Have you ever been denied on a bank account or perhaps know someone that has? Well, more than likely Chexsystems was used in the decision process of you or someone you know being rejected for that bank account. Some of you may be asking yourself “What is Chexsystems”? Reality is that most consumers aren’t familiar with this term until they’ve been denied from acquiring a new bank account.
To give you some information, Chexsystems is a consumer reporting agency that tracks your checking and savings bank account activity. They work similarly to how Equifax, Experian, and Transunion collect their data. Now, this has nothing to do with a credit score but as I mentioned earlier it can impact the ability to open a bank account or write checks for that matter.
You may be questioning whether or not all financial institutions screen applications by checking banking history. Truth be told, more than 80% of banks in the United States use Chexsystems as part of the application process for a new checking and/or savings account. As far as the data gathered by Chexsystems, it’s primarily negative information. This data surrounds things such as an unpaid balance, multiple overdrafts in a short amount of time, bounced checks, suspected fraud, and/or violation of banking rules and regulations. Currently, Chexsystems policy is that an entry will be deleted after five years from the date the account was closed. Again, this may resemble the way credit bureaus work and how they factor in a person’s credit score but interestingly enough Chexsystems has their own scoring process, and different measures are taken regarding financial history.
Okay, so now that you have some central information regarding Chexsystems it’s now important to familiarize yourself with information that can assist you now and in the future. So here it goes!
Under the Fair Credit Reporting Act, as a consumer you are entitled to a free copy of your report once every 12 months or 60 days of being denied from opening a bank account. I would suggest to get the report directly from the Chexsystems website http://www.chexsystems.com/ because it’s the easiest and hassle free way to get your hands on it. Once you have the report, you will now have a better understanding as to what led to the decision of the refusal process, and notice any inaccuracies. In the case you do find inaccurate information, remember you can dispute it just the same way as you would dispute imprecision on a credit report.
Although most banks do utilize Chexsystems, there are a few banks that do not. For example, United Bank, TD Ameritrade, Southwest Financial Federal Credit Union, Green Dot Bank, Wells Fargo Opportunity Checking, and PNC Foundation Checking. You can always do some research to check what banks also offer “Second Chance” accounts in your state of residence.
Keeping track of a bank account is important, and should be part of your general credit conservation. Just as you keep track of what’s listed on your credit report, your Chexsystems report is something that should be looked at regularly. This can definitely save you or a loved one from being denied a bank account in the future.