If you are blacklisted by ChexSystems, then you will be effectively blocked from opening bank accounts at 80% of the banks in the United States. However, this doesn’t mean you’ll be unable to bank anywhere. Your first option is to go with a bank or credit union that doesn’t use ChexSystems. These are financial institutions that don’t reference ChexSystems at all when making decisions about new customers. If you’re ready to put your past beyond you, check out these “Non-ChexSystems Banks”.
When it comes to banking, you may not be aware that your accounts are always being watched. One of the companies responsible for reporting irregularities into your banking institution is an entity known as ChexSystems. If you’re you are not familiar with ChexSystems, then this article will show you everything that you need to know. This information can go a long way to help you clear up any potential issues with your checking and savings accounts.
ChexSystems is a nationwide consumer reporting agency where banks contribute information to closed checking and savings accounts. About 80% of all banks use ChexSystems services to screen applicants for checking and savings accounts. During the screening process, a bank will have access to checking and savings history going back over the last five years.
You can get a free report (also known as the “Consumer Disclosure”) each year from ChexSystems. You can request your free report at the official ChexSystems website.
Your ChexSystems report will give you a score between 100 to 899. The higher the score, the less of a risk you are to a bank. A bank can refuse to open an account if there are one or more negative pieces of information reported by ChexSystems. Because of this, ChexSystems does provide a free report each year upon request. This report allows consumers to dispute any information found on it.
Negative reporting information will stay on ChexSystems for five years. After that period, the information will be removed, but it can be removed earlier with a successful dispute of the information.
There are a couple of steps that you can take to get out of ChexSystems.
While 80% of the financial institutions in the United States use ChexSystems, there are a number of local banks and credit unions near you that you can consider. Find options by clicking below.
A second chance account is an account that doesn’t use the ChexSystems. Some of the positives of a second chance account are that you usually don’t need to maintain a high balance and you may not have to pay any fees. A second chance account is designed to help you build a positive history with ChexSystems. After several years of responsible banking with a second chance account, you may be able to open another account with a bank that uses the ChexSystems service. Here are some banks that offer second chance accounts:
Customers who open a Second Chance Account can earn other banking benefits with time. As long as you keep your account in good standing, you may be allowed more banking rights, and in the end, your account might be converted to a regular account.
If you can’t open an account or if you don’t want to have a traditional bank account, then you can consider some alternative options. These options can allow you to save cash and accept direct deposits onto an account.
Paypal – The world’s largest online payment provider allows you to transfer money online. In addition, PayPal offers a number of different debit cards with low fees.
Walmart Debit Card – If you shop often at Walmart, then you may want to consider a Walmart Debit Card. One of the big advantages of having a Walmart Debit Card is that you can load or withdraw money at Walmart’s Money services center.
Amscot Debit Card – If there is an Amscot location near your home, then an Amscot card may be ideal for you. Amscot is a financial services center known for their payday lending services. With an Amscort Debit Card, you can load money onto your card at any Amscot location orATM machine as well as withdraw funds.
Be sure to check the terms and the fees of any debit card before you apply.
There are several ways you might get reported on ChexSystems, including the following common actions:
Information from ChexSystems does not directly go on your credit report. However, if you do have negative information on your ChexSystems, this could limit your ability to open an account at certain banks. Over the long term, being unable to open a bank account could lead to negative marks on your credit report.
While you are likely to monitor your credit report, you should do the same with your ChexSystems report. Checking each report at least once a year will allow you to identify and possibly dispute the information if need be.
If you find negative information on your ChexSystems report, you’ll want to take some steps in order to remove that information.
The first step is to request your report. You can request your ChexSystems report for free (once per year) by visiting the ChexSystems website. You can also write to ChexSystems. Mail your request to the following address:
ChexSystems Attention: Customer Relations 7805 Hudson Road, Suite 100 Woodbury, MN 55125
If you find any information that may be in error, then you will be able to file a dispute, which you can do with ChexSystems. After you have filed the dispute, the bank that reported the information has 30 days to validate the information. If the bank fails to provide proof, then the information will be removed from your ChexSystems report.
If your ChexSystems report a debt to a bank, then you can potentially remove that information by simply paying off the debt. For instance, if you have a closed bank account with a debt of $200, then simply pay off the $200 and request to have the negative information removed from your ChexSystems report.
You can also request that the creditor remove the information. There may be situations where the creditor will allow you to settle any debts that you owe. Also, you can make arrangements to pay off your debt in installments. It doesn’t hurt to ask a creditor for a way to resolve this information.
If none of the above strategies work, then you can wait until the information drops off from your ChexSystems report. As stated before, the information will be dropped from your report exactly five years from the day that the information is reported. During that five-year period, you will likely be restricted from opening accounts with banks that use the ChexSystems database.
While common sense budgeting can keep you from ending up on the ChexSystems, the following strategies can also help:
Just about all banks have a service known as a “low balance alert.” With this alert service, you will receive either a text or an e-mail notification if your account reaches a certain amount. When you receive your low balance alert, you should refrain from using the account until you can add funds to it.
One of the easiest ways to keep yourself out of financial trouble is to create a budget. Creating a budget allows you to evaluate your income and manage your spending. Over time, making a budget will provide you excellent protection from bouncing checks or becoming overdrawn on your account.
No matter how much money you make, you won’t be able to stay out of trouble if you spend more money than you make. Therefore, you will want to cut any unnecessary spending. Be sure to check for any recurring charges on your account that you don’t need. Also, look for alternatives that can help you save money. For instance, buying items in bulk is usually more affordable during shopping trips.
Your credit card should not be a substitute for regular spending. If you have trouble controlling your credit card spending, then be sure to only use it in the case of emergencies. If you need to, remove your credit card from shopping sites to lower your chances of impulse spending.
You can get a secured credit card with just about any credit score. A secured credit card limits your spending the amount of collateral that you give to the credit card issuer. Over time, paying off your secured credit card on time will help improve your overall credit score.
If you are a victim of identity theft, then there is a possibility that someone could use your identity to open a bank account. With a bank account open in your name, a person can take out loans or write checks in your name.
To prevent anyone from opening a bank account in your name, you can place a freeze on your ChexSystems account. This freeze will alert any bank or financial institution that there should be no account opened in your name. This means that you can’t open a bank account while the freeze is active.
When you want to open a bank account, you can temporarily “unfreeze” or “thaw” your account from ChexSystems. After opening the account, you can return the “freeze” to your ChexSystems account once more.
In addition to ChexSystems, there are two other services used by financial institutions known as TeleCheck and Early Warning.
EWS provides what is known as a Deposit Score. This Deposit Score is compiled by the consumer’s banking history. Early Warning Services is designed to detect possible fraudulent activity. Co-owned by Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank and Wells Fargo.
TeleCheck helps financial institutions decide whether they should accept a check from a consumer. Telecheck is currently used by over 374,000 merchant locations. The TeleCheck System works by looking at previous consumer transactions to check for bounced checks or other risky activity.
Want to make sure that your background looks its best before you attempt to open an account at a bank that uses ChexSystems? Here are some top tips that you should follow:
Remember, you can get one free ChexSystem report per year. Be sure to get a copy and dispute any problems that you see on your report. You can resolve these problems by either filing a dispute or by requesting the creditor to remove the negative item.
In addition to getting a free copy of your ChexSystems report, you should also get a free copy of your credit report.
When you open a bank account, you want to make sure that you have the funds ready to cover any checks you may want to write or any debit card purchases. The last thing you want to do is open a bank account and immediately start getting hit with overdraft charges.
You want to make sure that you pick the bank that is right for you. In some cases, the bank that you pick may use ChexSystems. In other cases, a non-ChexSystems bank will be ideal for you. Consider the bank’s online services, the physical locations, and the bank fees. Remember, you will probably use that bank for a long time.
Once you have opened your bank account, you will want to make sure that you don’t end up with any negative remarks on your ChexSystems report. One of the best ways to keep your checking and savings account in good standing is to always make sure that both accounts are well funded. Also, be aware of any recurring charges that may debit money from your checking account. Finally, make sure that you check the balance of your savings and checking account often.
*IMPORTANT* Some banks will allow you to have a backup payment system for your checking account. This will help you reduce your chances of bouncing a check and getting hit with returned check fees. You can use a credit card as a backup for your checking account. Just be sure that your credit card has a high enough limit to handle any possible overdrafts from your checking account.
ChexSystems is an important reporting agency that can greatly affect your ability to open a bank account. If you suspect that you may have any negative information on your report, contact ChexSystems and request a free copy of your report. Be sure to dispute any information found, and if you can’t resolve any negative information on your Chexsystem report, be sure to consider non-ChexSystems banks and credit unions today.
One last thing to point out to people trying to find a bank to work with them is to be selective. It may be tempting to go from one place to another trying to find a bank that would be willing to allow people to open an account, but it can be a big mistake. Make sure that the bank you have engaged works with people who have been reported before it pulls your ChexSystems record. Pulling data again and again from the ChexSystems database can further worsen your situation, as every time the data is pulled it shows up as an inquiry into your account. Many banks do not work with people that have multiple inquiries conducted.
If you have been reported to Chexsystems, you need to be very proactive. Take time to get in touch with the bank to dispute the record today and start fixing the problem now. It is very difficult to survive without being able to use typical banking services that many people take for granted. You might be able to manage with only a savings account for a short time, but your banking fees will increase gradually to an extent that it becomes unaffordable. The faster you can fix the negative marks on your report, the sooner you will be able to open a new account.
If you want to be proactive and get your negative information removed from Chexsystems altogether, then be sure to read our free guide to getting out of Chexsystems for good.
Rooting for ya,
You can also ask your own questions, please contact us using the form here.