What Is ChexSystems?

Women at a Bank
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ChexSystems is a database that banks use to determine whether potential customers present too much risk to the bank. This system is regulated under the Fair Credit Reporting Act. If you have certain issues with your bank, you may be reported to ChexSystems.

Generally, these issues include having a history of overdrafts or having an account closed by the bank. If you have a negative report, you can work with  ChexSystems to clear up your report as quickly as possible.

 

What Can Banks Report?

ChexSystems is different from your credit report. It does not establish a history of good and bad behavior. Instead, your ChexSystems report only 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 gave false information when you opened your account.

You can be reported for bouncing checks repeatedly. A report also states if you still owe money to another bank. Generally, banks list the reason. The information can stay on your Chexsystems record for five years.

What Happens If I'm "on the List?"

Some banks won't accept you as a customer as long as you are on the Chexsystems list. Other banks will allow you to open an account if you have proof that you have paid off a balance you owed the other bank.

Some banks might offer you an account with higher fees, which help to offset the bank's risk of having a customer with previous mistakes.

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

How Do I Tell What Is in My File?

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

Once you receive the report you can take care of any fees you owe other banks and clear up your ChexSystems report.

When you pay off any owed amounts, request that the bank send in a report to verify the account has been paid. You can also request a letter stating this, and take it 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'll need to go through the same process to address any issues that you have with Telescan.

Can I Avoid Getting Reported?

You can avoid being reported to ChexSystems by contacting your bank when you have a negative account balance that you can't pay right away. Some banks might work with you as long as you make a genuine effort to bring your account back into the positive. This works the best if you communicate with your bank in person at the branch.

Make it a priority to stop the overdraft cycle as quickly as possible so that it does not become a constant problem and risk. Balance your checking account regularly, and stick to a written budget to avoid overspending your balance in the future. The best way to avoid having a ChexSystems report is to manage your bank accounts responsibly.

Most overdrafts happen when people don't track their spending closely enough. 

Address any problems as soon as they happen, and talk to the bank's customer service representatives to address the issue if necessary. Keeping extra money in an emergency fund can help you address overdraft problems quickly.

How Do I Clear Up Issues?

Take a proactive approach if you've been reported to ChexSystems. Contact the bank immediately to begin repairing the problem. 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.

A payment plan can take care of the problem. Once the money is paid off the bank should report it to ChexSystems so your report can show that the debt is paid off. A bank may be willing to work with you at this point. A smaller local bank or credit union may be more open to working with someone who's had issues reported to ChexSystems.

 

What If I Can't Get a Checking Account? 

It can be challenging to get by without using a bank to have electronic access to your money. You could make do with a savings account for a short time, but your banking fees will likely increase.

The sooner you can clear up your Chexsystems report and pay off any fees you owe, the sooner you will be able to open a new checking account. In the meantime, use these strategies to help you survive without a checking account.

This means planning your expenses much more carefully. In the interim, you can pay your bills with money orders or prepaid credit cards. Until your situation improves, other options exist to help you manage your money and function without a checking account.