look for on ChexSystems report? ›
Your ChexSystems report may also include things such as overdrafts, unpaid negative balances, and suspected identity theft or banking fraud. When you apply for a new bank account, the bank or financial institution in question can request a copy of your ChexSystems report.
What happens if you get reported to ChexSystems? ›
If you've had overdrafts and unpaid fees, they may be included in your ChexSystems report. While your ChexSystems report likely won't affect your credit scores, it may impact whether a bank or credit union will approve your application to open a new account.
Can I dispute ChexSystems? ›
If you dispute the completeness or accuracy of the information in your consumer file, you have the right to submit a dispute directly to the source of the information. However, if you prefer, ChexSystems® will contact the source on your behalf to initiate a reinvestigation.
5 steps to clearing your ChexSystems report
- Request a copy of your ChexSystem report. ...
- Dispute mistakes or fraudulent activity on your report. ...
- Pay off your balances. ...
- Ask creditors to remove information from your ChexSystems report. ...
- Wait for items to fall off your report.
Pay Off Outstanding Debts To Banks: If your ChexSystems report includes legitimate notations for unpaid negative balances on previous accounts, pay these off — or at least make a payment arrangement — and request that your bank update the payment status in ChexSystems when the debt is settled.
Where can I open a bank account if I'm on ChexSystems? ›
Many credit unions will open an account for you if you can reasonably explain why you haven't paid a ChexSystems debt, and some credit unions will not pull a report on you even if you do have poor history. Call and ask to speak to the branch manager or other bank official.
How do I get cleared from ChexSystems? ›
If you want to have your information excluded permanently, you may print, complete, sign and return a ChexSystems Permanent Opt Out Election form. Please complete the entire form. Failure to provide complete and accurate information may prevent the processing of your request.
Can I open a bank account if I freeze ChexSystems? ›
Time for Freeze
This freeze is free to request and prevents the approval of new checking, savings, credit card and/or loan accounts in your name without your express consent. Experts recommend a ChexSystems freeze if you have a clean record and have no immediate plans of switching banks, etc.
Which bank does not use ChexSystems? ›
SoFi, Capital One 360, Chime, LendingClub and Varo are all banks that don't use ChexSystems, which may provide a second chance to people whose ChexSystems history is not favorable.
Can I open a bank account after being reported to ChexSystems? ›
Having a ChexSystems record could make it difficult to get approved for new bank accounts. Prepaid debit cards and second chance checking accounts are alternatives to consider when you're unable to qualify for a standard bank account.
Why would ChexSystems decline your account? ›
Unpaid fees or negative account balances. A financial institution may deny an account to anyone with a record of negative account activity. Suspected fraud.
What bank does not use ChexSystems? ›
SoFi, Capital One 360, Chime, LendingClub and Varo are all banks that don't use ChexSystems, which may provide a second chance to people whose ChexSystems history is not favorable.
