ChexSystems is used by over 80% of all banks and credit unions in America to determine whether individuals qualify to open checking and savings accounts. It has a database that can be used by these financial institutions to check whether applicants have debt elsewhere.

What is ChexSystems?

ChexSystems is a private account verification system under the Fair Credit Reporting Act (FCRA) owned by Fidelity National Information Services. It bars individuals who have a suspicious financial history from opening checking and savings accounts with other banks. These accounts are said to be closed ‘for cause.’

An account closed ‘for cause’ is one that has been terminated or deactivated due to factors such as bouncing too many checks. Some quarters may consider this approach unfair because an individual may just have an unfair series of bad checks, while another will be a bonafide financial criminal, yet they will both have their accounts closed ‘for cause.’

Some of the other negative activity that ChexSystems would see as warning signs include:

• Persistent overdrafts
• Continual bounced checks
• Closing accounts involuntarily
• Identify theft
• Suspected fraud
• ATM abuse
• Suspicious opening of accounts lately

Banks and credit unions will supply this information to ChexSystems, which will be stored in its database and shall be used to make further financial decisions.

Steps to clear up your ChexSystems report

Request your report

Visit ChexSystems, and select ‘request your report’ on the dashboard. The report comes after five business days. It should state clearly the reason for reporting along with the individual’s identification data.

Once you receive your ChexSystems report, you may want to clear it because:

• It contains errors.
• It is out of date.
• You (still) want a bank account.

ChexSystems should send you a free copy of your consumer disclosure report at least once every year at your request. You must be over 18 years old. If your account opening application has been denied by a bank, ChexSystems will send you a free report.

At the ‘Closure Status’ output, it will either be ‘Unpaid’ or ‘Paid in full.’ ChexSystems’ system will remove your report after five years if you do not do so manually. In case you pay up any pending balances with a credit union or bank, ChexSystems will update the report to depict this payment.

Dispute errors

You have the right to dispute any information that you feel is inaccurate or incomplete. Further, any consumer reporting agencies should amend this issue within 30 days. If any information cannot be verified, it should either be removed or corrected within that set time.

There are two approaches to this:

• Disputing errors directly to the company or financial institution that sent the information to ChexSystems.
• Sending your complaint to ChexSystems and letting it determine whether there is an error or not.

Once you find your report is unsatisfactory, and you can back up your claim, you are free to send your dispute by mail or fax to ChexSystems. You will be required to provide all relevant documentation. Always send copies of these documents, and not originals, if you are doing so by mail.

In cases such as suspected fraud or identity theft, whereby there could be a third party to witness, include their contact information in the submission. As a pro tip, always have receipts and copies handy.

These are the ways you can submit your dispute to ChexSystems:

• Online: Submit a ChexSystems Dispute Form Online
• Fax: 602-659-2197
• Mail: Address to: ChexSystems, Inc.Attn: Consumer Relations7805 Hudson RoadSuite 100Woodbury, MN 55125
• Telephone: 800-428-9623

Clear your debts

You will need to pay up any outstanding debts with banks and credit unions that you may have. At least they will have no negative balance reporting to do in your case to ChexSystems.

You can either pay the debt in full or settle for a repayment plan. Some will waive the balance or allow you to pay a less amount. Be committed to pay the full balance within the shortest time possible. Cut down on your budget and stick down to this budget.

There are several debt payment strategies, such as debt snowball and debt avalanche methods. In the former, you rank debts in terms of which is the largest and which one is the smallest, while in the latter, you consider which debt will cost you the most in terms of fees.

When you have paid your balance, you may now request the financial institution that reported you to ChexSystems to remove your record from their report. Send all receipts of payments to ChexSystems so that they can update their database.

Once ChexSystems update your report, you can now open a bank account.

FAQs

Are there any banks that do not consider ChexSystems reports?

ChexSystems is a consumer reporting agency that provides valuable information to financial institutions about individuals who hope to open checking and savings accounts. However, some banks choose not to use ChexSystems reports and offer second-chance banking. They include:

• Wells Fargo
• Capital One 360
• Chime
• Green Dot
• TD Ameritrade
• BBVA Compass
• Radius Bank

Can I sue ChexSystems?

Legal action is always advised to be the last course of action. However, if you feel your case was mismanaged, or some aspects were ignored, you can sue ChexSystems in Federal Court. This may also apply if you feel ChexSystems violated FCRA laws in one way or another.

If you have paid your balances in full and your dispute request is still being ignored, you can sue ChexSystems, especially if these said errors are still being reflected in your ChexSystems report.

Is a ChexSystems report the same as a credit report?

A ChexSystems report and a credit report can be accessed by anyone, at request, and free of charge at least once a year. The two are not the same. Your credit report will outline in detail how you handle debt, and will be used to make important decisions on whether you can handle more debt, if given to you. A ChexSystems report will reveal any issues you have had in your banking history.