What Is ChexSystems?
ChexSystems is an account screening bank report agency. It operates in the background of the banking system to help lenders and banks screen potential customers to open bank accounts. Banks use ChexSystems to determine the customers who may be more likely to be a risk of misusing or mismanaging their accounts based on their past behavior. Based on the National Consumer Law Center, around 80 percent of banks utilize an account screening CRA and ChexSystems to evaluate whether they should approve applicants to open a new account.
Working
A credit union or bank will examine the candidate's ChexSystems report. More than 80 percent of credit unions and banks utilize consumer reports from organizations like ChexSystems and Early Warning Services to help them determine whether or not to accept accounts with banks, as per the National Consumer Law Center. The process of reviewing your credit is similar to applying for credit cards.
This assists the issuer to evaluate if you're a problematic customer in the case of a new credit line. (Some banks check applicants' credit scores when they apply to open a new bank account as well. Credit unions and banks share details about the individuals they serve and the date they closed their accounts. In exchange, the agency collects the consumer's history and generates risk scores, reports, and risk assessments that banks can use when they evaluate prospective customers.
What to Do If You're Listed in ChexSystems
It's possible that you don't know that you've got a ChexSystems account until the time you attempt to open an account at a bank and get refused. Suppose you've received a letter saying that you cannot open a banking account due to a negative ChexSystems report. In that case, the first step is to ask for an official duplicate of the Consumer Disclosure. This is also provided to you at no cost. When you've got an original duplicate of the ChexSystems report, you can go through it carefully to ensure that all the details are correct. If you discover an error or mistake, you are entitled to challenge the report. You can file a dispute via the ChexSystems website.
Once you file a dispute, the company is obliged to look into and verify whether the information contained in the file is correct. The investigation is usually completed in thirty days (21 days for Maine residents). However, they can be extended for 15 days if you submit additional information when the investigation is ongoing. When the investigation is concluded, ChexSystems will notify you by letter of the results. It's not guaranteed that negative information will be removed or changed; however, it's worth investigating if you suspect you've been incorrectly reported to ChexSystems.
What Is a ChexSystems Report?
The ChexSystems report is like a credit report because it provides information about your previous financial transactions. Instead of listing the same information you would find included on your credit reports, such as credit utilization and credit history, ChexSystems collects information about your savings and checking account information.
Most credit reports include data from the last seven years; however, ChexSystems reports typically maintain negative information for five years. But, each institution has its own set of rules regarding the length of time that must be allowed after a negative experience like non-paid overdraft charges and before you can open an account with a bank.
With these reports, ChexSystems tracks the bank accounts you have and keeps an account with this information to track your activities and why your previous accounts were closed. Suppose you are applying to open a new saving or checking account. In that case, your banks or the credit unions will usually look over your ChexSystems account to determine if they will be able to accept you as an incoming customer.
How to Review Your ChexSystems Report
The Fair Credit Reporting Act (FCRA) permits you to access your ChexSystems report for free per year. Request a duplicate report online or request the report to be delivered via fax or postal mail. When you receive an official copy of your report, you should examine it thoroughly to ensure there aren't any errors. It's recommended to examine your report each year to ensure that there's nothing wrong or fraudulent that is listed, particularly if you are planning to open a brand new account.
If there is a file with negative information and you have a history, shut accounts are made available. Making sure you check your report at least once per year isn't too bad because it will ensure that the information you have is current and your name is in good standing. If you decide to request a banking account and are rejected based on the information the bank found in your ChexSystems report, you can request an additional copy free of charge to verify that it's true. If you discover an error, you've got the right to challenge the report.
