You probably know that banks check your credit report as part of the loan application process, but did you know that they do something similar when you apply for a bank account? While most banks don’t run your credit when you apply for a new checking or savings account, they do typically put your information through another type of consumer reporting system - one that details your banking history.
ChexSystems is the most well-known bank account screening company, but other players include Early Warning Services (commonly referred to as EWS), and Telecheck. While the exact reports from each of these companies may differ slightly, they are all aimed at helping banks and credit unions determine if you’re too risky for an account.
If you’re planning to open a new checking or savings account, it’s essential to understand what type of information could be found in your ChexSystems report. It’s also important to know what to do if your ChexSystems report is preventing you from getting the banking services you need.
What Does ChexSystems Report?
Your ChexSystems report provides financial institutions with your banking history. It documents any past mistakes you may have made with your bank accounts within the last five years. Banks review this information to see whether offering you an account will pose a financial risk. Typically, a ChexSystems report will include the following information:
- Identifying personal information
- History of bounced checks
- Active and closed bank accounts
- Fraudulent bank activity
- Applications you’ve made for new bank accounts
- Unpaid bank fees
- History of overdrafts and unpaid negative balances
How Do I Know What’s On My ChexSystems Report?
If you’re planning to open a new bank account, it’s a good idea to review your ChexSystems report prior to applying. It’s also a good idea to review your report if you’ve recently been denied a bank account. You can request a free copy of your ChexSystems report once every 12 months. You can find information about requesting your report on the ChexSystems website. You can submit a request online, by postal mail, or by phone.
What Should I Do If I’m Blacklisted by ChexSystems?
If you are denied a bank account due to unfavorable information in your ChexSystems report, you first need to determine whether the information in your report is accurate. If you believe your ChexSystems report is inaccurate, you will need to file a dispute. This can be done through a dispute form on the ChexSystems website, or you can submit a dispute through the mail, or by calling ChexSystems at 1-800-428-9623. If you’ve been denied a bank account due to accurate but negative information in your ChexSystems report, you’ll need to do some work to clean up your report. You should contact any financial institutions that you owe money to and settle those debts. You should also ensure that you get some kind of receipt or written proof of the repayment. Once you have addressed the negative items in your report, you can reapply for an account or ask the bank to run an updated ChexSystems report for you. If it will take some time to remove the negative information from your report, you might consider applying for a “second chance account”. These types of accounts are only available at certain financial institutions and may come with fewer perks than a traditional bank account, but they are typically easier to open.
Being aware of your ChexSystems report can help you better prepare for a new bank account, and help you understand the importance of responsibly managing any bank accounts you currently have. Reviewing your ChexSystems report on a regular basis can also help you spot any misinformation or signs of identity theft so you can address it before it gets out of hand and damages your financial freedom.