The Complete Guide to Your ChexSystems Report

The Complete Guide to Your ChexSystems Report

What Is ChexSystems?

ChexSystems is a credit reporting agency regulated under the Fair Credit Reporting Act (FCRA). It works with many different credit bureaus, banks, and financial institutions to gather the bank and financial history of consumers related to these institutions. It maintains a record regarding your bank accounts – both savings and checking accounts – and all related activity for the past five years.

A lot of banks and financial institutions require a ChexSystems report to approve or deny your request for opening a new bank or credit account. Yes, we said a lot of, not all banks and financial institutions are linked to ChexSystems.

The ChexSystems Report

ChexSystems keeps track of your accounts and activities in a report called the ChexSystems report. It includes all your bank accounts and accounts with credit unions. The report also contains all the information regarding your activities as well as the reasons behind your account closures.

So if you want to know what is in a ChexSystems report, here goes:

  • Your information such as name, address, social security number (SSN)
  • Details of involuntary account closure
  • Negative balance
  • Bounced checks
  • Overdrafts
  • ATM card abuse
  • Fraudulent activity or identity theft
  • Number of new accounts you recently opened or applied for

Unlike other consumer reports that hold information on the report for the past seven years, the ChexSystems report keeps the information for the past five years only. After five years, it is automatically removed from your ChexSystems report.

Who Uses ChexSystems Report?

Whenever you request for a new bank account or credit account, the respective bank or credit union will ask for your ChexSystems report. They use the report to determine whether they should approve your application. If the ChexSystems report includes any information that presents you as a risky customer, the bank or credit union simply denies your request. Most of the time, negative balance, bounced checks, and fraudulent activities might be a hurdle to opening a new deposit account.

Second-Chance Bank Accounts

Now, there are several banks and credit unions that offer a second-chance bank account for people who cannot open a regular bank account due to some suspicious activities or unpleasant bank records mentioned on their ChexSystems report.

However, these second-chance bank accounts come with several limitations. They charge a higher fee and provide limited services. For instance, you might not be allowed direct access to deposits or checks.

Prepaid Debit Card

Another option is to apply for a prepaid debit card. You will be able to use what you have loaded on your card only. This means you are using your own money and do not owe it to any bank or credit union. This keeps your ChexSystems record safe.

Getting a Copy of Your ChexSystems Report

Under the Fair Credit Reporting Act (FCRA), every consumer can access his ChexSystems report once in a year for free. You can also apply for a copy of your ChexSystems report if your request to open a checking or savings account was disapproved in the past 60 days.

Note that if your request was disapproved, the bank or credit union must provide the reasons for the denial. If it links to your ChexSystems report, but you think that’s misinformation, you can request a copy of your ChexSystems report.

How to Request a Copy of ChexSystems Report?

Fortunately, there are several different ways of accessing a copy of your ChexSystems report. These include:

  • Online through ChexSystems’ website
  • On call by dialing 800-428-9623
  • Faxing a request form to 602-659-2197 and downloading the report
  • Mailing a request to ChexSystems Inc., Attn: Consumer Relations, 7805 Hudson Road, Suite 100, Woodbury, MN 55125

Requesting Online

If you are requesting for your ChexSystems report online, follow these simple steps:

  1. Access the ChexSystems website and agree to the terms and conditions.
  2. Check the box if a bank or credit union denied your account opening request, and the cause was ChexSystems’ record.
  3. Verify your age.
  4. Enter all the required information such as your name, current address, Social Security Number, date of birth, etc.
  5. You will be given a security code. Enter that and click submit.

Once ChexSystems receives your request, you will get a copy of your ChexSystems report via email within five business days. Thus, requesting online or over the phone are the fastest ways to put forward a request.

Clearing Your ChexSystems Report

Once you receive your ChexSystems report, read it thoroughly to identify any misinformation reported. Once you find the negative item, you are in a good position to dispute the entry. However, if the information is legitimate, it is going to stay on your report for five years. And so, you might face difficulty in getting approval for a new bank or credit union account.

According to the situation, you might be able to clean up the errors on your ChexSystems report. As ChexSystems is a consumer reporting agency, FCRA gives the right to the consumers to file a dispute and report any wrong information.

Well, here are two ways to clear your ChexSystems report:

1. Pay off the Balance

If your report shows that there is some negative balance and you owe money – such as your credit card debt or negative balance due to overdrafts – you should try to pay off the balance as quickly as possible.

This makes ChexSystems review the report and correct the entries. However, make sure you notify your bank or credit union of the paid balance so that they deliver the information to ChexSystems to eliminate the negative entry from your ChexSystems report. Or else, you can directly send the receipt to the reporting agency to clear your record.

2. File a Dispute

On the other hand, if there is any inaccurate item or information on your report, you have all the legal rights to dispute it with ChexSystems. For that, you need to follow the ChexSystems dispute process.

Write a Letter of Dispute/Report the Dispute

Firstly, you must write a letter of dispute in which you report the negative item and provide all the necessary information such as the date, bank or credit account, and account number. Make sure you do not include any information other than what’s required.

If you do not want to write a letter, there are several other ways to report the dispute, such as making an online request and disputing over the phone. However, with both these methods, you cannot keep a paper trail. Therefore, conventional mail is the best option.

Deliver the Letter

Next, you need to deliver the letter. Simply mail it through certified U.S. mail and receive a green return receipt from the post office. This is proof that your letter has been delivered to ChexSystems.

Waiting for the Response

Under the FCRA, ChexSystems must investigate and respond within 30 days. Also, you can request to know about the verification method. If ChexSystems responds within 30 days with the verified dispute and fails to find the item in your record, they should remove the item.

If they fail to respond within 30 days, this means they still have to clear your report as they could not find anything wrong in your record.

If they do not delete the item despite failing to prove it, you are in a good position to take legal action.

Impact on Credit Score

Your ChexSystems report does not directly affect your credit score. However, if you were denied a checking or savings account or have any such poor record in your ChexSystems report, it might be linked to a certain aspect of your credit history.

For instance, if you have a negative balance on your checking account, the bank might report to a debt collection agency, which, in turn, reports it to national credit bureaus. Now it might have a poor impact on your credit score.

If you are concerned about your credit history, you should keep a check on your credit. Several free credit monitoring services help track your FICO score and related financial activities.

It will help you improve the score as well as your chances of approval for a new checking or savings account. If not, you can try second-chance bank accounts.

Verdict – Take Healthy Financial Choices

To make sure that your ChexSystems report never contains any negative entry, you must take healthy financial choices. Only open the bank and credit union accounts that you need to use. Opening and closing accounts for nothing has a bad impact on your ChexSystems report as well as credit score.

Unfortunately, if there are any negative items on your ChexSystems report, it will be a hindrance to opening a new account. And you need to wait for five years. Alternatively, you can go for a second-chance bank account or prepaid debit card. Make sure you do not misuse them.

It takes some time and effort to improve your financial record and maintain a good relationship with banks and credit unions. Do not get demoralized and stick to good financial choices!

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