What Is ChexSystems?

(June 2024)

What Is ChexSystems?

In This Article

Do you have a hard time opening a checking or savings account? If yes, chances are ChexSystems reports about your banking history are negative—probably because you have unpaid fees, overdraft or suspected fraudulent activities report on your banking history.

But having a negative ChexSystems report shouldn’t stop you from opening a checking or savings account.

Read this article till the end to learn what ChexSystems is, how it works, and what to do so you can open a new bank account if your banking history contains a negative ChexSystems report.

To Know What ChexSystems Is:

  1. Understand the Nature of ChexSystems
  2. Know How ChexSystems Works
  3. Learn What Banks Report to ChexSystems
  4. Know How to Get Your ChexSystems Report
  5. Understand What to Do If You Can’t Open a New Checking Account
  6. Know How to Clear Your ChexSystems Report
  7. Learn if ChexSystems Report Include Credit Reports

Excited? Let’s get into it.

1. Understand the Nature of ChexSystems

To learn anything about ChexSystems, first understand what it means. You’re probably familiar with how credit bureaus monitor your bill payments—either early or late— right? Sure you do. As a consumer reporting firm, ChexSystems reports your banking history to banks.

The agency’s report features your personal information (full name, previous addresses, social security number), unpaid fees, unpaid negative balances (overdrafts), fraudulent activities, public records, and application of other bank accounts (or other bank account inquiries).

2. Know How ChexSystems Works

To understand ChexSystems, know how it works. The agency assists banks and other financial institutions to be aware of the risk of approving your application for a new checking or savings account.

Banks submit your banking details to ChexSystems, and it processes the information to create your banking history report with a risk score. ChexSystems keeps negative information on your report for five years. Notwithstanding, banks determine how long you need to wait after a negative information passes on your ChexSystems report.

ChexSystems investigates promptly any dispute you file and reports your banking history to banks whenever they need it. The Federal Trade Commission and the Consumer Financial Protection Bureau oversee ChexSystems.

3. Learn What Banks Report to ChexSystems

To grasp how ChexSystems works, learn what banks report to the agency. Basically, banks report to ChexSystems activities such as unpaid negative balances (for example, due to overdraft), fraudulent activities, an involuntary closing of an account, and so on.

4. Pay Your Bills on Time

To understand how ChexSystems runs, know how to get your ChexSystems report. Complete your consumer disclosure report form on ChexSystems’ website to get a copy of your report. Indicate whether you want to download the report online or get a copy via your email.

Expect a free report from the agency if its receives an urgent notice that requires immediate action. Dispute any error on your report on the agency’s website through fax or by email.

Additionally, feel free to request your report from ChexSystems for any business transaction that you started. If you apply for any federal government benefit program that requires the proof of your financial commitment, request your report from ChexSystems.

Present your driver’s license number, Social Security number, and other personal information to request your ChexSystems report.

5. Understand What to Do If You Can't Open a New Checking Account

To grasp how ChexSystems functions, understand what to do if you can’t open a new checking account. Expect banks to reject your application for a new checking or savings account if there’s any negative information on your ChexSystems report.

What do you do, moving forward?

  • Consider other alternatives. Apply for a second-chance checking account or a prepaid card account if a standard checking account didn’t work because of a negative information on your ChexSystems report.

However, you pay more for a lower-risk account without access to some benefits, including access to a debit card and lack of overdraft protection. Receive both check and bank deposits with a standard card account—except that a standard card account attracts a fixed monthly fees.

  • Dispute inaccurate information on your report. Go through your ChexSystems report to see if there’s any error in it. If you find an error on your report, promptly file a dispute with ChexSystems and the bank that reported the error.

6. Know How to Clear Your ChexSystems Report

To learn how ChexSystems works, know how to clear your ChexSystems report. The agency automatically clears your report of any negative information after five years. Five years is too long. Analyse your ChexSystems report and check what steps to take.

For example, if the report claims you owe a financial institution money, pay the debt as soon as you can. Request your bank to update your report to reflect the debt you cleared. To fast-track the process, send a payment receipt directly to ChexSystems.

7. Learn if ChexSystems Report Include Credit Reports

To understand how ChexSystems runs, learn if the agency’s report includes your credit history. Note that ChexSystems reports your banking history not your credit reports. Details such as unpaid fees and overdraft are present in your ChexSystems report. If you need to check your credit reports, check Experian, Equifax or TransUnion.

Don’t think having bad credit affects your chances of opening a new checking account. Your credit score imparts your loan or credit card application but doesn’t necessarily affect your chances of opening a savings or checking account. Also, if you have good credit but your ChexSystems report has negative information, you will still have a hard time opening a new bank account.

Recap

Your ChexSystems report determines if your application for a new checking or savings account will be successful or not. The report contains information that relates to your previous overdraft, unpaid fees, or involuntary account closure, and so on.

To understand how ChexSystems operates, know what it is and how it works. Learn what banks report to ChexSystems, know how to get your ChexSystems report, and understand what to do if you can’t open a new checking account.

Lastly, know how to clear your ChexSystems report and learn if ChexSystems report include credit reports.

Become a

S'witty Kiwi Credit Insider!

Get the latest credit tips and hacks in your inbox!