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Everything You Need to Know About ChexSystems

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Most people know they have a credit score and credit report that lenders use to decide if and how you can borrow money. But did you know that banks and credit unions have their own method of determining if you’ll be a good customer? Enter ChexSystems, a reporting system that tracks all of your closed checking and savings accounts. Even though many consumers haven’t heard of the agency, its reports could have a massive effect on your ability to open a new bank account.

What is ChexSystems and what does it do?

The information that ChexSystems tracks is used to create your Fair and Accurate Credit Transaction Act (FACTA) report. Think of this as a banking-specific version of your credit report.

When you apply for a new checking account or savings account, the financial institution will often run your ChexSystems report to see if you have any negative marks. These can include overdrawn accounts, negative balances, closed accounts and more, all of which typically stay on your report for five years. Basically, banks check these reports to assess how much of a risk they’re taking by doing business with you.

“[Banks] want to know that if someone’s going to open an account with them that they’ll keep the account in good standing,” said Alexandra Cisneros, an education specialist at GreenPath Financial Wellness.

There are a few ways that ChexSystems helps banks do that. First, there’s your “risk score” — also known as your consumer score — that the agency calculates based on your prior credit behavior. Scores range from 100 to 899, and just like with your credit score, a higher number means you present a lower risk.

ChexSystems also generates a Consumer Disclosure report, which shows specific details about your credit history. The report might list past issues, such as unpaid account fees, overdrafts, bounced checks or even suspected fraud.

How many banks use ChexSystems?

Around 80% of all banks use ChexSystems, according to Banks.org. Cisneros said that nearly every major bank and credit union she has encountered does look at the agency’s reports, but there are some options in case you end up with negative marks or a low score.

Many banks offer “second chance” accounts, which specifically help people with less-than-perfect financial histories. These bank accounts might come with limitations or extra fees, but they can be a great workaround if you’ve received a poor ChexSystems report. Read on for more information on this option.

Why do I have a ChexSystems report?

There are plenty of reasons you may have a ChexSystems report, some of which might come from issues completely beyond your knowledge.

“The way people usually come to realize that they are having an experience with ChexSystems is when they apply for a checking account and find that they have a file,” Cisneros said.

Overdrafting is the most common occurrence that Cisneros sees, but there are plenty of other problems that might pop up. Here are the most common examples, which are broken down in detail below.

1. Not paying account fees

When you overdraw your account, your bank will usually charge you a fee. Overdraft fees can be as high as $35 at some banks, but as of March 2017, the national median was $30, according to research firm Moebs Services.

Even if you’re only overdrawn for one day, you can end up owing significantly more than that if you continue to spend money before you realize the account is overdrawn. It can be difficult to repay these fees, especially if you can’t afford to bring your account current.

However, if you end up closing the account with a negative balance or if the bank decides to close the account for you, ChexSystems will list this on your report. This is one of the most common reasons that a bank or credit union will deny your application, since your report reflects that you might struggle to pay your debts.

If you do get a fee on your account, call your bank as soon as possible. Sometimes the bank will waive (or reduce) fees for good customers. At the very least, ignoring the problem won’t make it go away and can cause you to get a negative mark on your ChexSystems report. Usually banks will give you a deadline to pay your fees before closing your account and reporting it to ChexSystems.

2. Overdrafting on your account

Even if you pay your overdraft fees when you go over your account balance, you can still be denied a new account if ChexSystems shows that you overdraw too often.

Here are some safeguards that you can set up to prevent overdrafts:

  • Keep all of your money in one account that you use solely for daily transactions.
  • Allow your bank to decline purchases if you don’t have enough available funds (which may mean declining to enroll in overdraft protection).
  • Use caution when opting for overdraft protection. With this service, banks will allow transactions to go through even if you have insufficient funds, but they will almost always hit you with overdraft fees at the same time.
  • Avoid using checks, which may be cashed at a later date.
  • Set up bank alerts so you’re notified if your balance dips below a certain amount.

3. Writing bounced checks

A bounced check is when you write a check for an amount that you don’t currently have in your account. When the recipient tries to deposit the check, the bank will reject it and charge you a fee for insufficient funds.

If you have any bounced checks that have been reported by retailers, it will show up in your ChexSystems report, which could cause you to be denied for a new account. Bouncing checks makes it seem like you’re not on top of your finances, especially if it continues to happen over a long period of time.

4. Committing fraud

It’s one thing to write a check for $100 and assume you have $100 in your bank account, only to have that check bounce. But it’s quite another to write a check knowing that you don’t have the funds in your account.

That constitutes fraud, and it’s a serious offense that can result in criminal action. Other types of fraud include opening an account with someone else’s information, and trying to write a check to yourself from another person’s account. Instances of fraud will show up on your ChexSystems report.

How long do ChexSystems reports last?

ChexSystems keeps records for five years, meaning you’ll have to wait that long for any negative marks to come off your report. However, if you find incorrect information, you can dispute it and ask for it to be removed.

You can also freeze your ChexSystems report. Like a credit report freeze, you can freeze your ChexSystems report so no bank or credit union can view it. This could block someone from stealing your identity and opening a new account in your name. However, it can also make it more difficult for you to open a new checking or savings account.

How can you clean up your ChexSystems report?

The first step to cleaning up your ChexSystems report is to take a look at what’s in it. According to Cisneros, this “investigation” phase is often the hardest step for consumers, but it can make all the difference in clearing your record.

“Know your options and what will happen — being aware of that can be the most empowering thing,” Cisneros said.

Getting your ChexSystems report

To get your free ChexSystems report, go to www.chexsystems.com and click on “Free FACTA Report.” As with a credit report, you’re legally entitled to one free copy of your report every 12 months.

However, unlike with your credit report, which you can access online after answering a series of questions, you have to wait for your ChexSystems report to be sent to you by mail. You should receive the report within five business days after submitting your application.

Submitting a dispute

From there, you can dispute any errors or mistakes you might see on your report. To do that, you can submit a form via this website, by fax at 602-659-2197 or by mail at the following address:

ChexSystems Inc.
Attn: Consumer Relations
7805 Hudson Road, Suite 100
Woodbury, MN 55125

ChexSystems recommends that you include the following information when you submit your dispute:

  • Full name
  • Social Security number
  • Current mailing address
  • ChexSystems consumer ID number, if available
  • The information you are disputing, as well as any information regarding the nature of your dispute

It usually takes 30 days for the investigation to be finalized, and the results will be mailed to you.

What are the alternatives to a checking account?

Thankfully, consumers with negative ChexSystems reports do have a few alternatives at their disposal. If you’re having trouble opening a checking account, here are two of the easiest workarounds.

Second chance bank accounts

Again, second chance bank accounts offer you the chance to open a bank account despite having an imperfect financial record — albeit with a few limitations and possible fees. There are plenty of great options available, many of which also offer you a road to a standard, fully equipped account.

For example, Radius Bank, which is available to consumers nationwide, offers an easy-to-open second chance account that comes with a free debit card, 24/7 banking access and the ability to upgrade to a more premium account after 12 months of good credit history. There are a few fees to watch out for, though.

Another option is the app Chime, which offers bank accounts without checking applicants on ChexSystems. As an added perk, the account is mostly fee-free, with no monthly charges, ACH transfer fees, foreign transaction fees or ATM fees.

Additionally, other major banks like Wells Fargo and BBVA Compass also have options for people with less-than-ideal ChexSystems reports.

For more info on second chance accounts, here’s our list of some of the best options available. If you already have a bank in mind, call them and ask what information they use to verify new accounts. Not all banks use ChexSystems; some use other systems like Early Warning System or Telecheck.

Prepaid debit cards

A prepaid card works like a gift card. You load it with money and then use it wherever cards are accepted. You can send money with your prepaid card, pay bills online and set up direct deposit. In many ways, it acts like a debit card that you’d get with a checking account.

There are plenty of options when it comes to prepaid cards, with many major financial institutions offering their own deals. For example, the American Express Bluebird card allows customers to add between $1 and $1,999, with accounts that cost as little as nothing to open. Meanwhile, the Navy Federal Credit Union’s GO Prepaid Card doesn’t charge any fees for use or activation, but it does require that you deposit at least $20 in order to open an account.

However, there are downsides to these cards, mostly fees. Some prepaid cards charge a fee for buying the card, while others have a monthly fee. They can also charge every time you withdraw money or reload the card. If you use the card often, you can face high fees every month that cut into your ability to save money and improve your finances. In our review of the AccountNow Gold Visa Prepaid Debit Card, for example, we found that consumers could spend more than $100 in fees per year just to maintain the card.

Still, a prepaid debit card is one alternative to consider if you have a negative ChexSystems report. And if your report is stopping you from opening a new checking or savings account, remember that there are also steps you can take to clean up your ChexSystems report.

The information in this article is accurate as of the date of publishing.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Auto Loan, Reviews

LightStream Auto Loan Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Reviewed By

If you’re in the market for a quick, affordable and hassle-free way to finance your next car, a LightStream auto loan should definitely be on your radar. It’s particularly well-suited for deal-seekers with good credit who don’t mind working with an online company when it comes to financing their cars. If you’d rather work with a local company that can offer in-person support, however, you might want to skip this lender.

How LightStream auto loans work

LightStream offers a wide range of options for financing your next ride, including:

  • Purchase of a new or used car, either from a dealer or an individual
  • Auto loan refinance (except it does not refinance its own loans)
  • Auto lease buyouts
  • Loans for motorcycles, as well as boats and RVs
  • Classic car loans

Auto loans at a glance:

  • Starting APR range: 3.49%–9.49%
  • Fees: None
  • Loan amounts: $5,000–$100,000
  • Terms: 24–84 months
  • Credit requirements: Minimum 660 credit score
  • Mileage or vehicle restrictions: None

LightStream offers the same starting rate whether you’re buying a new or used car from a dealer, something you don’t see at other lenders. But keep in mind that the lowest rates go to those with the best credit who opt for the shortest loan terms possible and use autopay to make their car payments.

Satisfaction guarantee

If you see a lower rate elsewhere, LightStream will beat any verified offer with a rate that is .10 percentage points lower. It also promises a $100 guarantee within 30 days if you aren’t satisfied with your loan experience.

How to apply for a LightStream auto loan

The only way you can apply for a LightStream auto loan is through its online form. It is an online lender, after all, so you should be comfortable with handling your business details — including the loan application — online. You’ll need to:

  1. Acknowledge receipt of LightStream’s statement on the use of electronic records.
  2. Agree to receive electronic records.
  3. Agree to use electronic signatures to sign your loan documents.

You’ll also need to have a Visa or Mastercard credit card to apply, which LightStream uses during the verification process.

You will be asked to provide:

  • The purpose, term and amount of desired loan
  • Your name
  • Your address
  • Phone number
  • Social Security number
  • Employment information
  • Annual income
  • Total amount of assets and equity in your home

From there, LightStream may contact you for more details and documentation. If approved, you’ll need to sign your loan documents electronically and provide LightStream with your bank account details. The money will then be deposited into your bank account, which means you’ll need to pass it along to the seller, whether that’s a dealer or private seller. LightStream will not send the money to the seller directly.

It’s important to note that LightStream doesn’t offer any preapproval options, but if you apply and are approved for a loan, you are under no obligation to accept the loan.

How to qualify for the best rates

LightStream requires good credit at a minimum, but looks for excellent credit when giving the best rates. It defines excellent credit as:

  • Five or more years of significant credit history.
  • A credit history with a variety of account types such as major credit cards (for example, Visa, MasterCard, Amex), installment debt (vehicle loans) and mortgage debt if applicable.
  • An excellent payment history with no delinquencies or other problems repaying debt obligations.
  • A proven ability to save as shown by some or all of the following: liquid assets (stocks, bonds, bank deposits, etc.), cash down payments on real estate, retirement savings and little, if any, revolving credit card debt.
  • Stable and sufficient income and assets to easily repay current debt obligations and any new loan with LightStream.

Pros and cons of LightStream auto loans

LightStream offers the convenience of an online lender with the backing of a brick-and-mortar bank as the online arm of Truist, the bank created by the merger of  SunTrust Bank and BB&T. But it’s important to weigh all of your options carefully when choosing an auto loan. It’s one of the biggest purchases you’ll make, after all.

Pros

  • Wide variety of loans: New, used, refinance and lease buyouts loans are available on a wide range of vehicles. Unlike other lenders, LightStream doesn’t place restrictions on your vehicle’s age, make, model or mileage.
  • Decent rates: We’ve seen lower starting rates at credit unions, but you’ll have to meet membership requirements. LightStream has no membership requirements and provides the same starting rates for new and used vehicles as well as refinance loans.
  • No down payment required: LightStream finances up to 100% of the car’s cost. Of course, it’s always best to put down as much as you can afford on an auto loan. This will help you save money over the life of your loan and avoid becoming underwater on that loan.
  • Quick funding: If you complete the application process and are approved by 2:30 p.m. EST, you could receive funds the same day.
  • Good reviews: LightStream auto loan reviews are generally positive.

Cons

  • Good credit required: To qualify for a LightStream auto loan you’ll need a credit score of at least 660 or better.
  • No preapproval process: Unlike many lenders, you’ll have to complete a full application in order to see your rates and terms. Still, the process is fast, and if you complete your rate shopping within a certain time period, multiple applications should not impact your credit any more than a single application.
  • No face-to-face service: If you’re the type of person who likes to seal the deal with a handshake after signing the documents, you’ll want to stick with some place local.

LightStream vs. Capital One

If you’d like a bit more of a guided approach to the car-buying process,  Capital One’s Auto Navigator loan options might be better for you. Rather than sending you cash directly that you can use on whatever car you want to buy, Capital One’s Auto Navigator service lets you first get prequalified for financing, and then shows you which dealers in your area may offer based on the type of car you want to buy and the financing you can afford.

If any of the offerings pique your interest, you can then finish the application and buy the car. It’s still a good idea to compare the offer with other new and used car loan rates.

LightStream vs. Carvana

Carvana works similarly to Capital One Auto Navigator in that you can prequalify for financing and browse real cars in your area that you may then be able to buy. It’s important to remember that Carvana only sells used cars and its financing is only available on Carvana cars. But it is possible to finance here with poor credit — Carvana requires borrowers to be 18 years old, have no active bankruptcies on their credit report and earn at least $4,000 per year.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Credit Cards, Reviews

CreditStacks Mastercard Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer. This site may be compensated through a credit card issuer partnership.

Written By

The CreditStacks Mastercard offers a unique opportunity for individuals with little or no U.S. credit history – such as recent college graduates or professionals relocating to the U.S. for employment – to be approved for a credit card.

That’s because instead of requiring a Social Security number (SSN) or individual taxpayer identification number (ITIN) as most traditional credit cards do, the CreditStacks Mastercard allows applicants to apply using a valid passport or U.S. government-issued ID, a U.S. visa or a permanent resident “green” card (if applicable), as well as proof of income. The CreditStacks Mastercard also allows you to apply up to 60 days prior to starting your new job in the U.S.

We break down the pros and cons of the CreditStacks Mastercard, and show how it compares to the Capital One® Secured Mastercard®, which is also designed to help individuals establish or rebuild credit.

CreditStacks Mastercard pros

No credit history required. With the CreditStacks Mastercard, you can apply without a Social Security number and with little or no U.S. credit history. Once you obtain your Social Security number, you must provide it within 60 days of account opening. At that point, CreditStacks will begin reporting your credit activity to the Equifax and TransUnion credit bureaus.

Note, if you have been living in the U.S. for more than one year, you will be required to provide a Social Security number when applying for the card. A credit check may also be performed.

Decent credit limit. The CreditStacks Mastercard offers a credit line of up to $5,000 – which is a generous amount for an unsecured credit card that doesn’t require credit history.

Your credit limit will be determined by the proprietary underwriting procedures of CreditStacks, which will consider your current employment situation and additional factors, instead of your credit score.

No annual fee. The CreditStacks Mastercard comes with a $0 annual fee.

Additional CreditStacks Mastercard benefits:

  • Mastercard ID Theft Protection(™). Access free identity theft resolution services, as well as Mastercard ID Theft Alerts(™).
  • Extended warranty. Receive an extended warranty of up to one year past a manufacturer’s warranty of 12 months or less.
  • Purchase protection. If you are dissatisfied with a purchase, you may be eligible to receive a full refund for up to 60 days from the date of purchase.
  • Price protection. Get reimbursed for the difference if you find a lower price for an eligible new item within 60 days of purchase using your CreditStacks Mastercard.
  • Purchase assurance. Cardholders receive coverage if an item is lost, damaged or stolen within 90 days of purchase.
  • Travel protections. The CreditStacks Mastercard offers a MasterRental(R) collision damage waiver, lost or damaged luggage insurance, travel accident insurance, baggage delay insurance and trip cancellation and trip interruption insurance. Plus, receive access to exclusive experiences and offers through Priceless Cities and special travel offers through Mastercard’s online booking tool.
  • Cellphone insurance. If you use your CreditStacks Mastercard to pay your monthly cellphone bill, you can receive coverage against theft or damage of up to $600 per claim and up to $1,000 per 12-month period.

CreditStacks Mastercard cons

No rewards program. The CreditStacks Mastercard does not offer a sign-up bonus or rewards on the purchases you make using the credit card. That said, when trying to build or rebuild credit, it’s best to focus on paying your bill on time and in full (when possible) each month, rather than racking up rewards.

No intro APR on purchases. The CreditStacks Mastercard does not offer a 0% intro APR on purchases – meaning, if you don’t pay your balance in full each month, you will be subject to interest charges at a rate of 15.49% Variable APR.

That said, the card’s ongoing APR for purchases is reasonable – considering that some cards designed for individuals with little or no credit come with APRs upwards of 26.99% (variable).

Compare it to the Capital One® Secured Mastercard®

Similar to the CreditStacks Mastercard, the Capital One® Secured Mastercard® is designed for individuals with little or no credit. However, because it is a secured credit card, the Capital One® Secured Mastercard® requires a refundable security deposit of $49, $99 or $200, for an initial credit line of $200.

If you deposit more money before your account opens, you may be eligible for a higher credit line, up to $1,000. Additionally, you can be given access to a higher credit line after demonstrating responsible card usage by making your first five monthly payments on time.

While the Capital One® Secured Mastercard® does not require U.S. citizenship to apply, it does require a valid SSN or ITIN, as well as a residential address in the U.S. or a U.S. military location.

See how the cards compare side-by-side in the table below.

CreditStacks Mastercard vs. Capital One® Secured Mastercard®

 CreditStacks MastercardCapital One® Secured Mastercard®
Annual fee$0$0
Rewards rateN/AN/A
Credit lineUp to $5,000$200-$1,000
Deposit requiredNone$49, $99 or $200
Regular purchase APR15.49% Variable26.99% (Variable)

The Capital One® Secured Mastercard® also comes with a number of benefits, including auto rental collision damage waiver, travel accident insurance, extended warranty and 24-hour travel assistance services. As a Capital One member, you will also have access to virtual card numbers and account alerts from Eno, as well as access to your credit score and fraud monitoring through CreditWise.

But if you plan to carry a balance on your card, you’ll be better off with the CreditStacks Mastercard, since the Capital One® Secured Mastercard® comes with a substantially higher APR of 26.99% (Variable).

Read our: Capital One Secured Mastercard review

Which credit card is best for me?

If you haven’t yet established credit in the U.S., the CreditStacks Mastercard could be a good fit. In addition to not requiring a Social Security number for approval, the card helps build your credit by reporting to two major credit bureaus.

But if you’re in the market for a secured credit card and already have a SSN or ITIN, the Capital One® Secured Mastercard® is a good alternative. While the card offers a much lower credit line than the CreditStacks Mastercard, it does offer a variety of useful benefits that aren’t common for a secured credit card.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.