How to Clean Up a ChexSystems Report

What Is ChexSystems?

ChexSystems is a banking reporting agency that collects information on your deposit accounts, such as checking and savings accounts. It is similar to credit reporting agencies like Experian, but only keeps track of negative information about deposit accounts with banks and credit unions.

ChexSystems maintains a report of certain account activities and reasons accounts were closed. Most banks and credit unions use this information to determine whether to allow you to open an account with them.

Examples of items that can show up on your ChexSystems report include:

• Involuntary account closure
• Bounced checks and overdrafts
• Unpaid negative balances
• Account, card or ATM abuse
• Suspected fraud or identity theft
• Number of accounts applied for recently

Each bank and credit union has different criteria for which activities it will report and which activities may prevent you from opening a new account with them.

Learn more: Do Bank Accounts Affect Credit Reports?

How to Clean Up Your ChexSystems Report

1. Request a copy of your ChexSystems report. If you've been denied a bank account because of your ChexSystems report, it's a good idea to get a copy and address potential concerns.

Federal law allows you to obtain one free copy of your ChexSystems report every 12 months. You can also request a free copy when a bank refuses to open an account due to information on your report. To request a copy of your report, visit the ChexSystems website.

2. Review your report. When you get your ChexSystems report, look through it to determine what may have caused your denial.

3. Dispute any inaccurate information. If you find erroneous or fraudulent information, you have the right to dispute it. You can file a dispute at the ChexSystems website, by phone or by mail. Include any supporting documentation you have in your dispute with the agency. Investigations typically take up to 30 days. If you believe the information is due to fraud, you can also add a security freeze to your ChexSystems report, which can help stop thieves from opening bank accounts using your identity.

4. Pay any overdue amounts. Paying what you owe will not remove accurate information about unpaid balances from your ChexSystems report, but it will update your report to show that the account was paid in full.

If you'd like to get the information removed altogether, you can contact the bank or collection agency and see if they will ask ChexSystems to remove the information from your ChexSystems report after you pay the debt. If they agree, get confirmation in writing. (Keep in mind that ChexSystems is not obligated to remove the overdue payment from your report, even if the creditor requests it.)

Clearing up your ChexSystems report can take time, but it shows that you're working to improve your financial situation and can help your chances of getting a new bank account.

How Long Does Information Stay on Your ChexSystems Report?

It usually takes five years for information to fall off your ChexSystem report on its own, although you can file a dispute asking to have inaccurate information removed. You can sometimes have information removed earlier by paying any outstanding balances and asking the bank or collection agency to request removal of the item.

Unfortunately, negative information on your ChexSystems report may limit your options to second-chance bank accounts and prepaid debit cards. If you can get negative information removed by disputing it or paying off a debt, it's best to do so to avoid having to wait.

How to Open a Checking Account Without ChexSystems

While most banks and credit unions use ChexSystems or another consumer reporting agency, there are several that offer what's called second-chance banking. These financial institutions either don't check your ChexSystems report at all, or they're willing to look past some negative items.

National examples of second-chance bank accounts include:

• Capital One 360 Checking Account
• Chime Second Chance Banking
• GTE Financial Go Further Checking
• Varo Second Chance Banking
• Wells Fargo Clear Access Banking

You may also have luck finding second-chance banking opportunities with regional and local banks and credit unions. Call the institution directly to determine what your options are.

The Bottom Line

Issues with your ChexSystems report can cause problems if you need a new bank account. But fortunately, you have options. By getting a copy of your ChexSystems report and addressing the problems that are preventing you from getting approved, you can improve your odds for the next time you apply.

Also, consider getting a free copy of your credit report and FICO^® Score^Θ from Experian. While your credit score won't keep you from getting a bank account, knowing where you stand and working to improve your credit history can put you on the road to better financial health.