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Fake Money: How to Spot It and Report ItWhat Is ChexSystems and What to Do if You’re Listed
ChexSystems lets financial institutions know about their customers. It’s like a credit bureau, but it looks at your banking history and reports it to a bank or credit union when you apply for an account.
You can view your ChexSystems report for free. And if the report is the reason you are denied a banking account, you still have options.
What is ChexSystems?
The ChexSystems consumer financial reporting agency was started under the Fair Credit Reporting Act. While Experian, Equifax and Transunion report your credit, ChexSystems reports your banking history.
Banks, credit unions and other financial institutions use ChexSystems to assess potential customers.
ChexSystems is overseen by the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC).
You can get your free ChexSystems report every 12 months if you request one. (See below.)
How does ChexSystems work?
ChexSystems works mainly for financial institutions to help evaluate the risk of giving you an account, based on your banking history.
The ChexSystems report is meant to show whether you’re financially responsible. If you’ve ever opened a bank account in the United States, you’ve probably been screened by ChexSystems.
And if you’ve ever been denied a checking account, it may have something to do with your ChexSystems report.
Your ChexSystems report can include both good and bad points, such as:
- Checking account openings and closings
- Applications for new bank accounts
- Your history of writing checks, including any bounced checks
- Unpaid overdraft fees
- Outstanding debts
- Accounts closed because of insufficient funds
- Suspected fraud incidents
Keep in mind that ChexSystems itself doesn’t approve or deny applications. It just reports to financial institutions on your banking history.
How to get a copy of your ChexSystems report
You can get a copy of your ChexSystems report for free every 12 months through the ChexSystems website, regardless of bank application status. And if you have been denied an account, you can also request a copy of your report through the bank that denied you.
What to do if you’re listed in ChexSystems
You may not realize you have a ChexSystems report, even though most people have one. And as noted, being denied a banking account can often be traced back to your ChexSystems file.
Get a copy of your report from ChexSystems or a bank that refused to give you an account, and check the information for accuracy.
If your report contains errors, you can dispute them through the ChexSystems website. Include any documentation with your claim, but know that it can take upward of 30 days to complete an investigation.
Your ChexSystems report may show you what might have caused the denial. You may have overdue fees or other issues you could address. If you do make payments to fix the problem, keep documentation from the financial institution so you can show ChexSystems and update your report.
Banks that don’t use ChexSystems
While most banks, credit unions and other financial institutions use ChexSystems, some don’t. And even the ones that do use it might have options for those with a bad report.
Financial institutions that don’t use ChexSystems
Most banks don’t publicly disclose whether they use ChexSystems. But here are some that don’t use it when evaluating potential customers.
- Capital One 360 Checking
- Chime Second Chance Banking
- Foothill Credit Union Rebound Checking account
- Go2Bank Mobile Bank Account
- Montgomery Bank New Start Checking
- Navy Federal Credit Union
- SoFi Checking and Savings
- Southwest Financial Credit Union Checkless Checking
- Varo Online Bank Account
- Woodforest National Bank Second Chance Checking
Your bank or credit union might have lenient qualifying standards. Talk with a representative at your bank before completing an account application.
Second-chance banking
Second-chance banking accounts are for those who might not qualify for a traditional deposit account because of poor banking history. They’re available from some regular banks and online financial institutions.
Second-chance banking is usually best if you’re having trouble getting an account but need one anyway. Maybe your job will only pay you through direct deposit, or you require checks for certain bills.
You might still face some issues with second-chance banking, such as monthly fees or no access to checks. This will depend on your account and the financial institution you open it with.
Prepaid debit cards
With a prepaid debit card, you can only spend funds you’ve loaded onto the card. These cards aren’t tied to a bank account.
Before you get a prepaid debit card, think about how you’ll use it. For instance, some merchants might have limitations on prepaid debit cards or charge fees when you use them.
While prepaid debit cards can help with your finances, ChexSystems doesn’t track them. This means you can’t use a prepaid card to show a positive banking history to potential banks in the future through your ChexSystems report.