ChexSystems Making Your Life More Difficult? Here's What You Can Do

Past banking problems can impact you for up to five years, but that doesn't mean you're stuck.

If you've hit a brick wall while trying to open a bank account, it may be due to ChexSystems. Any previous banking problems you've experienced are reported to ChexSystems. When you want to open a new account, the new bank or credit union looks to see what ChexSystems has on file. 

What's frustrating about ChexSystems is that negative remarks remain on your ChexSystems report for up to five years. Here, we'll cover a handful of the negative remarks that can show up on your report and how to get on with your financial life despite what ChexSystems says. 

Your ChexSystems report 

Here are the kinds of things you might find on a ChexSystems report and why each notation raises a red flag:

• Involuntary account closure: An involuntary account closure means that another bank gave up working with you and closed out your account to cut its losses. 
• Overdrafts and bounced checks: Many of us have experienced a checking account overdraft, but an occasional overdraft is not the problem. When overdrafts become commonplace and cost the bank money, it causes other financial institutions to worry it could happen to them.
• Unpaid negative balances: If you've left a bank without depositing enough to cover negative balances and overdraft fees, it's a relatively large red flag.
• Suspected fraud: If a bank believes you've used your account to attempt a fraudulent scheme, it's reported to ChexSystems.

How to obtain a copy of your report

Per the Fair Credit Reporting Act, you can request a free copy of your ChexSystems report every 12 months. You're also eligible for a free copy of your ChexSystems report if any of the following is true:

• You've been denied a new account.
• You're the victim of identity theft and have placed a fraud alert in your file.
• Your ChexSystems report contains inaccurate information due to fraud.
• You are on public assistance.
• You are unemployed but expected to apply for employment within 60 days.

You can request a copy of your ChexSystems report in one of four ways:

1. Visit the ChexSystems website and fill out a form
2. Leave a message at 800-428-9623
3. Fax a request to 602-659-2197
4. Mail a written request to Chex Systems, Inc., Attn: Consumer Relations, PO Box 583399, Minneapolis, MN 55458

If you find a mistake on your report, dispute the error online or by mail with return receipt requested. ChexSystems has 30 days to verify or delete the negative remark from your report. 

Non-ChexSystems and second-chance banks

If the negative remarks contained in your ChexSystems report are accurate, it's going to take time for those negative remarks to fall off. In the meantime, there are ways to find another bank and rehabilitate your banking reputation. 

For example, some banks do not use ChexSystems to screen applicants. That means they do not care about negative remarks found in your report. And then some banks offer second-chance checking accounts.

A second-chance checking account is designed for people who have run into banking problems in the past. Banks offering second-chance accounts overlook past mistakes and offer checking accounts geared toward helping you take control of your money. 

It's important to note that second-chance accounts typically carry higher fees than regular checking accounts. That's because the bank knows it's taking on more risk with your account. 

If you're looking for a bank that does not use ChexSystems or a bank that offers second-chance banking, these three can help you get started:

GTE Financial Go Further Checking: Does use ChexSystems

If you apply for a traditional GTE checking account and are denied, the bank will inform you and encourage you to apply for its Go Further Checking account instead. What's so nice about GTE Financial's second-chance banking is that once you've used the account responsibly for one year, they'll upgrade it to a traditional account. You only need $5 to open an account but will pay a $9.95 monthly fee (unless you meet specific requirements). 

Chime: Does not use ChexSystems

If you've heard Chime commercials on the radio, you probably realize that Chime is a financial technology company that partners with banks. Like a typical bank, checking and savings accounts are FDIC insured. Chime offers no minimum balance, no monthly service fees, no foreign transaction fees, no transfer fees, and no late fees. 

Capital One 360 Checking: Does not use ChexSystems

With Capital One 360 Checking, there's no minimum opening deposit, no monthly fee to pay, and free overdraft options. 

If you're on the ChexSystems blacklist, banking may feel a little more challenging, but it doesn't have to be. The good news is that you have options.