What Is ChexSystems? Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: On This Page
eva_blanco/Shutterstock April 12, 2022 Barbara Whelehan is a contributing writer for Bankrate. Barbara writes about a range of subjects, including homebuying, real estate, retirement, taxes and banking. David Schepp is a wealth editor for Bankrate, focusing on deposits and consumer banking content. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Here is a list of our . Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. If you apply for a new checking account and your application is denied, chances are it’s because there’s a negative report of your banking history by ChexSystems. ChexSystems is a specialty consumer reporting agency operating under the Fair Credit Reporting Act. It is similar to a credit bureau, but it tracks consumers’ deposit and debit history, rather than their ability to pay bills on time. Generally, ChexSystems reports on blemishes in banking history, such as overdrafts and unpaid fees. “A history of overdrawn accounts will be reflected on your ChexSystems report and could stand in the way of getting a new checking account much the way a history of loan defaults would make prospective lenders unwilling to extend credit,” says Greg McBride, CFA, Bankrate chief financial analyst. How does ChexSystems work
ChexSystems helps financial institutions assess the risk of accepting customers. The credit reporting agency collects information about consumers from banks to create a report and issues a risk score based on that information. Banks rely on consumer disclosure reports to determine whether to grant a customer access to a bank account. These reports can warn banks about thieves looking to commit fraud, but they also include information on consumers who have made honest mistakes, such as inadvertently overdrawing funds. Consumer reporting agencies, like ChexSystems, must follow certain regulations, such as reporting information accurately and investigating disputes by consumers in a timely manner. ChexSystems is overseen by the Consumer Financial Protection Bureau and the Federal Trade Commission. What information banks report to ChexSystems
The CFPB website lists common reasons why consumers may have a negative consumer disclosure report: Unpaid negative balances (as a result of overdraft fees, for example). An involuntary closure of an account. Suspected . Owning a joint account with someone else who had one of these problems. Chi Chi Wu, a staff attorney at the National Consumer Law Center, says bank overdraft policies are largely to blame for many of the negative reports compiled by credit reporting agencies. “Banks have these terrible overdraft practices where they allow people to overdraw their account, including by using their debit card when they could decline the transaction without charging a fee,” Wu says. “Then they charge this enormous fee of $35, which sometimes exceeds the amount overdrawn, and they charge that fee for every overdraft. “It’s one of the top reasons people don’t have a bank account. In some cases, the account is closed because the overdraft fees aren’t paid. That results in a negative report on ChexSystems or Early Warning services, and that prevents the consumer from opening another bank account.” Overdrafts in consumers’ banking history can result in serious consequences, as the consumer is often forced to use expensive financial alternatives to handle routine transactions. A on the economic well-being of U.S. households showed that 18 percent of U.S. adults have insufficient access to banking services, with 5 percent considered unbanked, meaning they have no bank account at all. The reported number of unbanked adults was disproportionate along class and racial lines, as well as education levels. For example, 13 percent of Black adults were unbanked, compared with 3 percent of white adults. Furthermore, 16 percent of adults whose family income is less than $25,000 were unbanked, while 3 percent of those in the next family income bracket ($25,000 to $49,999) were unbanked. Are credit reports also part of the review process
ChexSystems reviews banking history, not credit history. Information in a ChexSystems consumer file can include debit history, checking account closures and check order placements. There are three that supply credit reports, and the information stored by the credit bureaus is separate from ChexSystems. In other words, doesn’t necessarily affect your ability to open a bank account. But good credit also won’t help you get approved for a bank account if ChexSystems reports a negative banking history. How to get a copy of your ChexSystems report
You can get a copy of your consumer disclosure report either online or by mail by . “You are entitled to a free annual report,” Wu says. “When banks use the consumer reporting agency to deny you a bank account, the bank is required to send you an adverse action notice.” ChexSystems must also provide consumers with a free report if they receive an adverse action notice, which gives them an opportunity to look for errors. “If you do find issues on your report, make sure everything is accurate, just as you would with a credit report, and dispute anything that is inaccurate,” Bankrate’s McBride says. Errors can be disputed on , by mail or by fax. Other legitimate requests for your report, according to ChexSystems, may include: A business transaction that you initiated. An application for a license or government benefit where proof of financial responsibility is required. A child support determination. To access your report, you will be required to divulge your Social Security and driver’s license numbers, as well as other personal identifying information. ChexSystems says that all personal information transmitted over the internet is encrypted to protect privacy. I ve been denied Can I get a bank account
If you’ve been blacklisted by ChexSystems, you still have options. “Some banks and credit unions offer second-chance checking accounts, designed to help someone that has had previous missteps get back on the right track in managing their account,” McBride says. may involve a monthly fee, a minimum balance requirement or both, but it gives consumers the opportunity to show that the account can be managed responsibly. Some financial institutions offer other low-risk accounts that you might qualify for, such as safe checking accounts that don’t offer checks but provide a debit card. “Safe bank accounts could be another option,” NCLC’s Wu says. “The main feature of safe bank accounts is that they are low cost, avoid overdrafts and do not charge overdraft fees.” How long do you stay on ChexSystems
According to ChexSystems, records of consumer reports are generally kept for five years from the report date, but consumers can request removal of a report earlier than five years if it is out-of-date or incorrect by . ChexSystems usually takes 30 days to investigate a dispute, after which it may remove your report. Bottom line
Banks and credit unions use information provided by ChexSystems to determine the risk level of a consumer. It’s important to be aware that your banking history of the last five years is stored by ChexSystems — if you’re not approved for a deposit account, it’s likely because of something in the ChexSystems report, like an involuntary checking account closure. Look out for errors in ChexSystems reports and dispute them, so that incorrect information won’t affect your ability to open an account. If you’ve been blacklisted by ChexSystems for a negative banking history, there are second-chance or safe bank account options available. –Staff writer René Bennett contributed to this article. SHARE: Barbara Whelehan is a contributing writer for Bankrate. Barbara writes about a range of subjects, including homebuying, real estate, retirement, taxes and banking. David Schepp is a wealth editor for Bankrate, focusing on deposits and consumer banking content. Related Articles