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What is ChexSystems?

Katie DuncanSeptember 7, 2022

Reviewed By: Amplify

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Many people are familiar with the important role that credit reports and history play in our financial health. Fewer know about ChexSystems, the widely used reporting agency that keeps tabs on the health of your deposit accounts.

If you plan on opening a checking or savings account in the near future, your ChexSystems report will come into play. Here’s what you need to know about how to get—and keep—your report in good shape.

What is ChexSystems?

ChexSystems is a consumer banking reporting agency. Created under the Fair Credit Reporting Act, this agency collects information about problems you’ve had with deposit accounts like checking and savings accounts at banks and credit unions.

Anytime you open a new deposit account, the financial institution will likely take a look at your ChexSystems report before approving your application. This helps banks determine whether or not a customer may be at risk for misusing or mismanaging a bank account based on their history.

What does a ChexSystems report contain?

In short, a ChexSystems report is a record of your banking history, which can cover a huge range of actions or issues. Everything from fraudulent activity on your account to unpaid balances can be included. On your report, you’ll see a detailed history outlining:

  • Overdrafts
  • Bounced checks
  • Number of accounts you’ve recently applied for
  • Unpaid fees or negative balances
  • Account, card, or ATM abuse
  • Involuntary account closures

Additionally, your ChexSystems report will have personal information such as the name(s) that you go by, date of birth, phone numbers, and email addresses. Information generally stays on your ChexSystems report for five years.

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ChexSystems vs. Credit Bureaus

You may be familiar with the three major credit bureaus— Equifax, Experian, and TransUnion. These organizations are responsible for compiling your credit report and formulating your credit score.

While ChexSystems is similar to a credit bureau, they have a notable difference— credit bureaus report on your credit history, not your deposit account history. This means they look at how you’ve repaid any money that you’ve borrowed, whether it be your credit cards, mortgage, auto loans, student loans, and more.

Your ChexSystems report typically doesn’t have a direct impact on your credit report or credit score. However, if you have a negative balance or unpaid fees on a checking account that has been sent to collections, the collection agency may report it to the credit bureaus, which would then impact your credit score.

To avoid negative marks on your ChexSystems report affecting your credit score, it’s important to pay off any unpaid fees or balances on old accounts. If you are unable to pay, contact the financial institution to find out about alternative solutions.

ChexSystems Score vs. Credit Score

ChexSystems also assigns account holders a “consumer score” ranging from 100 to 899 that indicates the risk level for owning a deposit account. Like a credit score, the higher the number, the lower the risk.

Creditworthiness and credit scores play a big role in everyone’s overall financial health. They help determine whether you can get things like a home mortgage, a car loan, or in some cases, even a job. The ChexSystems score may seem like a less important factor, but depending on what the history shows, it can prevent some people from being able to get a bank account. This can have a huge impact on someone’s ability to pay bills, apply for jobs or apartments, and save for the future.

What to Do If You’ve Been Denied a Checking Account

For most people without past banking issues, the ChexSystems report or score holds little significance. If you have had issues, though, it can wreak havoc on your financial stability by leaving you with a bank account.

If you’ve been denied a checking account due to information that appears in a ChexSystem, you can work your way to approval by doing the following.

1. Get a copy of your ChexSystems report.

Thanks to the Fair and Accurate Credit Transaction Act (FACTA) amendments to the Federal Fair Credit Reporting Act (FCRA), you are entitled to a free copy of your consumer report, at your request, once every 12 months.

To request your ChexSystems report, you can:

  • Submit your request online here
  • Call (800) 428-9623 and speak to a representative or an interactive voice response system
  • Complete, print, and mail the Consumer Request for Disclosure Form to the address found on the ChexSystems website

If you have been denied an account and ChexSystems was used in the decision process, you can request an additional report, even if you’ve already received one in the past year. This can help you better understand what led to the bank’s decision to deny your request.

2. Dispute inaccurate information.

If you find inaccurate information on your report, you can dispute it with the financial institution that provided the information or with ChexSystem directly. Find more information on how to do that here.

3. Explore your other options.

If the information on the report is correct, you still have options.

First, speak to representatives at other financial institutions. Local credit unions, for instance, may have different requirements for opening an account. Just because you are denied at one bank doesn’t necessarily mean that you will be denied at all of them.

Second, explore other types of accounts. Some institutions offer what is known as second-chance checking accounts. These accounts typically have fewer features and higher fees than standard accounts but can be helpful in helping you rebuild your checking history.

Lastly, look at options like prepaid debit cards. These are another alternative to checking accounts that allow you to receive deposits and charge a card.

The Bottom Line

Most people don’t give much thought to their ChexSystems report. However, if you plan on opening a checking account, it’s a factor that banks will look at. If you’ve made mistakes with your bank accounts in the past, don’t give up hope. Marks on your report only last five years and there are steps that you can take in the meantime to get the financial products you need.

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Katie Duncan

Katie Duncan is a financial writer based in Austin, Texas. Her articles include financial advice for freelancers, homebuyers, and more. When she’s not writing, Katie loves traveling and exploring the outdoors with her friends and her dog, Poe.