Cards Nerd

Freezing of accounts is a serious issue and some consumers are neither aware of the circumstances that could result in this action, nor the involvement of Chexsystems in it. Well, as a consumer, you need to be informed of the process that leads up to the actual freezing of the account so you can tackle it better.

Some other Consumer Reporting Agencies (CRA)  provide reports on both the positive and negative aspect of your financial status, but with Chexsystems, the data provided is only on the negative. It is with this report that most banks make a decision on a consumers financial stability and may deny opening of accounts and other financial services based on the negatives.

How does Chexsystems relate with freezing my Accounts?

Chexsystems is a data compilation service dealing only with negative financial issues a consumer may have over the span of 5 years typically. It compiles this database into reports and alerts the banks on updates on your accounts. This now sets off the banks to pay attention and sort out the data  it provides, using it to make an informed decision about your financial capability, obligations and performance.

Can Chexsystems directly freeze my account?

The answer is No. Its jurisdiction does not cover taking action on a consumer’s account, it can only provide data in report form and then the banks make decisions about that consumer.

Is Chexsystems important?

Yes, it is. Most banks in the US rely heavily on the data it provides. ‘More than 80% of banks and credit unions use consumer reports from Chexsystems and other agencies to help them decide about bank applicants’ says Nerdwallet . Hence, because banks use this report, consumers need to pay more attention to their standing with Chexsystems.

What data in Chexsystems report can cause the freezing of a consumer’s account?

Any negative financial data in a consumer’s account is instantly placed on Chexsystems radar. Examples are:

1. Suspected Fraud or Identity Theft: When a consumer’s account is suspected of fraudulent activities or if a consumer bcomes aware of an identity theft situation, the consumer may decide to initiate security lockdown and this will be captured by the Chexsystems.

2. Bounced Checks and Overdrafts: An account that has activities of bounced checks and overdrafts that are not repaid within the stipulated period can lead to freezing of the said account.  

3. Accounts frozen for cause (fraud or bad checks): Consumers accounts that have a history of bad checks within a short period catches the attention of the Chexsystems, and the banks, acting on this report, may decide to freeze the account to better rectify,understand and monitor that account.

4. Abuse on debit cards or ATM: When a consumer’s account debit card has a history of misuse, it pops up on Chexystems radar and this may cause the bank to freeze your account, sometimes so you can come in person and they confirm that it really is the consumer and not someone else using the account.

5. Excessive loss of Checks or debit cards: When a consumer is in constant need of a new debit card or can’t find checks, it causes suspicion and banKS may freeze that account to flush the person out.

From the above examples, one can see that while the use of Chexsystems may seem like a way to poke holes at a consumer’s financial inadequacy, the same report is also used to protect the interest of the consumer and help them monitor their financial standing.

How do I access Chexsystems report?

Chexsystems reports are designed in such a way that the consumers have the right to retrieve a free Chexsystems report annually and dispute untrue negative information provided. Its governing Act,  the Fair Credit Reporting Act (FCRA)  aims to ‘promote the accuracy, fairness, and privacy of information in the files of the consumer reporting agencies’.

What should consumers do when their account is frozen?

At this point, all the information provided earlier comes together.

1. Get that Chexsystems report: Consumers need to know what data is contained in their Chexsytems file. Apply for the free annual report at  consumer disclosure report.  

2. Dispute any discrepancies found in the report as it could be responsible for the freezing of the consumers account.

3. If the data contained is true, go over to any physical bank office closest and discuss how to work or pay off any unpaid overdrafts or other financial obligations.

4. When the obligations are settled, ask for a receipt and request creditors to file and update with Chexsystems.This will help them see that even though you had financial issues, they were cleared off. This is important for future account opening or diagnosis by the banks.

5. Get a Second Chance account. This gives you somewhere to park your money while waiting for the account to be cleared. Also, if there were previous unpaid overdrafts in a consumer’s main account, the second chance account can help the consumer get back on good standing with Chexsystems as long as it is maintained responsibly.

6. Wait for the 5 year period frame of the Chexystems to expire. It will automatically ignore those financial anomalies before the 5 year period.

Chexsystmes seems to work, hence, why Bank of America and some other banks, use it to make informed decisions.

I hope this article is helpful in enlightening you on Chexsystems and their influence over banks in freezing an account.

Most people are aware of credit ratings; that they are a measurement of how a person may handle their financial commitments based on previous credit behaviors. It’s widely understood that lending services use credit scores to assess various factors when handing out financial loans. They also know the importance of a good credit score when applying for those financial services.

However, what many don’t realize, is how you manage your savings and chequing transactions can negatively affect your standing at a financial institution. Also, if you’re account consistently has negative banking activities, your bank can report that information to consumer reporting agencies, like ChexSystems, that are designed to track such events. Just like credit scores, your debit score will follow you. ChexSystems shares their information with all the banks that use their service. If someone is rejected by one bank due to a poor ChexSystem score, chances are good they will also be dismissed at another bank for the same reason.

People often don’t know they have a poor “debit score” until they apply for an account at a new financial institution and are rejected. Many are declined the option to open a simple chequing account if they have a poor debit, or ChexSystems score. In the most severe cases, people who have been blacklisted by the consumer reporting agency, ChexSystems, are unable to open any kind of bank account and are deemed “unbankable.”

Who owns ChexSystems?

Fidelity National Information Services (FIS) is the owner of ChexSystems. FIS acquired ChexSystems in 2007 with the purchase of eFunds for a cool 1.8 billion dollars. It is regulated by the US federal government legislated Fair Credit Reporting Act (FCRA). They are a global leader of financial technology solutions.

Why do Banks Use ChexSystems?

Fraud protection. Protection against fraud is why ChexSystems is used by 80% of financial institutions in the United States. Losses incurred by fraudulent activity at the personal account level, which is basically loss from bad cheques, cost banks 7 billion dollars in 2016. With potential losses like that, it’s no wonder banks, and credit unions take precautions for even simple chequing accounts. Personal account fraud, resulting in million-dollar-losses, has made headlines across the United States in recent years.

• In 2010, a Texas resident pled guilty to “defrauding three Texas banks of more than one million dollars.”
• A man, from Illinois, was sentenced to one year in a federal prison in 2013 for his involvement in a cheque-kiting scheme that totaled up to more than 4.8 million dollars in bad cheques.
• A cheque kiting ring that cost California banks “at least $15 million” dollars made headlines in 2014, and even landed some individuals on the FBS’s wanted-list.

Applying for a personal chequing account is as enjoyable as renewing your driver’s license but leaves you with writer’s cramp from signing endless mystery forms. Having to make an appointment to get approval from a bank that allows them access to your money may seem silly, but is a requirement in our current, fraud-infested, reality. So, until people stop trying to swindle banks money away from them, the banks will continue to use protective measures, like ChexSystems, when screening new clients.

Account Data is Tracked at ChexSystems

Reports are made to ChexSystems from financial institutions when a chequing or savings account held at their business causes loss, has suspicious activity, or when a new account is being applied for. Only negative transactions are tracked, unlike credit ratings which monitor all credit activity, regardless of its intrinsic value.

What activities are reported to ChexSystems?

Banks report all negative banking activities to ChexSystems. Harmful banking activities can indicate fraudulent or risky banking behavior is occurring within an individual’s account. These warning indicators include:

• Bounced cheques. Repeatedly writing/depositing cheques that bounce increases the likelihood of risk to the bank and, could be an indication cheque kiting is occurring.
• Debit/ATM card abuse. One way to be flagged for debit card abuse is to use an ATM to commit fraud. Depositing empty envelopes to withdraw instant cash is fraudulent behavior that will get reported to ChexSystems.
• Unpaid Overdrafts. Accounts that consistently spend more time in the red than in the black is considered a risky bank practice.
• Multiple account applications. Several applications to numerous banks in a short time-frame is viewed as suspicious.
• Accounts closed for cause. Accounts considered “delinquent” can be closed by the banking institution it belongs to without consent from the account holder. If that occurs, the bank will report the information to ChexSystems.

Can ChexSystems affect my credit rating?

No. ChexSystems only tracks negative banking activity and, is used to screen new account applications. The database is not used when processing a loan, or when assessing other credit services. Another difference between credit reporting agencies, like Equifax or TransUnion, and ChexSystems is the CRA’s track both positive and negative activities, while ChexSystems tracks just negative account activities.

However, if a financial services provider requires a loan applicant to open a savings account as part of their credit lending process, ChexSystems will be accessed for that step of the loan application. So, a poor ChexSystems score may indirectly affect an applicant’s loan approval. If the bank cannot approve a new savings account for a loan applicant, they may decline the loan based on that.

Outcomes of ChexSystems Reports

If a financial service company finds your name in the ChexSystems database, it means: within the past five years a report has been made, from a financial institution to the ChexSystems database, that your bank account has been involved in risky banking activities. This information will be included as part of the bank’s overall screening process when determining if a potential client is a risk to their institution. How the banking business will use that information is up to the institution and, varies from bank to bank.

Some institutions, including Bank of America, will consider the severity of the information found in a ChexSystems search and how much time has passed since the reported incident. Clients applying for personal accounts with a history in ChexSystems may not automatically be rejected. But, they may have to accept an account with higher fees and more strict regulations. Two common experiences from having a low score on ChexSystems are:

• Denied Chequing/Savings Account

In 2012, CNN Money reported “2.3 million people” were denied personal banking accounts they had applied for in 2011. It is unclear if those rejections were determined using ChexSystems data but, the dismissals themselves probably negatively impacted their overall ChexSystem score. Each time an application to open an account is rejected by a financial institution that uses the ChexSystems database, a report is generated, and sent to the consumer reporting company.

• Second-Chance Account

People with a history of risky bank account management denied approval for a traditional account that might qualify for a “second-chance” bank account. Not all institutions offer the second-chance option, but those that do typically have higher annual fees than their traditional accounts.

Know your ChexSystems Report

Maintaining good credit should include periodic reviews of your credit and ChexSystems scores. Whether or not you’ve had trouble getting approval for opening a bank account in the past, regular monitoring of your ChexSystems activity is a useful tool, even when you’re not working towards improving your score. That way you’ll know what’s on your report and if the information is accurate. Nothing is infallible, and mistakes can occur within the ChexSystems database too. That’s why it’s important to know what’s on your debit report. If an activity has been reported to ChexSystems in error, financial institutions will see you as a risk and may decline your business. Or, subject you to unnecessarily high fees. The sooner the error is found, the quicker it can be resolved. The only way to fix a mistake in the ChexSystems database is by the individual taking the lead to rectify it.

Can I access my ChexSystems report?

Yes. Everyone is eligible for one free ChexSystems report every 12 months. That is a regulated standard set by the Fair Credit Reporting Act (FCRA), consumer reporting agencies are required to follow.

If you’re thinking of opening a new bank account and want a heads up on what the banks are saying about you, simply request your free report using one of ChexSystems report request options. The report will be mailed to you within five business days of ChexSystems receiving your request.

Is requesting a copy of my ChexSystems score free?

No. While a ChexSystems report is free when requested once every 12 months, obtaining your score is not. The cost of getting your ChexSystems score is $10.50. Access to a ChexSystems score requires the applicant to complete a Score Order Form, and submit it via mail or fax.

What do I do if I find a mistake on my report?

Dispute the mistake. Contacting both ChexSystems, and the bank that reported the erroneous activity, is recommended by WalletHub, an online financial resource, to get an error removed. Procedures and tips on how to prepare your information for a dispute can also be found there. On the ChexSystems website, disputes can be submitted using their online portal. How it works is explained in their tutorial Submitting A Dispute.

Avoiding ChexSystems

Finding yourself blacklisted by ChexSystems doesn’t automatically mean you’re unbankable, but it does mean you might have to do some homework in finding a bank willing to work with you. While the majority of banks do rely on ChexSystems as part of their client screening process, there are some that don’t. And, of the 80% of banks in America that use ChexSystems, many don’t rely solely on ChexSystems information for account approvals. They combine ChexSystem data with other factors to create a broader picture that is used to determine if a client is a safe-bet or risk. If you’ve found yourself on the low end of the ChexSystems scale, try out some less-than-traditional banking options.

ChexSystem Free Finances. According to letmebank.com, and lendedu.com some of the best non-ChexSystems banks are:

• BBVA Compass. The ClearConnect Checking account at BBVA Compass is available throughout the lower 48 States, and applications are available online only. While this bank may not use ChexSystems for screening, they do run credit checks when evaluating new accounts.
• Chime. Banking for the next generation has arrived with Chime’s uber-laidback appearance and tech-focused banking options. Not for the old-school paper check user, this bank is mostly online and requires clients to have up-to-date mobile devices.
• Wells Fargo. Founded in 1852, Wells-Fargo has been a main-staple of American banking for over 150 years. Rocked by a recent scandal involving millions of fake accounts being created, Wells-Fargo has rebranded its traditional institution and now offers its Opportunity Checking option for clients who don’t qualify for a standard account. Hmmm, it seems they learned everyone might need a second chance!

Skirt the Issue. Getting around without a bank account isn’t convenient or easy, but it is doable. Ideally, finding a bank that will work with you is the preferred choice, but if time or convenience is an issue consider the following.

• Money Market Accounts. Often offered by brokerages that don’t run ChexSystems, money market accounts are highly-liquid investment accounts that can be used similarly to a bank account. They usually have high minimum balance requirements and can only be withdrawn from six times per calendar month.
• Electronic Wallets. PayPal has a host of choices for managing money without needing a traditional banking account. Fees do apply to each transaction. With a PayPal Cash Card, money can be deposited at participating merchants and withdrawn at ATM machines.
• Prepaid Cards. Easy to get, without a credit check or ChexSystems inquiry, prepaid debit cards are a viable option for those who find themselves in the unbankable category. Bluebird prepaid debit cards have no monthly fees, no transaction fees, and access to an extensive ATM network.

Freezing Out ChexSystems

Getting stuck in a cycle of bad reports hammering your ChexSystems score can feel like an unending vicious loop. Being denied a chequing account will likely be reported to ChexSystems, which may lead that same person to apply for another account at a different bank, who may then be denied again, leading to further decreases in their ChexSystems score. And on and on. Indeed, improving a ChexSystems score seems like an uphill battle. Is there a way to stop the consumer reporting agency from handing out private information about someone’s banking history without their permission?

Yes. Individuals can request a security freeze be placed on their account that will “prohibit a consumer reporting agency from releasing any information in your consumer file without your expressed authorization.”, as stated on the ChexSystems website.

• To place a security freeze on your ChexSystems account visit their website and input the required information into their online security freeze request. Security freezes do not mean a financial institution will process a new account application without accessing your ChexSystems score. It means that ChexSystems needs to have your expression of consent before they can release your score to a banking business.
• To lift a security freeze, merely return to the ChexSystems website and follow the instructions to have the freeze lifted. Options include temporary freeze lifting and permanent removal of the security freeze.

We established already that ChexSystems is a nationwide specialty consumer reporting agency (CRA) under the federal Fair Credit Reporting Act (FCRA). What you might not know is that is used by more than 80% of United States banks and credit unions help in the decision-making process of financial products. ChexSystems’ clients regularly contribute information on closed checking and savings accounts. This means that if a consumer has ever opened a savings or checking account, they have a ChexSystems report also known as a consumer disclosure as ChexSystems refers to them. This agency will provide consumers’ information on the use of their accounts.

ChexSystems puts together a data report that can be used by financial institutions and merchants to help them decide about the denial or approval of the financial products that you have applied for. Under permission from the FCRA, they can obtain financial information and primary functions to help businesses and banks assess risk when opening new accounts.

Vice President of Public Policy, Telecommunications and Fraud at the National Consumers League, John Breyault puts it simply when he says:

[Banks] use ChexSystems for sort of a particular use case, and that’s to find out if you’re a risk to the bank when you open a checking or savings account with them.

John Breyault, Vice President of Public Policy, Telecommunications and Fraud, National Consumers League

 It is important to note that just like other CRAs such as Equifax, Experian, and TransUnion, ChexSystems is allowed to include your name on lists that creditors and insurers use to make prescreened product offers. However, you can opt out of these lists. The only difference between ChexSystems and other CRAs such as Equifax, Experians, and TransUnion is that ChexSystems collects data about how you’ve used past bank accounts instead of how you’ve paid off your debts. Generally, ChexSystems only lists negative information on your report.

As a service-based organization, ChexSystems offer services including account history reports, identity verifications and transaction monitoring to ensure consumers following the appreciate financial laws.

If a consumer applies for any bank account, banks will call upon the services of ChexSystems to check the banking history as well as the data for any risks on the file. If the consumer is rejected from a bank, it means the report from ChexSystems displayed risk factors. 

The information obtained by the banks from ChexSystems is made up of two components which include a risk score and a report. The risk score ranges from 100 to 899 and the higher the consumers score, the better. This shows the consumer is less ‘risky’ and therefore, has a higher chance of being approved.

The report will display items to the bank including unpaid fees, check bounces and any form of suspected fraud, along with any information that makes the consumer a risky customer when it comes to handling their financials.

The report generated by ChexSystems is data banks have reported about a consumer from the past 5 years. The bank will add to the consumer’s file, any overdrafts, fraudulent checks and any for suspicious behavior that could deem them a risky consumer. 

If a consumer has been suspected as a risky consumer and rejected an account with any bank, they will appear in the system for a 5-year period.

However, if the consumer believes they are not at fault, they can request a report from ChexSystems and dispute any claims against their account.

Here are the right steps to take:

1. Request the report from ChexSystems, this can be done on their website
2. Review the report and check for any wrong or outdated information
3. If any errors are found, the account can be disputed, which can also be done via the ChexSystems website
4. The investigation usually takes around 30 days
5. Also, ensure ChexSystems contacts the bank who provided the incorrect information to have it removed.

Is there any way around ChexSystems?

ChexSystems provides banks and credit unions with the following:

1. Risk score: ChexSytems Consumer Scores are based on your banking behavior and they go from 100 to 899. Higher scores show that you are a less risky customer, so the higher score you have, the better.
2. Report: ChexSystems reports (Consumer Disclosures) show unpaid negative balances (primarily from overdrafts), suspected fraud, checks bounced at retailers, credit enquiries, identifying information (name, social security number, past addresses), public records, consumer-initiated security freezes, and check orders.

You can request for a free report or risk score from the agency, but the most important to a consumer is the report because it gives you a look into why a bank has denied your request. Usually, consumers can get a free report annually. You can request for the report by filling the consumer disclosure for on the ChexSystems official website.

The consumer disclosure is used by banks to determine whether they can grant you a checking or savings account. There are numerous instances where people have been unable to open accounts due to their financial history. This is because banks report to ChexSystems any types of account problems such as bounced checks, fraud, returned checks, insufficient funds, etc. This information remains in your report for up to five years or until the source of the information requests for its removal or until ChexSystems is obligated to remove it under applicable law or policy.

It is important to note that you can dispute a ChexSystems report if there are any discrepancies. You can dispute inaccurate information about you or your financial history with the financial institution that issued the information or with ChexSystems. Dispute investigations with Chexystems can take 30 days or more if information or documentation is submitted in the middle of an investigation.

Being up to date with consumer reports such as ChexSystems reports generated on you makes you financially empowered. ChexSystems reports can prevent you from having a bank account, which means you will be unable to safely store your money, you will be unable to get a free debit card for purchases, and you will be forced to pay high fees for sending and cashing checks.

Being financially empowered by being aware of what’s on your ChexSystems report allows you to dispute any inaccuracies that may be present in your consumer disclosure. You will also be able to prevent discrepancies such as insufficient funds and bounced checks that may negatively affect your financial life.

How to check if ChexSystems has a record on you?

Obtaining a record with ChexSystems can have impacts on a consumer’s reputation with any bank they are looking to start banking with.

In order to ensure ChexSystems doesn’t have a file on record, a consumer can follow some easy steps.

1. Get Overdraft Protection – this prevents checks for bouncing and if the account is overdrawn.
2. Check accounts – being mindful of all the bank accounts gives the consumer more information on what might be happening to the account. Online banking is the best option for this.
3. Check closed accounts – when closing accounts, consumers need to check there are no fees applied to the account once it has been closed.
4. Communicate with the bank – if a consumer moves addresses, doesn’t turn recurring payments off or has any financial changes, they should alert the bank.
5. Check with ChexSystems – every 12 months consumers should request a report to ensure all bank accounts are showing no discrepancies
6. Be educated in the rules and rights – understanding a bank’s policy can help ensure there are no surprises when it comes to ChexSystems.

Can you get a report from ChexSystems? If so, is it free or paid?

ChexSystems does not take wages from a consumer. As a regulated consumer reporting agency (CRA) under the federal Fair Credit Reporting Act (FCRA), ChexSystems offers consumers a free annual report. However, if you need a report for any reason, you are required to pay $10.50 to get your consumer disclosure.

While one might think that incase or a dispute the investigation might be costly, the FCRA mandates that must conduct a free of charge reasonable investigation of your dispute. This means that the consumer can get their consumer disclosure cleared of any inaccuracies free of charge. After complete investigation, ChexSystems does not require payment to remove inaccurate consumer reporting information.

It is also important to note that ChexSystems is not a collection agency and will therefore not contact a consumer as part of an effort to collect debt; neither do they make unsolicited calls to the consumer.

Can ChexSystems force my employer to withhold money from my paycheck?

Yes, it’s called wage garnishment and is a government agency order or court order that requires your employer to withhold a certain amount from your wages and send it to your creditor. Commonly, child support, consumer debt, back taxes, and student loans are sources or wage garnishment. It is important to note that wage garnishment is fully dependent on the state and federal garnishment limits. Wage garnishing explains the process of where a creditor is allowed to take a payment directly from a consumer’s bank account when they owe debt.

ChexSystems are not a collection agency and will not make any contact with a consumer in an effort to collect debt. They will never require payments from a consumer to investigate the consumers reporting history and will not require a payment to remove their record from the data.

The Minnesota based organization, ChexSystems will not garnish a wage from anyone; however, a creditor can have the right to perform this.

If your ChexSystems report has overdrawn accounts or unpaid bank fees, this may be due to wage garnishment. Banks only run credit checks if you apply for credit and they do not search court records to see whether you have judgment against you. However, ChexSystems reports may have information on your banking behavior which shows information such as bankruptcy, unpaid negative balances, bounced checks, etc. Although creditors cannot set off your account after you have filed for bankruptcy, the record will show that you have filed for bankruptcy which severely affects your credit and your chances of opening a new bank account.

However, there are other options that can be used to deal with wage garnishment. You can get a more suitable plan to pay off your debts and ensure that with time, your ChexSystems risk score rises. Debt relief may repair your financial records if it carefully and diligently executed. To ensure that your wages are not garnished, it is important to pay your child support, alimony, back taxes, and student loans on time, so that your ChexSystems report remains clean.

Reported by Bankrate in an article on banking smarter, this year, the J.D. Power 2019 U.S. Retail Banking Satisfaction Study found around 4 percent of consumers have switched banks in the past 12 months, which means the services of ChexSystems is in high demand.  

Greg McBride, CFA, Bankrate chief financial analyst, suggests consumers need to be smart about their banking choices.

The marketplace is constantly changing with new offers, innovative products and features that might put more money in your pocket or make your life easier. Or both. So it pays to have your antenna up and be on the lookout for something that is a better deal or works better for your financial lifestyle.

Greg McBride, CFA, Bankrate chief financial analyst

Consumers need to be aware of their banking choices so they don’t find themselves with a ChexSystems record.

ChexSystems ensures all consumers are safe and secure with their finances. A ChexSystems report can be the difference between a successful bank account application and an unsuccessful one. However, it also protects businesses and consumers from any fraud or mistreatment of finances, it ensures all consumers play by the rules.

Financials. It’s a topic most people dread. It is even worse when you know your bank accounts haven’t had the brightest or cleanest history about them. If that sounds like your bank accounts, then this article is for you.

You may be wondering why you were denied by a bank while trying to open a new checking account. ChexSystems is likely the culprit of your poor reputation. But don’t worry, we will walk you through what ChexSystems is, what it is for, how you can find your report, and even wipe out your information from their system!

ChexSystems are reports that hold information about banking mistakes from the past, such as unpaid fees, undisputed checks and fraudulent activity. Banks will investigate your checking account through ChexSystems to determine if they want to accept or deny you based on your financial past. Bad news is that it could raise many red flags for you when trying to do anything with your current bank or a new one.

ChexSystems is an agency that creates reports for ay unresolved issues that you may have encountered in the past with your checking accounts. The reports’ information includes: any unusual or fraudulent activity or any type of account misuse over a five-year period.

According to the National Consumer Law Center, about 80% of banks and credit unions confirmed that they receive reports and information regarding customers from ChexSystems. By using this method, it helps banks decide whether they want to continue working with applicants to open new bank accounts with them. The agency will collect the consumer history reports and develop risk scores.

ChexSystems is owned by FIS. FIS Global provides banking and payment technology, processing services and information based services to major banks. Their goal is to help businesses make the complex, clearer. They are headquartering in Jacksonville, Florida and employ 52,000 people globally. FIS focuses on retail and investment banking.  

ChexSystems is governed by the Fair Credit Reporting Act that:

promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies

What a ChexSystems Report Includes

ChexSystems reports act as bank statements and are meant to paint a picture of your activity. Unlike credit unions where they focus on only your credit history, they collect information about your checking account.

• Public records
• Unpaid fees
• Account inquires
• General information
• Unpaid balances
• Fraudulent activity

You or your bank can request a report or risk score from ChexSystems. These reports will provide with all relevant information. Anyone can request these reports or scores from the agency. The ChexSystem’s report, however, will give you a better idea as to why you were rejected by a bank.  

Risk Score: Risk scores are scores that show banks you are not a high risk customer. The higher your score, the better chance you have at opening accounts without problems.

As all of your activity is scored. The Consumer report draws up a number, that number is considered your score. Scores range between 100 to 899.

Report: Also known as the “Consumer Disclosure,” a term coined by ChexSystems, shows items related to all of your account history. These Consumer Disclosures will show you items like unpaid fees from overdrafts, bounced checks, and suspected fraudulent activity. The report will also contain information such as credit inquiries, consumer initiated freezes, or if you were a victim of identity theft.

You can learn how to Request your Consumer Disclosure Report easily through the ChexSystems’ website.

If you are having problems with opening a checking account it is likely that ChexSystems is to blame. For closed accounts, they call them “for cause,” meaning: there was incorrect on false information regarding the account, several bounced checks over a short period of time, lack of payment of insufficient funds, overdrafts, fraud, any abuse of a checking, savings, or any type of transaction, or any bank rule violations.

What is ChexSystems Used For?

ChexSystems is a reporting agency used by banks and consumers to provide reports on checking accounts or other information regarding specific and/or suspicious activity.

ChexSystems can be used for “freezing” your banking reports. You have the option to request a freeze on your report. This will stop the reporting agency from releasing your reports and confidential information without your authorization. This freezing action will not stop or prevent any necessary pre-approval screenings for new credit. No fees are required to be paid for requesting a freeze. Freezing fees will depend on your residence.

Banks and ChexSystems

Banks, especially, use ChexSystems to identify whether they would like to pursue a customer and allow them to open a checking account with them. The ChexSystems report helps banks and lowers their risks of onboarding a new customer attempting to start a profile with them.

Yes, banks will typically use ChexSystems to identify if a new customer opening an account with them will result in risk. ChexSystems are the helping hand to banks where they can carefully screen applicants and review full financial reports for problems the applicants may have had in the past such as unpaid debt, past due fees, or any suspicious activity on their checking accounts from the past 5 years.

You can use ChexSystems, as well. You can order a report of your financial background. Your report will be mailed and arrive within five business days. The good news is that the shorter your ChexSystems report is means that you have the least amount of negative account activity and history!

Once you are in the ChexSystems, it will decrease your chances of opening up new accounts at banks.

Using ChexSystems Online

Yes, you can check ChexSystems online and request a report from them by visiting their website. Other than gaining access to your reports, you can learn more about identity theft, freezing reports, disputing information, or simply contacting a representative.

Anyone can use ChexSystems. You can order a personal report that will give you all of the information about your account history.

The report includes: Check writing history and checking account applications, openings, and closures.

Review your report and if you find that there are inaccuracies you may dispute them. If there is a case where you have been a victim of bank fraud or check writing fraud, your report will show all activities.

Every consumer is allowed to order one free report each year. According to the fair and Accurate Credit Transactions Act, consumers can now order their free ChexSystems report yearly!

Reading your ChexSystems report goes a little like this. You will be shown a lot of information including:

• Source of Information
  • Bank / Credit Union with information about you and your accounts.
• Reported Name
• Reported Address
• Reported SSN/ID
• Driver’s Licence
• RTN
• Account
• Date Reported
  • Day complaints began about your referred accounts
• Reported For
  • A description of your account and reported incident that occurred i.e. Fraudulent activity, unpaid fees
• Closure Status
  • Reports if the issue was resolved
• Closure date
  • Resolution date

Credit Unions and ChexSystems

Yes, both banks and credit unions will use ChexSystems to reveal your past information to them. Here is a list of banks and credit unions that do and do not use ChexSystems:

Do:

• All America Bank
• Avidia
• Blue Federal Credit Union
• CIBC
• Citi

Do Not:

• ACNB
• Bank of America
• TD Bank
• U.S. Bank
• Wells Fargo

For the complete list of banks and credit unions that do and don’t use ChexSystems click here.

Banks That Do Not Use ChexSystems

There are a handful of banks that do not use ChexSystems. Just to name a few:

• TD Ameritrade:
• Axiom Bank
• Woodforest National Bank
• United Bank
• Southwest Financial Federal Credit Union
• Green Dot
• Wells Fargo Opportunity Checking

ChexSystems is a commonly used reporting system by banks. There are however, banks that choose not to use it. It is not uncommon to find banks that will not take the take to check your records.

There is a term called “second chance banking” if you have had a few negative incidents on your ChexSystems report.

If you are interested in getting approved for the second chance banking, you can use overdraft protection, if this is a common problem you have had in the past.

Disputing ChexSystems

There are a few reasons why your report may contain errors. Mistakes happen all the time. No bank is perfect and information can input incorrectly. It happens. Bank employees may be typing in information too quickly or end up inputting numbers that don’t match yours. Descriptions could be poorly written and be misinterpreted. The incident may have been written incorrectly.

Another reason for error could be because of fraud and/or identity theft. IF you have ever beena victim of fraud, you know that identity can easily happen and become a huge headache to deal with. With technology today, people can steal information from others and use it to their advantage. There are people who try to pose as you and try to use your bank accounts.

In the case that you notice missing/incorrect information or random activity  after reviewing your report, you can legally submit a dispute through the ChexSystems’ website. Under the discretion of the FCRA, the agency and company must complete an proper investigation of your dispute, for free. Any errors must be corrected by the company that provided the false information.

If it so happens that you find incorrect personal information on your ChexSystems report, such as incorrect addresses, social insurance number, incidents that may have never occurred, no closure reports for resolved matters, you can definitely dispute this and ensure that all mistakes be corrected immediately. If you believe you were falsely accused for fraudulent acts on your bank account, you can bring it up in the dispute and to your financial institution for providing false information to ChexSystems. Always check that your information is correct with all of your banks and credit unions to ensure that these problems and misinformation does not happen again and save yourself the trouble.

Here are some steps you can take when filing your ChexSystems dispute:

1. Mention the error in your report. Circle, underline, or highlight the error on the physical report. Make sure you photocopy one to send back to the bank or ChexSystems. Do not send them the original. Instead, keep the original for yourself.
2. Use the right forms to file your dispute. You will need separate forms to file more than one dispute on different matters. Make sure you prepare the proper letters and include all of the necessary information.
3. After gathering all of your forms, information, and dispute letters, you cane either dispute your case online, by mail, or by fax.

Completing the online forms requires you to read and review the directions on how to properly fill out the forms. Agree to the Terms and Conditions below. You will also be asked if you received your Consumer Disclosure Report.

Fill in all of the necessary information on the form and follow the instructions on the page. There will be a section titled “Dispute 1: Details.” In this section, you can report what the dispute is, the source (Your bank), and the date of the problem item in your report.

In the section titled “Nature of your dispute,” you can complete your write-up about your dispute and explain what the issue is in a 2,000-character limit letter. You also have the option to upload attachments with the supported file formats being: JPG, BMP, PNG, TIF, TXT, RTF, PDF, DOC, DOCX. Keep in mind the limit is 25 megabytes. Remember to upload a photocopy of your report with the circled problem to support your claim.

If you have another item you would like to dispute, remember to file a new dispute under “Dispute Another Item.” If you have more than one matter you would like to dispute, you have the ability of disputing up to 50 items.

Once all of your disputes are complete, it is time to send your documents in. You can either send your documents:

• Online: Enter your security code found at the bottom of the form, then click “Submit.”
• Mail: Send your dispute directly to ChexSystems, Attn: Consumer Relations, 7805 Hudson road, suite 100, Woodbury, MN, 55125.
• Fax: Send to 602-659-2197

Don’t forget to contact your bank and credit union and send them all of the documentation, dispute letter and any other pertinent information in proving your case.

Waiting for your response from ChexSystems? it could take up to 30 days.

ChexSystems and Your Information

The ChexSystems agency will keep your records on file for up to five years starting from the closing date of your account. Any money you owe the bank from overdrafts will stay on your ChexSystems record.

Your account can and will be removed if t is suspected that it was opened by someone else other than you or it was a due to identity theft.

Problems like these will limit you when it comes time to open a new account with a bank, and you will ultimately be denied.

If your ChexSystems report causes a bank to deny you from opening a bank account, you can order your report within two months (60 days) of denial.

Clearing Your ChexSystems Record

Have you had trouble opening an account at a bank and are wondering what the problem might be? It is possible that your bank has done their research and background checks with ChexSystems.

So how can your clear your ChexSystems record and start fresh?

• You can start by Requesting your ChexSystems report. By reviewing your report, you will be able to understand why your bank ahs decided to disapprove your new account. You can request this report once a year. Want to request your report? You can call ChexSystems at 800-428-9623 or visit the ChexSystems website. You can fill out the Consumer Disclosure form and submit it online. If you prefer to send your form by mail, you can send it to Chex Systems Inc, Attn: Consumer Relations, 7805 Hudson Road, Suite 100, Woodbury, MN, 55125. If you would like to fax your form, the ChexSystems Fax number is 602-659-2197.

• Dispute Errors online by visiting the ChexSystems website. You can fill out the dispute form and upload any files that are necessary to support your claim. When you have completed the form and have reviewed it, you may click “submit.” You can send your form via mail or fax, too. Simply print out the dispute form and fill it out. Include information and copies of documents. Send them to the Fax or Mailing address previously listed.

• If you prefer to speak with a representative, you may call the ChexSystems phone line. Note that you are not allowed to attempt to resolve any disputes that relate to identity theft or fraud over this phone line.

Sometimes we get caught up in our day to day lives, work, and family. As busy as life gets, we have to pay off our debts. This is why it is important to pay any kind of debt you may still be owing. Pay it as soon as you can to clean your record.

Another way to clear your ChexSystems record is to ask creditors if they would kindly remove your information from the system. Ensure that you pay your debts proper to asking. Once this is complete, you can then request for your information to be deleted. Remember to keep any receipts or documents that have to do with paying your debts so that you have a paper trail in case they ask for verification.

Lastly, if you do not mind waiting, you can leave it until the 5-year mark for your information and records to be completely removed from ChexSystems.  

Account Closure

ChexSystems will not close your bank account. However, they can prevent you from opening new bank accounts. The only time ChexSystems will close your account with them is if you request it and request it by your financial institution.

Opening a New Account

If you have had previous problems with your ChexSystems account, then you will surely have difficulty with opening a new account. Check bank policies to ensure you are able to open a new account. Order and review your ChexSystems personal report before attempting to open anew account.

How to Keep Yourself Out of ChexSystems

If you have ever had negative activity on your checking accounts, it is likely those actions have landed you in the ChexSystems records. You may have not known, but ChexSystems has been keeping an eye on everyone’s checking accounts for any type of negative activity. Unfortunately, there are many people who cheat the bank and cannot be found anywhere in ChexSystems.

Something as simple as overdrafts and missing fee payments are of the most common reasons why ChexSystems would target someone. If you want to learn how to stay out of ChexSystems, you can do the following:

• Always stay up to date on your bank account balances
• Inquire about the length of time it takes for deposits to be credited to your bank account
• Ensure you do not choose to write a check if there are insufficient funds in your account to cover it
• Review your account before closing it by clearing all checks, stopping all automatic debits, and paying any unpaid fees

By taking these necessary steps, you will be able to have no problem staying out of ChexSystems.

Maintaining a Positive ChexSystems Report

It’s important to know the right steps to take in maintaining a glowing report on ChexSystems. If you recently discovered that ChexSystems has a profile report on you, you can rest assured that you have the ability to break the cycle and add some positivity to your report.

Want to learn how you can maintain a positive ChexSystems report? Here are ways you can do just that:

• Halt automatic payments before you close a checking account: Sometimes it will take the bank more than a week to process any transaction that needs to be deducted from your account

• Go to your bank or credit union to close your account: do not let your account become a negative balance before closure

• Allow enough time when depositing checks: before writing against the balance

• Be mindful with your joint accounts: If something were to happen to your joint account, both account holders will be accountable if something happens to it

• Protect your debit cards: Never share your card or PIN number with anyone. Always keep this information private and do not write it down anywhere where someone could easily find

• Avoid post dating any checks: Your account could get closed if you have bounced checks, you can cash them out early

• Balance your check book: Avoid overdrafts and add account protection

• Report stolen or lost checks: When you notice you have misplaced your checks, notify your bank immediately to protect yourself from any fraud that could come of the situation

• Contact your bank if you are planning to change your address: Ensure your bank has all up to date and correct address information

• Always look at your bank statements on a regular basis: to make sure there is no unusual activity or an item that doesn’t seem to coincide with your regular activity
  
  

You will never have a negative ChexSystems report if you follow these steps. The main takeaway here is that you should always be aware of your bank accounts. Regularly review your statements for any unusual activity. If you notice something doesn’t look quite right, or see that there is missing or incorrect information, notify your bank right away.

If you requested a Consumer Disclosure Report from ChexSystems and notice that they may have incorrect information about you or the numbers do not add up, submit a dispute as soon as possible. Resolve any issues between you, ChexSystems, and your financial institution for the least amount of worry.

Review any financial history, and if something looks suspicious, take action. ChexSystems reports are a great way to investigate your checking accounts and really get a clearer understanding of your financials.

It doesn’t hurt to order your Consumer Disclosure Report and review it so that you can stay on the right track.

Now, if you ever get denied by a bank in the future when you try to open a new account, remember ChexSystems is likely the one behind the decision banks make about their customers.

ChexSystems is a nationwide specialty consumer reporting agency (CRA) under the federal Fair Credit Reporting Act (FCRA) that is used by more than 80% of United States banks and credit unions help in the decision-making process of financial products. ChexSystems’ clients regularly contribute information on closed checking and savings accounts. This means that if a consumer has ever opened a savings or checking account, they have a ChexSystems report also known as a consumer disclosure as ChexSystems refers to them. This agency will provide consumers’ information on the use of their accounts.

ChexSystems puts together a data report that can be used by financial institutions and merchants to help them decide about the denial or approval of the financial products that you have applied for. Under permission from the FCRA, they can obtain financial information and primary functions to help businesses and banks assess risk when opening new accounts.

Vice President of Public Policy, Telecommunications and Fraud at the National Consumers League, John Breyault puts it simply when he says:

“[Banks] use ChexSystems for sort of a particular use case, and that’s to find out if you’re a risk to the bank when you open a checking or savings account with them.”

 It is important to note that just like other CRAs such as Equifax, Experian, and TransUnion, ChexSystems is allowed to include your name on lists that creditors and insurers use to make prescreened product offers. However, you can opt out of these lists. The only difference between ChexSystems and other CRAs such as Equifax, Experians, and TransUnion is that ChexSystems collects data about how you’ve used past bank accounts instead of how you’ve paid off your debts. Generally, ChexSystems only lists negative information on your report.

As a service-based organization, ChexSystems offer services including account history reports, identity verifications and transaction monitoring to ensure consumers following the appreciate financial laws.

If a consumer applies for any bank account, banks will call upon the services of ChexSystems to check the banking history as well as the data for any risks on the file. If the consumer is rejected from a bank, it means the report from ChexSystems displayed risk factors. 

The information obtained by the banks from ChexSystems is made up of two components which include a risk score and a report. The risk score ranges from 100 to 899 and the higher the consumers score, the better. This shows the consumer is less ‘risky’ and therefore, has a higher chance of being approved.

The report will display items to the bank including unpaid fees, check bounces and any form of suspected fraud, along with any information that makes the consumer a risky customer when it comes to handling their financials.

The report generated by ChexSystems is data banks have reported about a consumer from the past 5 years. The bank will add to the consumer’s file, any overdrafts, fraudulent checks and any for suspicious behavior that could deem them a risky consumer. 

If a consumer has been suspected as a risky consumer and rejected an account with any bank, they will appear in the system for a 5-year period.

However, if the consumer believes they are not at fault, they can request a report from ChexSystems and dispute any claims against their account.

Here are the right steps to take:

1. Request the report from ChexSystems, this can be done on their website
2. Review the report and check for any wrong or outdated information
3. If any errors are found, the account can be disputed, which can also be done via the ChexSystems website
4. The investigation usually takes around 30 days
5. Also, ensure ChexSystems contacts the bank who provided the incorrect information to have it removed.

How does ChexSystems affect consumers?

ChexSystems provides banks and credit unions with the following:

1. Risk score: ChexSytems Consumer Scores are based on your banking behavior and they go from 100 to 899. Higher scores show that you are a less risky customer, so the higher score you have, the better.
2. Report: ChexSystems reports (Consumer Disclosures) show unpaid negative balances (primarily from overdrafts), suspected fraud, checks bounced at retailers, credit enquiries, identifying information (name, social security number, past addresses), public records, consumer-initiated security freezes, and check orders.

You can request for a free report or risk score from the agency, but the most important to a consumer is the report because it gives you a look into why a bank has denied your request. Usually, consumers can get a free report annually. You can request for the report by filling the consumer disclosure for on the ChexSystems official website.

The consumer disclosure is used by banks to determine whether they can grant you a checking or savings account. There are numerous instances where people have been unable to open accounts due to their financial history. This is because banks report to ChexSystems any types of account problems such as bounced checks, fraud, returned checks, insufficient funds, etc. This information remains in your report for up to five years or until the source of the information requests for its removal or until ChexSystems is obligated to remove it under applicable law or policy.

It is important to note that you can dispute a ChexSystems report if there are any discrepancies. You can dispute inaccurate information about you or your financial history with the financial institution that issued the information or with ChexSystems. Dispute investigations with Chexystems can take 30 days or more if information or documentation is submitted in the middle of an investigation.

Being up to date with consumer reports such as ChexSystems reports generated on you makes you financially empowered. ChexSystems reports can prevent you from having a bank account, which means you will be unable to safely store your money, you will be unable to get a free debit card for purchases, and you will be forced to pay high fees for sending and cashing checks.

Being financially empowered by being aware of what’s on your ChexSystems report allows you to dispute any inaccuracies that may be present in your consumer disclosure. You will also be able to prevent discrepancies such as insufficient funds and bounced checks that may negatively affect your financial life.

How does ChexSystems affect consumers?

Obtaining a record with ChexSystems can have impacts on a consumer’s reputation with any bank they are looking to start banking with.

In order to ensure ChexSystems doesn’t have a file on record, a consumer can follow some easy steps.

1. Get Overdraft Protection – this prevents checks for bouncing and if the account is overdrawn.
2. Check accounts – being mindful of all the bank accounts gives the consumer more information on what might be happening to the account. Online banking is the best option for this.
3. Check closed accounts – when closing accounts, consumers need to check there are no fees applied to the account once it has been closed.
4. Communicate with the bank – if a consumer moves addresses, doesn’t turn recurring payments off or has any financial changes, they should alert the bank.
5. Check with ChexSystems – every 12 months consumers should request a report to ensure all bank accounts are showing no discrepancies
6. Be educated in the rules and rights – understanding a bank’s policy can help ensure there are no surprises when it comes to ChexSystems.

Can ChexSystems take wages from a consumer?

ChexSystems does not take wages from a consumer. As a regulated consumer reporting agency (CRA) under the federal Fair Credit Reporting Act (FCRA), ChexSystems offers consumers a free annual report. However, if you need a report for any reason, you are required to pay $10.50 to get your consumer disclosure.

While one might think that incase or a dispute the investigation might be costly, the FCRA mandates that must conduct a free of charge reasonable investigation of your dispute. This means that the consumer can get their consumer disclosure cleared of any inaccuracies free of charge. After complete investigation, ChexSystems does not require payment to remove inaccurate consumer reporting information.

It is also important to note that ChexSystems is not a collection agency and will therefore not contact a consumer as part of an effort to collect debt; neither do they make unsolicited calls to the consumer.

Wage Garnishment

A wage garnishment is a government agency order or court order that requires your employer to withhold a certain amount from your wages and send it to your creditor. Commonly, child support, consumer debt, back taxes, and student loans are sources or wage garnishment. It is important to note that wage garnishment is fully dependent on the state and federal garnishment limits. Wage garnishing explains the process of where a creditor is allowed to take a payment directly from a consumer’s bank account when they owe debt.

ChexSystems are not a collection agency and will not make any contact with a consumer in an effort to collect debt. They will never require payments from a consumer to investigate the consumers reporting history and will not require a payment to remove their record from the data.

the Minnesota based organization, ChexSystems will not garnish a wage from anyone; however, a creditor can have the right to perform this.

If your ChexSystems report has overdrawn accounts or unpaid bank fees, this may be due to wage garnishment. Banks only run credit checks if you apply for credit and they do not search court records to see whether you have judgment against you. However, ChexSystems reports may have information on your banking behavior which shows information such as bankruptcy, unpaid negative balances, bounced checks, etc. Although creditors cannot set off your account after you have filed for bankruptcy, the record will show that you have filed for bankruptcy which severely affects your credit and your chances of opening a new bank account.

However, there are other options that can be used to deal with wage garnishment. You can get a more suitable plan to pay off your debts and ensure that with time, your ChexSystems risk score rises. Debt relief may repair your financial records if it carefully and diligently executed. To ensure that your wages are not garnished, it is important to pay your child support, alimony, back taxes, and student loans on time, so that your ChexSystems report remains clean.

Final thoughts

Reported by Bankrate in an article on banking smarter, this year, the J.D. Power 2019 U.S. Retail Banking Satisfaction Study found around 4 percent of consumers have switched banks in the past 12 months, which means the services of ChexSystems is in high demand.  

Greg McBride, CFA, Bankrate chief financial analyst, suggests consumers need to be smart about their banking choices.

“The marketplace is constantly changing with new offers, innovative products and features that might put more money in your pocket or make your life easier. Or both. So it pays to have your antenna up and be on the lookout for something that is a better deal or works better for your financial lifestyle”.

Consumers need to be aware of their banking choices so they don’t find themselves with a ChexSystems record.

ChexSystems ensures all consumers are safe and secure with their finances. A ChexSystems report can be the difference between a successful bank account application and an unsuccessful one. However, it also protects businesses and consumers from any fraud or mistreatment of finances, it ensures all consumers play by the rules.

ChexSystems is a consumer reporting agency, which was established under the Fair Credit Reporting Act (FCRA). The agency collates shared information about deposit accounts held by the clients of financial institutions which sign up to the service, that is then fed into a database used to perform risk assessment checks upon customers seeking to open new accounts by over 80% of U.S. banks. In this sense, it is merely an information provider. However, around 25% of financial institutions adopt a blanket zero-tolerance policy towards negative data stored in the database, whilst others take certain types of activity flagged by ChexSystems into consideration as part of their decision-making process, or – as is the case for around 50% of U.S. banks – require the approval of a branch manager.

The denial of an application to open up a checking or savings account at a financial institution is often due to negative data recorded against your name in a database run by the consumer reporting agency ChexSystems, or one of its smaller rivals such as Early Warning System, or TeleCheck.

What rating system is used by ChexSystems?

ChexSystems assigns a numeric score to each individual, which is called a ‘QualiFile’ Score (however, we will simply refer to this score as your ‘ChexSystems score’ for ease of reference). The point system runs on a scale of 100 to 899. The closer you are to 100, the worse your score is considered to be. Its purpose is similar in nature to that of the credit score. However, whilst your credit score is always taken into consideration when a financial institution is deciding whether or not to lend money to you, not all financial institutions will also take into consideration your ChexSystems score for this purpose. Your ChexSystems score is predominantly used to assess the risks of providing you with a checking/deposit account.

Do I need to request my ChexSystems score?

You are entitled to request a free report from ChexSystems once every 12 months, by clicking on the ‘Free FACTA Report’ link located on the left-hand panel on the ChexSystems homepage, also provided here. As you will see, you can request your ChexSystems report online, or by phone, letter or fax. Follow the instructions on the website in line with your preferred method. If your report is clean, there is no need to pay for a ChexSystems score as it should be unblemished. On the other hand, if your report contains negative data, you are advised to request your actual score and attempt to clear the negative data held about you in the database.

How can I request my ChexSystems score and how much will it cost?

Should the need arise, you can request your ChexSystems score for free once every 12 months. You are also permitted to receive your score following a denied application to open a bank, either verbally or via a written notice, should the bank wish to provide you with this information. There is no obligation on the bank to do so.

In order to can request your ChexSystems score, you must complete the form provided on ChexSystems’ webpage here and send a letter, or a fax to the address and number listed on the document. It is not currently possible to find out your score online or by phone. You cannot find out your score from any third party vendor so do not be fooled by scams purporting to obtain this for you. If you request further confirmation of your score within a 12-month period, you will be required to pay a fee of $10.50 to ChexSystems.

You must be at least 18 years old to request and receive your ChexSystems score. Any younger and an adult will need to submit the request by mail on behalf of that child, including the information requested at the bottom of the ChexSystems page here.

Where the bank is happy to disclose your ChexSystems score, the notice must include certain pieces of information as stipulated by the Fair Credit Reporting Act (FCRA):

1. Your ChexSystems score
2. Other consumer scores used in the bank’s decision
3. Any factors that had a negative effect on your ChexSystems Score
4. The date upon which your ChexSystems Score was calculated
5. The name and contact information of any consumer reporting agencies that supplied them with information used in their decision-making process

If the bank makes your score available, they also have to tell whether any other consumer scores were used in their decision, any factors that negatively affected your score and when your score was calculated.

Rebecca Lake, My Bank Tracker

How is my ChexSystems score calculated?

ChexSystems does not disclose the formula used to calculate ChexSystems scores. However, information taken into consideration when calculating your score is derived from the following sources:

• ChexSystems consumer report
• Consumer credit reports
• Data from the ChexSystems DebitBureau (an agency which compiles data on bank accounts)
• Employment history
• Information in the public record stored in LexisNexis (e.g., bankruptcy notices, criminal convictions and residential history)
• Payday loan history

How do banks use ChexSystems scores when deciding who to accept or decline for a checking account?

According to information received in March 2012, ChexSystems provides “cutoff” segments, a consumer classification system which banks use to approve or decline consumers in line with their risk appetite. Consumers which pose the least risk are classified as ‘averse’, which covers scores from 580 to 899. Consumers posing a moderate risk are classified as ‘moderate’, which covers scores from 545 to 579. Consumers which pose a more significant risk are classified as ‘aggressive’, which covers scores from 525 up to 544. Naturally, anything less than that and most banks will lack the appetite to conduct business with consumers possessing such scores. Consumers have been denied for checking accounts with scores of 174, 295 and 553.

Remember that on the ChexSystems scale of 100 to 899, the lower your score is, the more likely it is that banks will be concerned that your account will frequently have a negative balance, and that fees will be left unpaid, or unpaid for prolonged periods of time. Therefore, a score above 580 is ideal to maximize your chances of being accepted for a checking account.

Other scores you may see associated with your ChexSystems report are ‘9998’ and ‘9999’. Don’t be alarmed: 9998 indicates that the individual associated with a specific Social Security Number is deceased; and 9999 indicates that there is not enough data available to form a score for the applicant. If the individual associated with a specific Social Security Number is not deceased, you can contact ChexSystems using the information here and request an amendment to the account.

How long will negative data about me remain in ChexSystems?

Although, the FCRA stipulates that negative information should not be held for more than 7 years, or, with regards to bankruptcies, any information that is more than 10 years old, according to ChexSystems itself, negative data not relating to bankruptcy will be removed from your ChexSystems report once a period of 5 years has elapsed from the date of the data being captured by the database.

How can I improve my ChexSystems score?

DO:

• Keep track of how long it takes for deposits to be credited to your account and double-check your balance before making payments, particularly if you are often at risk of going into the red
• Make sure that there are no outstanding fees to be paid, all checks have cleared and that no further deductions will be made from the account by previously established automatic debits prior to closing a checking account. Be sure to confirm with companies applying a direct debit how long it may take for their systems to process this payment change.
• Request a free copy of your consumer report every year from ChexSystems and rival companies, such as Early Warning or TeleCheck, as not every bank will use ChexSystems.
• Review your reports each year, looking out for errors and evidence of fraud in order to monitor and maintain your overall financial wellbeing.
• Pay off debts in line with instalment arrangements on time, or pay off debts completely finances permitting.
• Set yourself up with banking alerts any time a transaction is made with your card so that you can track potential identity theft more easily.
• Prioritise your relationship with your bank and be sure to communicate with them immediately when you realise you cannot make a payment that is due. Work with them to formulate a plan for paying off your debt in a timely manner.
• Update ChexSystems by sending them evidence that a debt has been paid off and request removal. You may find that the next report you request will no longer contain reference to it.
• Consider asking your bank to provide you with an overdraft protection service.
• Request text message alerts in order to be notified when your balance is getting low.

DON’T:

• Pay by check unless you are absolutely certain that there are enough funds in your account to finance them.
• Give out your PIN number and if you do, make sure that it is changed after.
• Close an account by depleting available funds – contactyour bank to make sure it is closed officially in order to avoid unforeseen bank charges.
• Open and close accounts too often – this is viewed upon negatively by banks.

What options are available to me if I cannot access mainstream checking accounts?

There are a range of options available to you if you choose not to dispute your ChexSystems record and would prefer to wait 5 years for the information to be removed from the database.

Not all financial institutions rely upon ChexSystems for decision-making purposes. Credit unions in particular are rather forgiving of ChexSystem report histories. Further still, some financial institutions even offer ‘second chance’ accounts, specifically designed for those with a low ChexSystems score. Finally, prepaid cards are relatively easy to obtain, irrespective of negative data in ChexSystems, as they don’t use the database or those of its rivals such as Early Warning System or TeleCheck, to approve your request.

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Most banks don’t even bother to ask what ChexSystems’ record shows. If you’re listed for any reason, you lose. Jane Bryant Quinn, The Washington Post

The denial of an application to open up a checking or savings account at a financial institution is often due to negative data recorded against your name in a database run by the consumer reporting agency ChexSystems, or one of its smaller rivals such as Early Warning System, or TeleCheck. Financial institutions subscribe to the database and share information about clients with less than stellar banking histories. The ChexSystems database is then used by over 80% of U.S. financial institutions to perform risk assessment checks upon customers seeking to open new accounts, of which, approximately 25% adopt a blanket zero-tolerance policy towards negative data stored in the database.

Unless the financial institution that provided information to ChexSystems requests the removal of that information, your information will remain in your ChexSystems report for a period of 5 years.

Anyone who has ever opened a bank account in the U.S. is likely to have a ChexSystems record.

Richie Bernardo, Wallet Hub

In many cases, the information relayed to ChexSystems is inaccurate, the result of fraud, or simply incorrect. For example, you may have already paid off a debt which is still marked in the system as ‘unpaid’. Although it is not possible to avoid having your name listed in ChexSystems , you can dispute any errors and restore your good name by having the incorrect information removed.

A study issued by the Federal Trade Commission in 2015 found that approximately 23% of consumers had discovered inaccurate information in their credit reports.

Most ChexSystems reports don’t show how much money was owed. It could be $4 or $40,000. Nor do they routinely show whether the overdraft was repaid.

Jane Bryant Quinn, The Washington Post

What are my rights if I choose to dispute information recorded against my name by ChexSystems?

ChexSystems is governed by the Fair Credit Reporting Act and Accurate Credit Transactions Act, which grant you the right to understand what data is being held against you, why, and to dispute the data.

You are entitled to request a free report from ChexSystems once every 12 months, or following a denied application to open a bank within the past 60 days. In the latter case, the bank which turned you down must issue an ‘adverse action’ notice to you, which contains the contact information of the entity which reported you. You can then request a free copy of your ChexSystems report from that company.

In order to successfully dispute information held about you within the database, you need to know precisely what information is contained within your ChexSystems report. Below, you can find a step-by-step guide to the process.

How do I file a dispute with ChexSystems?

Contact ChexSystems

The Fair Credit Reporting Act grants you the right to know what information is being held against you, the source of that information and to request proof of the information under dispute in order to validate its accuracy. The proof provided should include the name, telephone number and address of the person or business alleging that the information is true and was accurately recorded.

You can request a free report by clicking on the ‘Free FACTA Report’ link located on the left-hand panel on the ChexSystems homepage, also provided here. As you will see, you can request your ChexSystems report online, or by phone, letter or fax. Follow the instructions on the website in line with your preferred method.

ChexSystems Contact Details

✉ Mail	📠 Fax	📞 Telephone
Chex Systems, Inc.   Attn: Consumer Relations 7805 Hudson Road, Suite 100 Woodbury, MN 55125	602-659-2197	800-428-9623

Evaluate your ChexSystems report

The FCRA stipulates that consumer reporting agencies such as ChexSystems must accurately report information disseminated in the financial markets. In order to use this obligation to your advantage, you must carefully analyze the information contained within your report to identify any inaccuracies and/or clerical errors.

You should ask yourself the following questions:

• Has your personal data (e.g. name, social security number, addresses and bank account number) been recorded correctly?
• Have you ever been a client of the bank which recorded information against you?
• Do you recognize the debt recorded against your name?
• Is the amount of the debt recorded against your name accurate?
• Is a paid debt marked as unpaid?
• Are the dates of the alleged mismanagement which led to the information being recorded in the system accurate?
• Could the mismanagement have been the result of identity fraud?

Carefully make a note of every error you discover and search for evidence that can support your claim that the information is incorrect.

Send a formal letter of dispute to ChexSystems

You are advised to raise a dispute with ChexSystems first and not your bank, as you may be lucky and find that ChexSystems is unable to respond to your within the requisite timeframe due to a delayed response from the bank, meaning that by default, even if the information were true, they are required to erase it.

The best contact method is to send a formal written letter of dispute. Ensure that you choose certified mail with a request for a return receipt in order to receive proof of mailing and verification that your letter was successfully delivered. Furthermore, be sure to retain a copy of each letter sent to ChexSystems for your personal files.

Use the form provided by ChexSystems here to file your dispute. You can save and print the document, complete it by hand and then place it inside an envelope with a dispute cover letter on top detailing the reason that you are contacting them and any other documentation you need to provide (such as a photocopy of a document proving your identity) behind it. You can find a dispute cover letter template here.

The ChexSystems form provides space for up to 3 disputed items. Should you have further items to dispute, note this in the cover letter and attach as many forms as you need to in order to comply with their requested form of complaint. If you lack space in the official form, number the documents you wish to enclose and you can elaborate further on each item in your covering letter, referring clearly to each enclosure.

If you choose to include a copy of your ChexSystems report in your letter, you should not enclose the original ChexSystems report in your letter. Only provide a copy to ChexSystems.

Alternatively, you can file your dispute online by using the form in the ChexSystems link here. You can dispute up to 50 items in the online form by selecting the ‘Dispute Another Item’ button towards the bottom of the page.

To submit your dispute to ChexSystems online, simply enter the security code at the bottom of the form, and then click the ‘submit’ button

To fax your dispute to ChexSystems, send the relevant documentation to 602-659-2197.

To mail your dispute to ChexSystems, direct your letter to:
ChexSystems, Inc
Attn: Consumer Relations
7805 Hudson Road, Suite 100
Woodbury, MN, 55125.

Remember to include the following:

• Relevant information about the disputed information (e.g. account numbers and the names of the banks alleging mismanagement or misconduct)
• A detailed explanation of why recorded information is inaccurate
• Photocopies of documents that support your claims

ChexSystems must respond within 30 days of receipt of your letter/file/call (or 21 days for residents of Maine). Failing that, the disputed information must be removed from your ChexSystems record, irrespective of whether it is accurate or not. Note that if you submit further evidence to support your claim whilst ChexSystems investigation is still ongoing, the investigation period will be extended by a further 15 days. Confirmation of the delivery date and time can be provided by the postal service you chose to use, assuming that you requested a notice of receipt.

Should ChexSystems fail to respond in a timely manner, another letter should then be sent to ChexSystems requesting the removal of the item on the basis that they failed to respond within the timeframe granted by the Fair Credit Reporting Act. You can find a sample letter demanding removal of the information here.

On the other hand, if ChexSystems responds but fails to provide sufficient evidence to corroborate the information in the report, you should respond to them using the template letter here.

In the best case scenario, ChexSystems will provide you with a letter of response confirming the removal of the information from their systems.

However, in the event that ChexSystems notifies you that the bank validated the information contained within the report, you will need to write a letter to your bank. Proceed to the next step for an explanation as to how you should go about doing so.

Send a formal letter of dispute to your bank

Original creditors, such as banks, don’t typically have to validate your debts. They do, however, have to conduct an investigation if you dispute the validity of their reporting method.

Let Me Bank

If the information contained within the report is accurate, try to reach a settlement with your bank over the amount due and how this will be repaid (e.g. in installments).

Where you are in a position to dispute the information, you can find a suitable letter template here. Like ChexSystems, the bank has 30 days to conduct its investigation into the disputed information. Due to poor record-keeping practices and the destruction/loss of data whether intentionally, or unintentionally, it is often the case that the bank is unable to provide sufficient evidence.

Should the bank fail to conclude its investigation into the matter and respond to you within 30 days, you have the right to file a lawsuit against the bank for providing information to ChexSystems in the absence of records which validate the accuracy of the report. Proceed to the next step for further information on how to use the threat of legal action to your advantage.

Proceed to take legal action

Taking legal action is not ideal due to the cost involved in hiring a lawyer and the lengthy, unpredictable nature of the process. However, the mere threat of legal action through the filing of a small claims suit may be enough to convince ChexSystems and your bank to remove the negative information after considering the time and cost involved in proceeding to court. There is a small filing fee associated with this, of around $40. Your claim is that ChexSystems/the bank/other financial institution in question have failed to comply with legislation regarding fair reporting from such institutions, notwhether you did or did not rack up the debt in question for example.

What to do in the event of a procedural failure with ChexSystems

If ChexSystems or the bank confirm that the information held in your report is inaccurate/incorrect, but after reviewing your updated report again you note that it was not deleted, you will need to send a Procedural Request Letter which can be found at the bottom of the page here. Both ChexSystems and the bank will have 15 days to re-investigate the issue and confirm that they have updated your records, or they may be liable to investigation by the Federal Trade Commission. You have every right to initiate legal proceedings at this point if they fail to respond after 15 days.

Filing an official complaint with industry regulators

If neither ChexSystems nor the bank provide you with a response within 15 days, you are entitled to file a complaint with one of the following bodies:

• The Consumer Financial Protection Bureau (CFPB)
• The Federal Trade Commission (FTC)
• The National Credit Union Administration (NCUA)
• The Office of the Comptroller of Currency (OCC)
• Your State Attorney General’s Office
• Your State Banking Commission

In addition, you have every right to initiate legal proceedings against either ChexSystems or the relevant bank in a small claims court.

The process involved in removing negative data held against you from the ChexSystems database is a lengthy one. However, perseverance and patience is key to restoring your good name.

Consumer Statements

Assuming you do not proceed to court for whatever reason, another option available to you is to add a consumer statement to your file. Doing so will alert financial institutions which consider applications from you in future, to the fact that you disputed information held in your file and were unable to reach a resolution with the entities involved.

The statement must be no more than 100 words (or 200 words for Maine residents), must refer directly to the matter being disputed and must not include the names of the affected parties (whether they be people or businesses). To file a consumer statement, click on the ‘Request for Consumer Statement form’ link on the ChexSystems website here for the form. 

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Banks rely on ChexSystems to provide information about individuals who have had problems with insufficient funds in the past. It works much like being denied for a credit card due to past credit history. Even if your current situation has improved, you may be denied a bank account based upon your past banking history.

Lauren Ward, Crediful

ChexSystems is a consumer reporting agency, which was established under the Fair Credit Reporting Act (FCRA). The agency collates shared information about deposit accounts held by the clients of financial institutions which sign up to the service, that is then fed into a database used to perform risk assessment checks upon customers seeking to open new accounts by over 80% of U.S. banks. In this sense, it is merely an information provider. However, around 25% of financial institutions adopt a blanket zero-tolerance policy towards negative data stored in the database, whilst others take certain types of activity flagged by ChexSystems into consideration as part of their decision-making process, or – as is the case for around 50% of U.S. banks – require the approval of a branch manager.

What is the difference between ChexSystems and credit reporting agencies such as Experian?

Unlike credit reporting agencies such as Experian, Equifax and TransUnion, ChexSystems is not concerned with an individual’s creditworthiness and nor does it concern itself with capturing positive consumer behavior data. It is a consumer reporting agency, the overriding purpose of which is to track and store ‘negative’ consumer behavior data in the database such as information about excessive overdrafts, the accumulation of overdraft fees, insufficient fund transactions, accounts closed involuntarily, late payments on banking fees, the habitual use of bouncing checks, fraudulent check deposits, negative balances, suspicious behavior (e.g. structuring transactions to evade the reporting requirements, which is a criminal offense) and even opening too many accounts within a short period of time in order to take advantage of sign-up bonuses.

How does the point system work?

The point system runs on a scale of 100 to 899. The closer you are to 100, the worse your score is considered to be.

How can I find out my score?

The only way to find out your score is to complete the form provided on ChexSystems’ webpage here and send a letter, or a fax to the address and number listed on the document.

I tried to open a checking account but my request was turned down by the bank. What are my rights if I discover that I have been blacklisted due to a negative ChexSystems record?

ChexSystems is governed by the Fair Credit Reporting Act and Accurate Credit Transactions Act, which means that you DO have rights when it comes to understanding what data is being held against you and why, and contesting the data.

You have the right to:

1. Request and receive a free copy of your ChexSystems report each year, should one exist. A sample report can be found on the ChexSystems website here.
2. Be provided with proof of the negative data upon request, given the fact that you are entitled to all the information about you in the files of a consumer reporting agency.
3. Be notified of the fact that negative data contained in your ChexSystems report is the reason behind adverse action taken against you, following which you will be entitled to a free report from ChexSystems within 60 days.
4. Dispute inaccurate negative data contained within your record with your bank and ChexSystems, which ChexSystems is generally obliged to investigate and remove within 30 days, or 21 days for Maine residents. For example, notes of unpaid debts, incorrect dates regarding account delinquencies on your part and abuses caused by identity thieves. The Consumer Financial Protection Bureau provides sample letters of dispute at bullet point 4 of page 2 here.
5. Demand the application of a security alert/freeze in the event that you become a victim of identify theft. A security alert will advise financial institutions of the need to trigger enhanced identify verification processes should someone attempt to open an account in your name, whilst a freeze will prevent financial institutions that you have yet to do business with you, from accessing your report.

Unfortunately, although financial institutions and ChexSystems are obliged to investigate when negative data is contested, their decision-making process may still result in an unfavorable decision. If you are unhappy with how they have dealt with your query and believe that their reasoning is faulty or unfair, you can file a report with the Consumer Financial Protection Bureau here and the Federal Trade Commission here.

How can I request my ChexSystem report?

You are entitled to request a free report from ChexSystems once every 12 months, by clicking on the ‘Free FACTA Report’ link located on the left-hand panel on the ChexSystems homepage, also provided here. As you will see, you can request your ChexSystems report online, or by phone, letter or fax. Follow the instructions on the website in line with your preferred method.

How long will negative data about me remain in ChexSystems?

Although, the FCRA stipulates that negative information should not be held for more than 7 years, or, with regards to bankruptcies, any information that is more than 10 years old, according to ChexSystems itself, negative data not relating to bankruptcy will be removed from your ChexSystems report once a period of 5 years has elapsed from the date of the data being captured by the database.

Many banks and credit unions offer checking and prepaid accounts that are designed to reduce risks for both you and financial institution, typically by helping you manage your spending and avoid overdraft and overdraft fees.

Consumer Financial Protection Bureau

In the event that I cannot clear my ChexSystems record, what can I do?

All is not lost. Not all financial institutions rely upon ChexSystems for decision-making purposes. Credit unions in particular are rather forgiving of ChexSystem report histories. Further still, some financial institutions even offer ‘second chance’ accounts, specifically designed for those with a low ChexSystems score.

Due to the higher risk associated with providing banking services to ‘second chance’ account holders, banking fees are generally much higher and such accounts may come with certain limitations, such as lower withdrawal limits, the lack of an overdraft facility and no check writing capability. However, if it is your only option, through good account management, you can prove to regular banks in future that you are responsible enough to handle a normal account after a year or two.

Sign up to a bank which does not use ChexSystems:

• BBVA Compass: ClearConnect Checking
• Chime Bank: Chime Account
• Fifth Third Bank: Express Banking
• First National Bank Texas: Power Checking
• FSNB: Basic Checking Account
• Green Dot Bank: GoBank Account
• Navy Federal Credit Union: Checking & Debit
• Renasant Bank: Renasant Checking
• SunTrust Bank: Personal Checking Account
• TCF Bank: Free Checking
• U.S. Bank: Easy Checking
• United Bankshares: United Free Checking
• USAA: Classic Checking

Sign up to a bank which offers a ‘second chance’ account:

• Axiom Bank: Opportunity Account
• Bank OZK: Pathway Checking
• BBVA Compass: ClearChoice Free Checking
• Centennial Bank: Opportunity 100 Checking
• City National Bank: Bounce Back Checking
• East West Bank: Community Checking
• Landmark Bank: Rebound Checking
• MemoryBank: Memory Builder Checking
• Peoples Cash Solutions: Second Chance Checking
• PNC Bank: Foundation Checking
• Radius Bank: Essential Checking
• Republic Bank: Checking Builder
• Wells Fargo: Opportunity Checking
• Woodforest National Bank: Second Chance Checking

Credit unions offer the same services as banks and give clients a more personalized relationship.

Meriam Benmbarek, Benzinga

Sign up to a credit union offering a ‘second chance’ account and you may be eligible for a regular checking account within 1-2 years:

• Alliance Credit Union Fresh State Checking (eligible to be considered for a regular checking account after 1 year)
• Cardinal Community Credit Union 2nd Chance Checking (eligible to be considered for a regular checking account after 1 year)
• Federal Employees West Federal Credit Union Checking
• First Service Credit Union Fresh Start Checking
• Midland Credit Union Checking
• Motor City Co-Op Credit Union (uses TeleCheck)  MCCCU Checking
• North Georgia Credit Union Checking
  
  

Prepaid debit cards might not be the best option for people who could opt for a low-cost checking account instead – but for those who can’t, prepaid cards actually make great checking account alternatives as long as the cardholder takes the time to find the right one.

Casey Bond, Huff Post

Sign up for a prepaid debit card:

Prepaid cards are relatively easy to obtain, irrespective of negative data in ChexSystems, as they don’t use the database or those of its rivals to approve your request. Prepaid cards are an alternative to traditional cards. They do not extend credit and are not linked to a checking account. You are required to charge such cards with money before they can be used to shop online, pay for trips abroad and withdraw cash from ATMs. Each transaction made with the card will cause your balance to go down. When your balance is low, you can reload the card and resume making payments as normal. Many providers of such cards will permit you to have your wages or government benefits paid into them. However, you are typically required to pay a small monthly fee of a few dollars.

Checklist for evaluating a prepaid debit card offer:

Does the card have a monthly fee? If so, it should not be greater than $5.95 If a card charges a monthly fee, what do you get out of it?

Robert Harrow, Value Penguin

Akimbo Prepaid MasterCard Prepaid Card
American Express Bluebird Prepaid Card
American Express Serve Cash Back Prepaid Card
American Express Serve FREE Reloads Prepaid Card
NetSpend Prepaid Prepaid Card
Chase Liquid Card Prepaid Card
Walmart MoneyCard Visa With Cashback Rewards Prepaid Card

How Can I Avoid Being Flagged Under the System Again?

DO:

• Keep track of how long it takes for deposits to be credited to your account and double-check your balance before making payments, particularly if you are often at risk of going into the red
• Make sure that there are no outstanding fees to be paid, all checks have cleared and that no further deductions will be made from the account by previously established automatic debits prior to closing a checking account. Be sure to confirm with companies applying a direct debit how long it may take for their systems to process this payment change.
• Request a free copy of your consumer report every year from ChexSystems and rival companies, such as Early Warning or TeleCheck, as not every bank will use ChexSystems.
• Review your reports each year, looking out for errors and evidence of fraud in order to monitor and maintain your overall financial wellbeing.
• Pay off debts in line with instalment arrangements on time, or pay off debts completely finances permitting.
• Set yourself up with banking alerts any time a transaction is made with your card so that you can track potential identity theft more easily.
• Prioritise your relationship with your bank and be sure to communicate with them immediately when you realise you cannot make a payment that is due. Work with them to formulate a plan for paying off your debt in a timely manner.
• Update ChexSystems by sending them evidence that a debt has been paid off and request removal. You may find that the next report you request will no longer contain reference to it.

DON’T:

• Pay by check unless you are absolutely certain that there are enough funds in your account to finance them.
• Give out your PIN number and if you do, make sure that it is changed after.
• Close an account by depleting available funds – contactyour bank to make sure it is closed officially in order to avoid unforeseen bank charges.