What Is ChexSystems?
ChexSystems is a consumer reporting company that tracks how people have handled bank accounts. Most US banks and credit unions check it when you open a checking or savings account. If your report shows unpaid negative balances or fraud, you can be turned down.
It is a separate system from your credit report. Banking problems usually don't show up on your credit score, but they can follow you from bank to bank through ChexSystems.
What goes into a ChexSystems report
- Accounts closed by a bank with a negative balance you didn't repay, usually from overdrafts or fees
- Suspected fraud, such as depositing bad checks
- Bounced checks reported by stores
- How many times you have applied for accounts recently
It doesn't record your balances, your income or your ordinary account history.
How long it lasts
Entries stay on your report for up to five years, unless the bank that reported them asks for their removal sooner.
How to get your report, free
Under the Fair Credit Reporting Act, you are entitled to one free ChexSystems report every 12 months. You can also get one free within 60 days of being denied an account because of it. Request it through the ChexSystems consumer website or by phone. It usually arrives by mail within a few days.
How to fix an error
- Dispute it with ChexSystems. It has 30 days to investigate, and it must remove anything it can't verify.
- Contact the bank that reported it. The bank can correct or withdraw the report directly.
- Keep copies of every letter and statement.
How to deal with an accurate entry
- Pay what you owe. Ask the bank to confirm in writing that the balance is paid, and ask it to update or remove the report.
- Ask for removal in exchange for payment. Some banks agree to this, so it is worth asking before you pay.
- Wait it out. Old entries become less important over time, and they fall off after five years.
If you have been denied
Second-chance checking accounts. Many banks and credit unions offer these for people with a ChexSystems record. They often have a monthly fee and lower limits. After 12 months or so, most let you move to a regular account.
Accounts that don't use ChexSystems. Many fintech accounts and some online banks check other databases, or none at all.
Credit unions. They are often more flexible, especially if you already have a loan or share account with them.
ChexSystems and joint accounts
When you open a joint account, the bank usually checks each owner. A bad record for either person can get the application declined.
FAQ
Does ChexSystems affect my credit score? No. It is a separate report. An unpaid balance sold to a collection agency can show up on your credit report, though.
Do all banks use ChexSystems? Most large banks do. Some use Early Warning Services, the company that also runs Zelle, and many check both.
Can a teenager have a ChexSystems record? Only after they have held an account. A first teen account starts with a clean record.
Figures and rules in this article are checked against the official sources below. Where they disagree with us, they win.
- CFPB list of consumer reporting companies
- Fair Credit Reporting Act (free annual disclosure, disputes)
- ChexSystems consumer portal
