If you’re having a hard time getting a bank account, it’s probably because of ChexSystems… but you may not even know it! This system operates similar to a credit score but is specifically responsible for tracking your banking habits.
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What is ChexSystems?
ChexSystems is a nationwide consumer reporting agency, authorized under the Fair Credit Reporting Act. It tracks information about your closed checking and savings accounts.
Banking institutions use ChexSystems to decide whether or not to open a new account for you. It’s like when you apply for a loan somewhere and they check your credit score. Both ChexSystems and credit scores track your risk to the person who is offering you an account.
What does ChexSystems track?
Similar to a credit report, your ChexSystems report tracks accounts and inquiries pertaining to your bank accounts.
Among other things, the system keeps records of your:
- Closed accounts, whether it was voluntarily or involuntarily closed
- Negative balances and unpaid overdrafts on closed accounts
- Fraudulent and suspicious activity, even if it was due to identity theft
- Check cashing at locations that use Certegy Check Services
- Returned checks
- Check order history
- Account inquiries and applications
- Bankruptcies, judgments and other relevant public records
- Personal identifying information, such as your name, address and SSN
Closed account information stays in your record for up to five years. Most of the information is retained for between three and five years.
Here’s how to get a copy of your ChexSystems report.
You are entitled to get a free copy of your ChexSystems report every year. You can also get a copy whenever a bank uses the report to deny you a checking account.
You can submit a request online or complete your request over the phone, through the mail or by fax. You can see all the options on the ChexSystems website.
What can you do if you have a bad report?
A negative report can prevent you from opening a bank account, which can become a serious problem in today’s increasingly cash-free society.
If you have a negative report, you do have options.
Dispute any inaccuracies on your report. You can file a dispute with the institution that reported it, or directly with ChexSystems. Here are the instructions about filing a dispute with ChexSystems.
The agency isn’t required to remove any accurate information from your file, but they are required to update the information if you have paid off an old closed account.
Pay off old accounts.
You may need to pay outstanding balances at other institutions before you can open a bank account elsewhere. As soon as you pay it, you can file a dispute to clear up your report. However, it can take up to 30 days to resolve the dispute.
Choose an institution that doesn’t use this report.
There are banks and credit unions that do not use these reports when opening accounts. If your report is very negative, you may need to use one of these providers until the negative information falls off the report.
We’ve got a list of institutions that do not use this system below.
These bank accounts don’t use ChexSystems!
There are several bank accounts that do not use ChexSystems.
Try Chime, a digital account with great perks.
Chime is an online bank account that is perfectly suited to your needs. It offers fee-free access to 38,000+ ATMs. With Chime, are NO ridiculous bank fees, NO minimum balance requirements, NO service fees, and NO overdraft fees.
Even better, you can get paid up to two days early when you have a direct deposit set up with Chime! Their expedited direct deposit feature can be a lifesaver when you’re living on a low income.
Is Chime a scam? No way! Chime is a full service FDIC insured bank account that offers both a Spending and Savings Account.
GoBank is another great digital option.
There are a lot of similarities between GoBank and Chime. For example, GoBank also boasts a huge free ATM network and an early direct deposit program that could help you get paid up to two days early. There is a monthly account fee, but it is waived if you receive more than $500 per month in direct deposits.
Wells Fargo Opportunity Checking is a fallback option.
I have had a very unhappy history with Wells Fargo and some of their underhanded practices. Granted, it’s been 15 years since then… but I still don’t recommend them as an institution.
If you absolutely do not have another option, you may consider the Wells Fargo Opportunity Checking account. This account is available to those who can’t open a traditional account because of their credit score or ChexSystems history.
The Opportunity Checking account has a $10 monthly fee, but this fee can be waived if you receive more than $500 in qualifying direct deposits or 10 or more posted debit card transactions per month.