ChexSystems is the largest consumer reporting agency in the United States used by banks, credit unions, and other financial institutions to track customers when they apply for a bank account.
It was created back in 1971 and has become a go-to service for about 80% of financial institutions across the country. Even though there are so-called second chance banks that don’t use ChexSystems, it’s quite difficult to open a checking or even savings account if you have a bad consumer report.
ChexSystems serves banks, not regular people, by sharing with them mistakes you have made over the last five years.
If you are in ChexSystems it means that at some point you have made one or more mistakes reported by your bank or other financial institutions. This refers to:
The way ChexSystems runs its business doesn’t make most people happy. From time to time this approach is called unfair. For example, long ago, in 1991, Santa Cruz Sentinel quoted Max Foster, a policy analyst at Consumer Action at that time who said that ‘there is no distinction between a criminal and someone who has bounced three bad checks’.
Thirty years have passed, but nothing has changed.
There is no official list of items that banks report to ChexSystems, but the fact remains, if you find yourself in this database, you’re not alone. There are over three hundred million consumer reports in this humongous database.
A ChexSystems consumer report is a file (either electronic or paper) that contains all bad records reported by banks. No good information is stored, only mistakes you’ve made over the past five years. Yes, this is how long they stay in your report regardless of whether they are soft or hard. Compare this to credit inquiries that stay on your credit report for only two years before they fall off.
It contains your personal information including name, date of birth, and a set of records.
Your report looks like this:
Consider the following inquiry:
The customer must have initiated a check cashing transaction which was reported by a local store.
Inquire dollar amount is $87. The information in this report provides the way to solve the problem – you can contact the inquirer, in this case, a local store. If it were a real report, we would see the name of an organization.
You can find a sample consumer report by following this link.
An important characteristic of every customer is their ChexSystems score. In some cases, you can find it in your report, but oftentimes the company shares it only with an institution that makes a request. It’s kind of B2B (business-to-business) data.
You have all the right to know it. But typically, customers will know this value when they get rejected by a bank when opening an account. There are multiple discussions on CreditBoards.com like this:
Once you know your credit score, you can get an idea of what banks and credit unions think of you as a customer.
This number ranges from 100 to 899. If your score is low (100-300), it represents higher odds of future default. A financial institution will most likely refuse to open an account for you. If your score is high enough (over 600), it is a good sign representing low risk and lower odds of future default.
A ChexSystems score is a relative value, which means no one knows for sure what is good and what is bad. There is an opinion that, for example, a 545 score may be good for one bank and bad for another. So, you should always try to keep your score as high as possible.
According to MyBankTracker, 581 or better is considered a ‘safe score’, which means that most financial institutions will likely approve your application.
Not everyone has a ChexSystems score. There may be several reasons for that:
Also, if you find that your score is a four-digit number like 0457, just remove the zero: 0457 = 457.
You have the right to request your consumer report once a year absolutely for free. ChexSystems is obligated to provide you with it without any questions. The only requirement is, you have to request it properly in one of several ways.
Regardless of which way you use, the result is the same. You will get your consumer report within five business days.
In some rare cases, you may be waiting for your report longer. Checking Expert recommends that you get your report through mail or by fax. The reason is that officially ChexSystems has as many as 45 days to send your FACTA Free Annual Report if it was requested online, and only 30 days if you ordered it by fax or through the mail.
So, you ordered your report, received it, and realized that there were some mistakes that you didn't make.
No need to worry, because it’s one thing to pay off your debt, and quite another to fix the mistakes made by either your bank or ChexSystems.
It makes no sense to dispute your report if it contains a record of unpaid debt until you pay it off.
The best way is to find the name of an organization that has reported to ChexSystems and get in touch with it as soon as possible.
Your bank already has your data and other information. You can call them, but it’s always better to talk to a representative in person. Just show them what is wrong and ask about the reason the information got into your report. If the bank admits its mistake, ask a representative to inform ChexSystems without any delay.
The problem (as well as an advantage in this case) is that ChexSystems believes that banks and other institutions' information is always accurate.
But what if you found an error that the bank has nothing to do with or you simply have no idea how it got into your report? It’s not your job to get in touch with a service you’ve never been served by, especially if it is located in a city or state you’ve never been to.
Time to send an official letter to ChexSystems, in other words, dispute your ChexSystems consumer report.
According to The Fair Credit Reporting Act, you can request an investigation in case you find any errors in your report that you believe were mistakenly put into it.
The most important part of this process is sending the correct letter (or letters). It’s no rocket science but ChexSystems doesn’t provide you with easy-to-fill forms or something like that. So, you have to design them on your own.
In our ChexSystems Removal Kit that you can get right now, we provide you with different types of letters designed for solving different situations.
Again, it’s not that difficult to compose a letter on your own, but it’s always better to use examples that have already helped many people to clear up their ChexSystems records.
In case you’ve noticed a debt that you are not familiar with, the letter may look like this:
To Whom It May Concern: I’ve ordered my free report and noticed that BankName has listed unpaid debt on my ChexSystems file, dated August 31, 2021.
I have never been a customer of BankName and I have no idea how this data got into your database.
I have already requested full validation from BankName, especially copies with any documents with my signature. The bank replied that it had no such information and had never reported to you any information about me.
I am attaching the screenshot of their message and am in the process of obtaining a paper document.
Therefore, I request that this information be removed from my report.
To increase the chances of getting a positive response, you have to add supporting documentation.
Send your letter with U.S. Postal Service to this address;
ChexSystems Consumer Relations
7805 Hudson Road
Woodbury, MN 55125
Once ChexSystems receives your letter, they check if it is written correctly. After that, they send an electronic request to a bank or credit union to check if the information is correct.
If a financial institution responds that the information is correct, it becomes ChexSystems’ job to obtain a copy of the documentation and provide you with it. Remember, you must ask for this in your letter.
In case ChexSystems does not obtain any official documents, it must remove a particular record from your report. This is a requirement of The Fair Credit Reporting Act.
Law is on your side. Even if you have a negative balance or something like that but the bank refuses to provide ChexSystems with official proof, it is required to remove this information from your report.
Even though neither the bank nor ChexSystems have any reasons to make you guilty for any reason, sometimes it takes long weeks and months to clear up your record.
Many people don't even know that ChexSystems exists. They just use various banking services and are happy with it.
But many of them occasionally find out about its existence because they get rejected by the bank.
So, what exactly does your consumer report affect?
With that being said, with a bad consumer report, you won’t go to jail, but it will make you spend more time searching for banking services and pay more fees.
If you don’t have enough time or just don’t want to get involved in the dirty business of disputing, you might be interested in finding a service that can do the whole thing instead of you, on your behalf.
Although you can always hire a lawyer or another representative, it makes no sense. The thing is, an average attorney fee in the United States is $225 per hour.
Paying hundreds if not thousands of dollars for what you can do with your hands, makes no sense whatsoever. In case you are in a hurry and need fast results, the right thing you can do is dispute your report. As we have mentioned previously, in addition to supporting documents, you have to provide ChexSystems with a properly composed cover letter.
It will be considered an official document. Unfortunately, there are different life situations and different problems that require different letters. You don’t have to be a professional writer, but still, it requires a certain amount of expertise.
In our ChexSystems Removal Kit, you will find all the letters you need to clear up your ChexSystems record, no matter what mistakes you have made, especially if you notice some mistakes and don’t know what to do about them.
As for the question about ChexSystems removal services, we did thorough research and came to the conclusion that such organizations or private individuals don’t exist. But demand still exists, people often want to solve difficult problems in an easy and effortless way.
For those of you who care about your security, there is an option to freeze your consumer report at ChexSystems. This means that when you or anybody else applies for a bank account, they will be rejected.
ChexSystems freeze works great if you are sure that you won’t change your bank in the near future, or you won’t open a bank account for another reason.
To freeze your consumer report, go to a ‘Place a Security Freeze’ page at a ChexSystems website. You will have to fill out a special form and submit it.
Also, you can send a paper request. Get a free form, print it out, and after that mail it at the following address:
Attn: Consumer Relations
7805 Hudson Road Suite 100 Woodbury,
What would you bother doing that? If you read CNBC or visit other financial websites, you may know that money laundering, selling empty and loaded with money bank accounts, wire transfer fraud, identity theft, and other crimes are pretty popular nowadays. According to Fool.com, there were over 1.3 million reports of identity theft in 2020. Just look at this graph and you will understand why lots of people have already frozen their ChexSystems report. At the end of the day, it’s not forever. You can temporarily or permanently lift your freeze whenever you need it.
Being nervous about your consumer report is not the best idea, but taking care of your reputation is something you have been taught since childhood, isn’t it?
Therefore, your financial reputation can and should be managed not by banks, ChexSystems, or other financial institutions, but by yourself. After all, ChexSystems is just a mirror that reflects what it has been provided with.
So, the most important step is to build the right financial discipline and follow simple and straightforward rules:
Order it online, by fax, or by mail. Follow this link to get your FACTA Free Annual Report. It will arrive in five business days. There is no difference between ordering it online or offline. As a result, you get the same file.
There are two ways. You can either request your report, or the bank will share with you why it rejects your application. In this way, it will inform you of the reason which is a low ChexSystems score. Once you know that you are in a ChexSystems database, you will have to take an additional step which is requesting your report. Remember, banks don’t have your report, so you will not get it from them.
It is a file that shows all items starting with unpaid fees and finishing with suspected fraud. You can also find the contact information of the organization that provided ChexSystems with information about your financial missteps.
Five years starting from the report date. If the source of the information requests to remove the item from your report, ChexSystems is obligated to do that. This is a legal requirement. But that you have paid off your debt, does not mean that the bank will report it. Sometimes they do, sometimes they don’t. It’s your job to take care of your consumer report, so once you are debt-free, get in touch with the bank and ask them to send a notification to ChexSystems.
There are financial institutions called ‘second chance’. This refers to both banks and credit unions. You can open a checking or a hybrid account (checking plus savings) with Chime, N26, or some others. Read our full review of second chance banks.
Request your report to see what is wrong. After that, get in touch with the bank you owe and pay off your debt. The last step is asking the bank to notify ChexSystems. If something goes wrong or you notice an item that has mistakenly appeared in your report, start a dispute. You can dispute the bank that reported you and the ChexSystems.
Any past financial mistakes that banks and credit unions report. It simply believes them and adds to its database everything that is reported. This is the reason why a lot of people are looking for ways to clear up their consumer reports.
Yes, you can. But not right now. Visit this page, request your report, and wait for five business days.
Whether you know about it or not, you may have a ChexSystems report. This means a bank or a credit union you visit either online or offline to open a bank account, will see your score which will help it decide whether to serve you or not.
Having a report is not a bad thing. But to keep things under control, do not hesitate to request your free annual report and fix any mistakes as soon as possible. In case there are any mistakes, you can always get in touch with your bank or start a dispute with ChexSystems.