Banking

Everything You Need to Know About ChexSystems

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For many consumers, managing money has proved to be complicated. And for some, chances are the one thing standing between them and better money management is ChexSystems. This consumer reporting system, which monitors your banking history — specifically closed accounts — is used by banks and credit unions when deciding who to do business with. So if you plan on opening a new checking or savings account, or have already been denied, you’ll want to know what’s inside your report.

What is ChexSystems?

ChexSystems is a financial company covered by the federal Fair Credit Reporting Act (FCRA) that collects information about consumers and their banking habits. The information collected is used to create your ChexSystems report — or consumer disclosure report — and calculate and assign a consumer score, which ranges from 100 to 899. Higher scores mean less risk.

Opening a new checking or savings account requires a thorough review of your bank history, so many financial institutions request ChexSystems reports when someone applies for an account. Similar to a credit report and score, a ChexSystems report and consumer score gives a better idea of your financial responsibility and if having a banking relationship with you would be a risk.

What is a ChexSystems report?

As mentioned, ChexSystems collects information about your banking history. Since most banks refer to ChexSystems when making a decision about consumers, knowing what’s in your report can better help you understand if banks and credit unions see you as a risk and why.

Information found in a ChexSystems report includes:

  • Personal information: Personal information displayed on your report includes your name, date of birth, addresses and phone numbers.
  • Bank account history: Closed checking and savings accounts and instances of insufficient funds listed on the report will show your personal information, financial institution, account number, amount owed to the financial institution, closure status and closure date.
  • Unpaid fees or checks: Any unpaid fees and checks will be listed. Information about bounced or returned checks will include the retailer or business the check was written to, check number, amount, date of check and date of check paid.
  • Potential fraudulent activity: Instances of potential fraud include similar details of an account closure, such as name of reporting business, consumer’s name, address, amount of transaction and date of closure.

Can I request my ChexSystems report?

Every year, consumers are allowed one free copy of their ChexSystems report. In certain situations, additional requests for a free report can be submitted in a 12-month period.

Below are the steps to request your free ChexSystems report.

  1. Visit ChexSystems.com.
  2. Select “Submit Request Online” or “Submit Request By Other Methods,” which allows you to request a report by phone or mail.
  3. To complete the request online, answer a few questions and provide personal details, including your Social Security number, date of birth and driver’s license number.
  4. Select “Submit” If your selected delivery method was online, you’ll receive your report

Once you receive your report, you want to review it to confirm what information financial institutions have used to make a decision when you apply for an account. Upon your review, if you believe there’s inaccurate information in your report, you can dispute it. Since consumer agencies are required to remove or correct this information, an updated report that reflects the truth about your banking habits could get you that new checking or savings account.

What to do if you’ve been denied a bank account

The information in your ChexSystems report can be the deciding factor for financial institutions when evaluating your application for a new account, so there could be a chance you’re denied an account. Luckily, there are alternatives available to consumers who face difficulties opening an account at a traditional bank.

A second chance bank account is an option to consider because it gives consumers the opportunity to prove their financial responsibility. Sometimes, financial institutions offering second chance bank accounts prominently promote not using ChexSystems. Similar to a traditional bank account, you’ll have access to online banking and a debit card. Unfortunately, you could still be assessed overdraft fees, monthly maintenance fees and more.

A prepaid debit card is another way consumers can manage their funds if a traditional account isn’t an option. Simply open an account, add funds and use the card to make purchases. However, you want to be mindful of how much you have in your account because you’ll only be able to spend up to the amount of money in your account.

Frequently asked questions

The ChexSystem is used to monitor consumers’ banking habits. Information about these banking habits is then used to create a report that can be used by financial institutions to assess risk when consumers apply for an account.

ChexSystems scores range from 100 to 899. Consumers with higher scores are seen as lower risk.

Reported information stays on ChexSystems for five years. However, if any information on the report is inaccurate, you could potentially get it removed if your dispute is successful.