What Is ChexSystems?

What Is ChexSystems?

ChexSystems is a consumer reporting agency that functions similarly to a credit bureau. But instead of tracking your loans and credit cards, it maintains records related to your checking and savings accounts.

When you apply for a new bank account, banks and credit unions will often check your ChexSystems report to determine whether to approve your application. If your report shows anything that could indicate you might be a risky customer, it may deny you.

Learn more: Does Opening a Bank Account Affect Your Credit?

How Does a ChexSystems Report Work?

ChexSystems keeps track of your deposit accounts with banks and credit unions, then compiles a report showing your account activity and the reasons your past accounts have been closed. Here are a handful of items you might find on your report:

• Involuntary account closures
• Bounced checks
• Recent application inquiries
• Check orders

That said, it won't include any information about open and active accounts, and it also doesn't include details about accounts you closed voluntarily with no negative history.

Does a ChexSystems Report Affect Your Credit Score?

Your ChexSystems report has no direct impact on your credit score. However, if you have a negative balance on a checking account that's been sent to a debt collection agency, that agency may choose to report the collection account to the national credit bureaus, which can harm your credit score.

If you're concerned about your credit history, it's a good idea to check your credit regularly. Experian's credit monitoring service is free and provides access to your FICO^® Score^Θ, credit reports, customized alerts and more.

How to Get a Copy of Your ChexSystems Report

The Fair Credit Reporting Act makes it possible for consumers to access their ChexSystems report once every 12 months for free. You can also get a free copy if you've been denied a checking or savings account in the past 60 days. If you've been denied, the bank or credit union is also required to disclose the reason or reasons for the denial.

There are three ways you can request a copy of your ChexSystems report:

• Online through the ChexSystems Consumer Portal
• Over the phone by calling 800-428-9623
• By downloading a request form and mailing it to Chex Systems Inc., Attn: Consumer Relations, P.O. Box 583399, Minneapolis, MN 55458

Submitting your request online or via phone will generally give you the fastest response time. Note that you'll have to provide the following information to verify your identity:

• Name
• Social Security number
• Driver's license or other state identification
• Current address
• Previous addresses
• Date of birth
• Telephone
• Email address
• One-time PIN

How to Clean Up a ChexSystems Report

Legitimate information will typically stay on your report for five years, which can make it challenging to get approved for a bank account. Depending on the situation, though, there may be some opportunities to clean up your ChexSystems report.

Pay an Unpaid Negative Balance

If your report shows accounts where you still owe money, such as an account with a negative balance due to overdrafts, pay off the balance of what you owe as quickly as possible. In some cases, you may even be able to settle for less than what you owe.

While that won't remove the original negative item, it will update your report to show that the account has been paid or settled in full.

Dispute Inaccurate Information

If you find inaccurate information on your report, you have the right to dispute it with ChexSystems. Make sure to provide any supporting documentation you might have, such as:

• Identity theft affidavit
• Police report
• Account statements
• Paid or settled in full letters
• Death certificate

The agency can take up to 30 days to investigate your dispute (21 days if you live in Maine). However, if you provide additional information after your initial request, it can take up to 15 additional days to complete the process.

If ChexSystems can confirm your dispute, it'll remove the inaccurate information. If it can't, you'll have the chance to add a statement to your report describing the nature of your dispute so other financial institutions can see it when they check your report.

If you think the issue is due to fraud or you're concerned about identity theft, you have the right to also add a security freeze to your ChexSystems report.

What to Do if You're Denied a Bank Account

Taking steps to clean up your ChexSystems report may be enough to improve your chances of opening a new checking or savings account. But if the information listed in your report is accurate, you may simply need to wait out the five-year term.

In the meantime, here are some other options you can pursue:

• Ask about second chance accounts. A second chance bank account comes from a financial institution that either skips the ChexSystems check or is willing to look past your previous missteps.
• Consider a prepaid debit card. Prepaid cards aren't technically bank accounts, so their issuers typically don't check your ChexSystems report. These cards only allow you to spend money you've loaded onto your card, though some allow overdrafts.
• Look into fintech apps. Some financial technology companies offer second chance bank accounts, prepaid debit cards and even debit-credit hybrid cards that don't require a ChexSystems report review to get approved.

Tip: If you're thinking about opening a new checking account, the Experian Smart Money^™ Digital Checking Account & Debit Card can help you build credit without debt by automatically linking to Experian Boost^®ø, which gives you credit for eligible bill payments after three months of payments. You'll also pay no monthly fees^¶ for Experian Smart Money, have access to more than 55,000 fee-free ATMs worldwide^** and could receive your paychecks up to two days early when you enroll in direct deposit^†. You can get an Experian Smart Money Account through a free or paid Experian membership, which also gives you access to your FICO^® Score, Experian credit report and more. See terms at experian.com/legal.

Frequently Asked Questions

The Bottom Line

Getting denied a bank account can be frustrating and discouraging. But don't let it sap your motivation to improve your financial life. Review your ChexSystems report to see if you can do anything to improve your chances of getting approved.

It can take a while to get to the point where you're in good standing again with banks and credit unions, but the effort can be worth it to get back to the type of banking experience you want to have. While you work on it, you can check your FICO^® Score and Experian credit report for free to keep the rest of your financial picture moving in the right direction.