An Introduction to ChexSystems

If you’ve ever been denied an application for a checking or savings account due to your banking history, it’s probably the direct result of ChexSystems. But what is ChexSystems, how does it work, and what does it have to do with your banking history?

Read on for the answer to these questions and many more.

ChexSystems: An Overview

Governed by the federal Fair Credit Reporting Act (FCRA), ChexSystems is the “credit bureau” for financial institutions. They operate in the same manner as the credit reporting agencies, like Equifax, Experian, and TransUnion.

But instead of providing credit data, they offer consumer disclosure reports that include historical data for closed checking and savings accounts. These reports help financial institutions determine if the applicant meets the qualification standards for a new bank account or if they should be denied due to the high level of risk they pose.

What’s In Your ChexSystems Report?

ChexSystems or FACTA reports contain the following components:

  • Consumer identification number
  • Personal information
  • Identity theft security alerts reported by the consumer
  • Security freeze history
  • Reported information related to past accounts that were mismanaged or resulted in an outstanding debt balance
  • Inquiries initiated by financial institutions
  • Inquiries initiated by the consumer
  • Check-cashing inquiries
  • Retail information
  • Check-ordering history
  • Social security number validation
  • Additional information or supplementary data

You can view a sample consumer disclosure report here.

How to Retrieve Your Free ChexSystems Report

You can access your consumer report on an annual basis, free of charge, by following the instructions below:

  • Phone- Call 800-428-9623. You will be directed to an automated voice messaging system where you can initiate your request.
  • Mail- Download and print the Consumer Request for Disclosure Form and send it to Chex Systems, Inc.

Attn: Consumer Relations

7805 Hudson Road, Suite 100

Woodbury, MN 55125

  • Fax- Submit the Consumer Request for Disclosure Form to 602-659-2197.
  • Online- Complete and submit the Consumer Request for Disclosure found here.

Free ChexSystems reports are also available to consumers who’ve been denied for a bank account due to the information contained in the report.

Can Anyone Access Your ChexSystems Report?

The short answer is no. in order for a third party to access your FACTA report, they must:

  • Have written permission by you to do so. This is usually the case when you apply for a bank account and you sign an application granting the bank permission to access resources, like ChexSystems, to help evaluate your application and make a decision. Both business and personal transactions also fall under this umbrella.
  • Be ordered to do so by the courts through an order or federal subpoena issued by the grand jury. Child support rulings by the court of law may also warrant the release of your ChexSystems report.

What to Do If Your ChexSystems Report Contains Errors

If your ChexSystems report contains inaccuracies, you have the right to have them rectified. But in order to initiate the process, you’ll have to file a formal dispute. This can be done via the following methods:

  • Online by completing the digital form and uploading supporting documents
  • By mail at Chex Systems, Inc., Attn: Consumer Relations, 7805 Hudson Road, Suite 100, Woodbury, MN 55125
  • By fax at 602-659-2197

Should you decide to dispute your consumer report by mail or fax, be sure to include your full name, Social Security number, current and mailing address, and Consumer ID on all correspondence you send it. Your dispute letter should also clearly identify the item(s) in question and the reason it’s incorrect.

How to Contact ChexSystems

If you need more clarification about your ChexSystems report or the dispute process, you reach out via mail, fax, or phone. Their contact information is listed below:

Mail

ChexSystems, Inc.

Attn: Consumer Relations

7805 Hudson Road, Suite 100

Woodbury, MN 55125

*Phone

800-428-9623

Fax

602-659-2197

*(Please note that calling in will only route you to an automated menu that allows you to request your report or listen to responses to frequently asked questions. No representatives are available at the number to take your call).

ChexSystems: What It Means For Your Banking Options

Unfortunately, a shaky ChexSystems reports could spell big trouble when you apply for a checking or savings account. You could either be offered an account with less than favorable perks, like higher maintenance fees or minimum balance requirements or be denied for an account altogether.

Do All Banks Use ChexSystems Reports?

Before you have a complete meltdown, you should know that you aren’t banned from the banking world forever if you have less than perfect banking history. In fact, information reported only lingers for five or so years. Even better, some banks ditch ChexSystems altogether while others offer second-chance bank accounts. More on that shortly.

What To Do If You’re Denied for a Bank Account

Alternative Banking Solutions (or Non-ChexSystems Banks)

Worried that you won’t find a bank account that suits your needs because you’ve been denied on every turn? Take a look at what the non-ChexSystems banks have to offer:

  • BBVA Compass ClearConnect Free Checking
  • Navy Federal Credit Union
  • Suntrust Bank
  • United Bank

Quick note: while select banks don’t use ChexSystems to screen applicants, it’s possible that they run credit checks or use another similar service called Early Warning Systems during the evaluation process. So, it’s best to inquire with a banker before moving forward with your application.

Second-Chance Banking

You may also want to give banks that offer consumers another chance a try. These include:

  • BBVA Compass ClearChoice Free Checking
  • Capital One
  • USAA Free Checking
  • Wells Fargo

As mentioned earlier, you may have to pay higher maintenance fees or fork over more than normal for your opening deposit, but the benefits of second-chance banking usually outweigh the costs.

You should also know that these options may not be advertised to the public. Instead, you’ll need to go into the branch and speak with a banker about your situation. That way, they’ll be able to provide you with your options based on your banking history.

Prepaid Debit Cards

It’s not uncommon for consumers to want a bank account solely for the purpose of direct deposit or online transactions that require you to use a debit card. The good news is even if you’re unable to find a bank account that works for you due to ChexSystems issues, you can always use a prepaid debit card to get the job done.

While they are sometimes accompanied by higher fees and pose a bit more risk than traditional debit cards issued by banks, they have similar capabilities. And some prepaid debit card issuers allow you to personalize your card and receive direct deposits.

Can You Remove Accurate Negative Data From ChexSystems?

Are you being haunted by a slew of banking missteps from the past? Whether they resulted from a rough financial patch, carelessness, or honest oversight, it’s possible to have negative data removed from your ChexSystems report.

However, it’s not necessarily a good idea to reach out to ChexSystems and demand that they remove any negative information from your report. Instead, call up the bank and request that they remove the account in exchange for payment. If they agree, request that they provide their response to you in writing so you’ll have proof of the arrangement.

But if this approach doesn’t quite work out and the negative entries are older, you can try your hand at a dispute to see if the bank responds. Depending on the severity of the issue and age of the account, they may not bother and the information will be removed from your report.

The Bottom Line

It’s a good idea to be aware of how ChexSystems works and what’s listed in your FACTA report. That way, you’ll know what to expect when applying for bank accounts. And should you spot errors in your report in the future, you’ll know exactly what to do to have them resolved in a timely manner.

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