What Is ChexSystems?

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ChexSystems is a database that banks use to determine if potential customers are too great of a risk to the bank. This is a system that is regulated under the Fair Credit Reporting Act. If you have issues with your bank, you may be reported to ChexSystems. Generally, you will be reported if you have a history of overdrafts or if you have an account closed by the bank. If you have a negative report, you will need work to clear up your ChexSystems report as quickly as possible

What Can Banks Report to ChexSystems?

ChexSystems is different from your credit report. It does not establish a history of good and bad behavior. Instead your ChexSystems report just reports issues that you have had with a bank in the past. Banks will report you to this system if they close your account for negative balances or if you lied when you opened your account. You can be reported for bouncing checks repeatedly.  A report will also state if you still owe money to another bank. Generally, the bank will list the reason. The information can stay on the Chexsystems records for five years.

What Happens If I Have a Bad ChexSystems Report?

Some banks will not allow you to be a customer as long as you are on the list. Other banks will allow you to open an account if you have proof that you have paid off a balance that you owe the other bank. Some banks will offer you an account with higher fees, which help to offset the bank's risk for having a customer with previous mistakes.

You may also have to do without a checking account while you try to show that you are more responsible with your money. 

How Do I Tell What Is on My ChexSystems Report?

You can request a report from ChexSystems if you have been denied an account in the last sixty days. You can ask the bank to give you information on how to receive a report or visit their website.

Once you receive the report you will need to clear up any fees that you owe other banks to clear up your ChexSystems report. When you do this request that they send in a report that the account has been paid. You can also request a letter stating this that you can take with you to the bank. You can dispute any information by contacting ChexSystems as well. Telescan is another system that some banks and retail stores use. You will need to go through the same process to address any issues that you have with Telescan.

How Do I Avoid Having a ChexSystems Report?

You can avoid being reported to ChexSystems by contacting your bank when you are in the negative. Some banks are willing to work with you as long as you are making a real and steady effort to bring your account back into the positive. This works the best if you communicate with your bank in person at the branch. You should work to stop the overdraft cycle as quickly as possible, so that this does not turn into a constant problem. you should balance your checking account regularly, and stick to a written budget to avoid these problems in the future. The best way to avoid having a ChexSystems report is manage your bank accounts responsibly.

Most overdrafts happen because you are not tracking your debits and credits closely enough. 

  • Be sure to keep your account in good standing by balancing it and avoid being overdrawn.
  • Address any problems as soon as they happen.
  • Do not let your account to stay negative, bring the balance up to a positive one as soon as possible.
  • Talk to the customer service representatives to address the issue.
  • Keep extra money in your savings account to help cover emergency situations. An emergency fund can hep you address these problems quickly.

How Do I Clear Up My ChexSystems Report?

You need to be proactive if you have been reported to ChexSystems. Take the time to contact the bank today and begin repairing the problem now. If you cannot pay off all of the money you owe to the bank at once, you might be able to set up a payment plan with the bank.

This will begin to take care of the problem. Once the money is paid off the bank should report that to ChexSystems and your report will state that the debt is paid off. A bank may be willing to work with you at this point. Often a smaller local bank or a credit union may be more willing to work with someone with ChexSystems or credit issues. 

What If I Cannot Open a Checking Account? 

It is too difficult to survive without being able to use a bank to have electronic access to your money.You may be able to get by with just a savings account for a short time, but your banking fees will increase. The sooner you can clear up the report and pay off any fees that you owe, the sooner you will be able to open a new account. In the meantime, you can use these strategies to help you survive without a checking account. This will mean planning your expenses much more carefully. You can work to pay your bills with money orders or prepaid credit cards. There are options available to help you manage your money and function without an account.