Chexsystems: Consumer Reporting Agency

The vast majority of people in the US have a bank account in some way whether or not it's a checking, savings or money market account and use it regularly. But have you ever went in to apply for a bank account and gotten declined due to information inside a report? There is a consumer reporting agency named Chexsystems which keeps track of your banking information on which is based upon information submitted by your banking company. They report when you ordered checks, had an overdraft and were assessed an NSF fee, check fraud, or if you owe money to another bank. If any of this has happened to you and the bank reported you to Chexsystems (whether it be your fault or not), you could be blocked out from getting another bank account for up to five years.

My first experience of this was when my husband and I both went to try to open up a joint checking account after we were married and were declined due to a report pulled by Checksystems. Apparently, one of the banks I used to bank at before I met my husband reported me for an overdraft in which I had already paid and didn't report it to them that it was paid as agreed. Of course at the time I had never heard of Chexs and from then on had a horrible time trying to get an account for the next few years until I found a bank that didn't use them as a way to validate our identity. I have personally tried to get items removed from our report that should no longer be there, but have not had the luck that some other people have and apparently, I'm not alone.

So what exactly is Chexsystems? Chexsystems is a consumer reporting agency that reports information on how your bank account has been handled at your banking institution. They are part of the eFunds Corporation which is located in Delaware and are now considered to be like the three major credit bureaus Experian, Equifax and TransUnion. They keep records from your bank on whether or not you have check overdrafts and were assessed an NSF Fee, unpaid balances to your current and/or previous bank, or if your bank thought something suspicious was going on, such as depositing checks that are not valid, they might have reported you to Chexsystems.

But how can this keep you from getting a bank account you might say. Well, a growing number of banks will run a Chexystem report before you open up an account to see if there are any negative items. If when they pull your report and see anything there that may have been reported from any bank within the last five years, there is a good chance that you could be denied. Banks are currently relying on Chexsystems to help combat checking account fraud which has cost them millions of dollars.

So what is so bad about Chexsystems? For one, there is no say on how or why you should be reported to Chexsystems, therefore your bank can report you for just overdrawing your account for one single transaction. Think that's a little far fetched? It has happened to millions of consumers who either over-drafted their account, had a bad check written by someone else, or closed their account and had another item come through after words--all it takes it one mistake and you could end up in Chexsystems. There isn't any one criteria on how or why anyone should be reported, thus causing a wide variety of banks reporting when they feel the need to whether or not it was justified. Also, Chexsystems only reports negative items that have happened and nothing positive which could be detrimental to the consumer. Due to this, Chexsystems has a bad rep among consumers for those of use that ended up there for a simple mistake. Sure, for some people I'm sure it's justified if you try to commit check fraud, but for the vast majority of consumers this isn't the case.

So what can you do if you find yourself in Chexsystems? The good news, since Chexsystems is now a credit reporting agency you have the ability to get a free annual report to dispute any item and request that they provide evidence that the item is in fact valid. Additionally, not every bank is using Chexsystems to approve new bank applicants, there are still some out there that use other means in which to prove your identity. While it might be hard to find a bank that does this, there is a website in which can help you find one in your area. The website is called "Chexsystems Victims" and can be found here. Not only will they assist you in finding a bank in your area or one that doesn't use Chexsystems, but they will give you some tips on how to get items removed from your Chexs reeport. You may also elect to go to the "Second Chance Checking" in which you pay a small fee and take a class on proper banking procedures and as long as there is no debt owed, you could have the chance at obtaining a new checking or savings account. It is also possible to go back to the original banking institution and request that they remove the item on your report, but good luck at getting Chexsystems to remove it.