What is ChexSystems?
It is likely that negative actions in your ChexSystems report led to the denial of a bank account.
A consumer reporting agency, ChexSystems, gathers data on consumer checking, savings, and deposit account openings and closures, as well as the reasons for the closures. It operates under the Fair Credit Reporting Act and functions similarly to a credit agency.
ChexSystems is explained and alternatives to traditional bank accounts are reviewed by CNBC Select.
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What is a ChexSystems report?
ChexSystems operates in a manner comparable to a credit bureau. It amasses a substantial volume of banking information and communicates it to financial institutions, enabling them to evaluate the risk associated with a consumer prior to granting them access to a new account.
The ChexSystems Consumer Score, which ranges from 100 to 899, reflects your risk level for owning a deposit account. Higher scores indicate a lower risk profile and better approval chances. To view your score, you must submit an additional request form. However, the score alone may not be as informative as the full report, as it does not reveal the underlying causes of any potential issues.
Not everyone has a ChexSystems report, as it only includes individuals with a history of negative banking behavior or closed accounts.
You should have no trouble getting approved for top checking and savings accounts, including Citi® Access Checking, Discover Cashback Debit Checking, and LendingClub LevelUp Savings, if you have a clean banking history.
What is on a ChexSystems report?
Your banking history information could be included in a ChexSystems report.
- Number of accounts you've applied for recently
- Involuntary checking or saving account closures
- Unpaid negative balances and fees
- Bounced checks and overdrafts
- Suspected fraud or identity theft
- Who has viewed your ChexSystems report
ChexSystems only tracks forcibly closed checking and savings accounts, excluding active accounts and those closed voluntarily with no history of mismanagement. Additionally, ChexSystems reports do not contain information on criminal records, employment history, or rental history.
Special circumstances may allow for the removal of information from a ChexSystems report before the usual five-year retention period.
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How to get a copy of your ChexSystems report
There are three ways to request a copy of your ChexSystems report:
- By completing a form on ChexSystems' website
- By phone
- By mailing a Consumer Request for Disclosure Form
You have the right to request a free ChexSystems report every 12 months, and you may be entitled to more frequent updates based on your specific circumstances. If you find any inaccuracies in your report, you can file a dispute with the source or through ChexSystems, who will act on your behalf.
Regularly checking your ChexSystems report can help you detect fraud or identity theft. Alternatively, you can automate this process with an identity theft protection service. One of CNBC Select's top-ranked identity theft protection services, Aura, provides financial fraud and identity theft protection, as well as additional benefits such as credit monitoring.
What can I do if I am denied a bank account?
Banks and credit unions are required by federal law to inform you of the reason for denying you a bank account. Typically, the reason for denial is based on information found in your ChexSystems report.
If your bank account application was denied, request a copy of your ChexSystems report to identify areas for improvement and ensure accuracy.
Consider a second-chance account as you clean up your ChexSystems report, as these accounts typically do not use ChexSystems reports when evaluating applicants, increasing your chances of approval.
If you're unable to obtain a traditional bank account and are seeking a second-chance checking account, consider Chime Second Chance Banking* or Chase Secure Banking℠. The Chime account is notable for its lack of common banking fees, while the Chase account is distinctive for its welcome bonus.
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Chime offers financial technology services, not banking services. The Bancorp Bank N.A. or Stride Bank, N.A., both members of the FDIC, provide banking services and debit cards under a license from Visa U.S.A. Inc. These services can be used anywhere Visa debit cards are accepted.
