Posted by William Charles on May 28, 2014
Bank Account Bonuses

Published on May 28th, 2014 | by William Charles

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An Introduction To ChexSystems, Inc

an introduction to chexsystemsIf you spend any amount of time on this blog you’ll notice that I mention ChexSystems a lot (often wrongly referred to as check systems or chex systems), especially when talking about new bank account bonus promotions. In today’s post we’re going to be looking at what ChexSystems actually is and other important information.

What Is ChexSystems?

ChexSystems is national consumer credit reporting agency (CRA’s, similar to Equifax, Experian & TransUnion) that is compromised of the majority of credit unions and banks (up to 80% of financial institutions are members). It is owned by Fidelity National Information Services. They share information through ChexSystems about saving & checking accounts (deposit accounts).

Unlike other CRAs ChexSystems only contains negative information (they do contain some neutral information such as new account inquiries). When you apply for a new bank account your information will be run through ChexSystems. If a consumer has a single negative item on their ChexSystems report they’ll likely be denied for a new bank account.

Negative items include but are not limited to:

  • Unsatisfied balances
  • Check overdrafts
  • Depositing fraudulent checks
  • Suspicious account behavior reported by other banks (e.g possible structuring)

Negative items last for a period of five years, before falling off ChexSystems.

Obtaining Your ChexSystems Report

Because ChexSystems is legally considered a consumer credit reporting agency, they are required to give consumers access to their credit report for free under FACTA once every twelve months. Obtaining your report is easy and can be done online, by post or by phone. They’ll send you out your report within 5 business days of receiving your request.

By Phone

Call 1800-428-9623

By Mail

Print and complete this order form. Then send it to the following address:

Chex Systems, Inc.
Attn: Consumer Relations
7805 Hudson Road, Suite 100
Woodbury, MN 55125

Online

Click here to start the online process.

Tactics To Avoid Having Negative Items On Your Report

  • Always balance your check book
  • Avoid going into overdraft
  • Never close a bank account with a negative balance
  • If you’re struggling to balance your check book or are going into overdraft, contact your bank directly and make an effort to correct your mistakes

Clearing Negative Items

If you have a negative item on your ChexSystems report, it is possible to get it removed. There are two different options depending on whether the negative item is valid or invalid.

  • If the negative item is invalid, incomplete or incorrect you can dispute the item with ChexSystems to have it removed. They have 30 days to correct the information.
  • If the negative item is valid your best bet is to contact the financial institution that reported the negative item in the first place. In most cases places will be willing to remove the negative item if you pay back all money that is owed including fees, the only time that this really isn’t the case is when fraud is involved. If the bank/credit union agrees to remove the negative item if funds are repaid make sure you get this in writing, that way if they don’t follow through with the removal you have documentation stating they would. It’s important to note that they have no obligation to remove the item if you pay the money owing, they must mark it as paid though.

To dispute information with Chex you must complete this form and then fax it to or send it to the following mailing address:

Chex Systems, Inc.
7805 Hudson Road, Suite 100
Woodbury, MN 55125

F.A.Q’s

Can I still open a bank account if I have a negative item on my ChexSystems report?

You can, but it’ll be much more difficult. Some banks that use ChexSystems will approve you if the offence is minor (e.g an overdrawn account) and some banks don’t use ChexSystems at all. Instead they might require you to take a short checking course (usually half a day) that teaches you how to balance a check book. Alternatively they’ll charge higher fees.

In the coming weeks we’ll be adding a list of banks & credit unions that do not run your ChexSystems report.

What happens if I open too many bank accounts?

Almost every time you open a new banking account, your information will be run through ChexSystems. Other banks can see these inquiries and most of them have an automatic fraud level. If you have over this fraud level of new accounts opened within the time frame (usually twelve months) you’ll be denied for a new account.

The number of new accounts opened varies from bank to bank (or credit union) and is an internal algorithm, rather than something in built to ChexSystems. Financial institutions do this  because when somebody’s identity is stolen one thing that is often done by the thieves is bank account openings to write bad checks, overdraw the account or engage in check kiting.

Obviously the more new deposit account openings you have, the more likely you are to be denied due to too many new accounts. This also happens with traditional credit reports and too many new inquiries (e.g credit card issuers will deny you if you’ve applied for too much new credit recently – although this is usually done due to risk prevention rather than fraud prevention).

In general you won’t run into any issues with 6-8 bank inquiries in a year and shouldn’t have any issues until you have 12+ inquiries in a single year. But some banks are more inquiry sensitive than others, just like credit card issuers. We’re trying to build a list of financial institutions that are inquiry sensitive, you can help us by commenting below. Include the number of new accounts you’ve opened in the last twelve months  and the financial institution that denied you, please only include this information if you have no negative items on your report.

You can view what banks/or credit unions are inquiry sensitive on this page.

Got Another Question?

Feel free to ask below in the comments, alternatively ask the nice folks over at creditboards on their dedicated sub forum for ChexSystems.

Account opening inquiries stay on your report for a period of three years.

 



68 Responses to An Introduction To ChexSystems, Inc

  1. Tom says:

    How can I trust the ChexSystems website? It has copyright 2009 at the bottom of the page and mentions Netscape Navigator in the FAQ!

  2. chuck says:

    Would SARS be reported on Chex?

  3. Paul says:

    Banks also have tighter requirements than just how many inquiries you’ve had in a year. I was denied by Comerica because I had 5 new accounts in 6 months. Also denied by Bank Direct for similar reasons. This was when setting up new accounts to push some MO thru.

    SARs are Suspicious Activity Reports. Very basic stuff not to know for the so-called Doctor of Credit?

    • Mind was blanking, I never claim to be correct all of the time!

      “I was denied by Comerica because I had 5 new accounts in 6 months. Also denied by Bank Direct for similar reasons”

      That’s the same as being denied for inquiries, isn’t it?

  4. Understanding ChexSystems is definitely important for new to banking consumers. Thanks for the great run down.

  5. Thomas Vargo says:

    There are now many banks and credit unions located nationwide that are offering both “Fresh Start” and “Second Chance” checking accounts. One particular website called “InfoAviator” at http://infoaviator.org/finance/checking-accounts/2014/05/28/how-to-open-a-second-chance-checking/ has a complete recent list of these banks and credit unions offering checking programs that helps Chexsystems victims.

  6. Jason says:

    Thanks for the introduction. I got me Chexsystem report and here are data points: Pulled: Discover Bank(both checking and Credit card!), UFB Direct(bank of Internet), Fulton Bank, Bank of Niagara. Not pulled: BofA(even though they claim to pull), PNC, Citizens bank, M&T bank, US bank, capital one 360.

    A question: Why I cannot see the active bank account or history information from the report? Will the banks see my account history when they pull my report? Thanks

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  8. BionicBuk says:

    This was an interesting read, I wish I read this before I went on a Federal Credit Union binge. I applied for 8 FCU in a 2.5 week period and was approved for 6. The other two told me ChexSystems denied my information. Once you claim your Chex Systems report, it says there is a toll free number to reach a representative if you have any further questions. I don’t have that number yet. I was hoping to sign up for 11 FCUs this year. Dang, what a set back.

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  10. alex says:

    i had chase checking for years. i want to open chase savings. will they pull chexsystems?

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  13. Miles Hustler says:

    PNC auto denied me online with 7 inquiries in the past 12 months, and all but one were in the past 6 months, and was directed to go to a branch. Went to a branch and was denied, now with 8 inquiries, and no details other than a print-out identifying Chexsystems as the reason. Banker thought there might be negative info (e.g. negatively closed accounts), but got my report and it was clear.

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  17. Gary says:

    Was there any answer to the SAR reprts/closures being reported? Many people get accounts shut due to depositing too many money orders; does that negatively affect chexsystems?

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  19. genh says:

    Just got chex report and here are some data points on which banks pull/don’t pull:

    Pulled:
    First Citizens
    Northpointe
    Tech CU
    First Tennessee
    Santander
    Ally
    Discover Checking

    Don’t pull:
    Chase (done it twice)
    HSBC
    Suntrust
    Wells Fargo

  20. Marcia Nygaard says:

    Can confirm with genh, and to add on-

    Pulled:
    Christian Community Credit Union (CCCU)
    First Tech Federal Credit Union
    Pinnacle
    First Bank
    Key Bank
    CU of CO
    US Bank
    First Tennessee
    Northpointe
    Santander

    Not pulled:
    Chase
    Wells Fargo

    All these are inquiries made within the past year, & have not been denied.
    However I’m slowing the roll now to avoid being denied 🙂

  21. Ringo says:

    Pulled:
    Santander
    BMO Harris
    Discover Bank
    Seacoast National
    Ideal Credit Union
    Chartway Federal Credit Union

    Not pulled:
    Chase
    US Bank
    Associated Bank

    Chartway Federal Credit Union showed up 3 times on my Chex report for one application; 2 iniated, 1 not iniated.

    Ideal Credit Union showed up 2 times on Chex; 1 iniated and 1 not iniated.

    The rest showed up once as iniated.

    Got denied by Chartway: 6 new in 12 months of which 4 of those 6 showed on Chex.

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  26. Superchurn says:

    Applied for a Bank of America Core Checking $100 bonus offer, account said pending on the application result, then approved in an email a few minutes later. 3 days later, I can’t login, and I was told they closed my account “for business reasons” without any other explanation.

    Got a letter in the mail 3 days after that, saying they’re closing my account and that the account may be reported to ChexSystems, Early Warning Services LLC, or both.

    No transactions had even posted to the account yet, and initial funding hadn’t even posted.

    I had a total of 10 new bank accounts in 2016, mostly spread out, but 5 within the last 2 months, all approved except Santander. No negatives on ChexSystems report (after pulling for Santander denial).

    I’d never heard anything good about Bank of America. Beware.

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  28. Matthew says:

    I’m curious if it’s work checking the score Chex keeps on us. From the form online, it appears they no longer charge to give it to the consumer. Any thoughts, DoC?

    https://www.chexsystems.com/web/chexsystems/consumerdebit/page/requestreports/consumerscore/

    • Don’t think most banks use the score to be honest, they really look for negative items (likely either an auto denial or triggers manual review) and # of new inquiries. Overall score less important than with credit as deposit accounts are more binary (e.g either good or bad customer) as no credit is extended.

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  30. Zack says:

    Do you know if there is a separate chex for business checking accounts and will opening one show up as an inquiry on your personal chex? (analogous to how most business CC’s don’t show up on your personal credit report)

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  32. Roger says:

    Does it matter how you space out account openings? For instance, lets say I plan to open 12 accounts this year. Does it matter whether I open all 12 in January versus one per month throughout the year?

    BTW, great website!!!

  33. lingua says:

    This question may be a little long but hopefully a good answer will help others.

    So I’ve been hitting the bank accounts pretty hard and just receive my first ChexSystems report and am really surprised to see repeat inquiries by the same bank where I opened just one account.

    It’s divided into Inquiries Initiated by Consumer Action and Inquiries Not Initiated by C.A.

    In the former, CitiBank is listed 3 times on different dates within the same month.
    New York Community Bank (My Banking Direct) is listed twice for 2 consecutive days.

    In the latter, OneWest Bank is listed twice (once in the former), Santander 3 times (once in the former), and Citibank is listed 6 times, New York Community Bank is listed 3 times.

    Again, I’ve opened only one account at these bank. Any insight would be appreciated!

    • This is probably similar to hard/soft pulls on traditional credit reports. The inquiries not initiated by CA is where you’re seeing the repeat inquiries correct? Banks do this to make sure no negative marks have appeared on your report since opening.

  34. lingua says:

    There are multiples in both, but yes, more so in inquiries not initiated by CA.

    Under inquiries initiated by me there are also multiples: Citibank 3x, My Banking Direct 2x.

  35. Fish says:

    Ordered my Chex report:

    Inquiries listed:
    M&T (x3 – one for each account)
    First Tennessee
    Fifth Third
    Citibank
    Ally

    Recent accounts not included:
    Suntrust
    Chase
    Wells Fargo
    Regions
    PNC

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  37. MarcoPolo says:

    @DoC
    I requested my CHEXsystems report using the above form and all they sent me my CHEXsystems score?
    What gives?

  38. Taryn says:

    Is there anyway I can get some inquiries removed by disputing them? I applied to a few banks to get the bank bonus but for some reason all 8 inquiries are showing within a one week frame?

    I am pretty certain I did not apply for all 8 within a week. They were spread out by about 2-3 months.

  39. Kenneth says:

    William, you mentioned that overdrafts are considered negative. How about overdrafts covered by overdraft protection?

    I have Discover checking and savings accounts and usually leave $0 in the checking account. When a debit posts, Discover automatically transfers funds from the savings account to cover the overdraft. Would this be reported to Chex?

  40. Etrader83 says:

    Hello there,

    After reading your articles (and the comments), I’m now encouraged to start with the Bank Bonuses application game more seriously – thus far, I’ve only opened the Chase Checking+Savings A/C bonus ($300/$200)

    Since the ChexSystems Facta report is only available once a year, do you recommend that I request a report now or wait until I’ve applied for several bonuses (I don’t expect any negatives else Chase would’ve denied me an account)

    Thanks!

  41. KB says:

    Thanks so much for providing this introduction to ChexSystems! I am new to opening bank accounts for bonuses and have learned a lot from your site.

    I have a question: can you describe the negative impact of having too many new inquiries? Is the only negative impact that I could be denied from opening additional accounts? Seeing as I do not need any new accounts, I am just making some extra $$ by opening them, this is not a big deal. But is there anything else? Does having too many new inquiries affect my existing accounts or affect my credit? Will it have any other negative outcomes? Is too many inquiries considered a negative mark?

    Thank you so much for your help!

  42. tiwoahana says:

    Requested Chex consumer report online. Took 30 seconds to fill out and I should have it via snail mail in 5 days.

    Easy! I will report which banks show up there.

  43. Kevin says:

    The link above to obtain a report online isn’t working. Also, do we know about how long it takes for a new inquiry to show up on Chex? Next day? Next week? Next month? Just a rough idea. Thanks!

    • Jim says:

      Likely depends on the institution.

      For PNC, I opened two accounts within a few months and neither showed up on Chex or EWS.

      On the other hand, for M&T, BMO Harris, and a local credit union, they were market as an inquiry the same day (much like a credit inquiry) — I just happened to request a Chex report two days later and the all the account inquiries were already there

  44. Dave says:

    Got a letter in the mail from Chex Systems today – the first I’ve ever received.

    It was a letter notifying me that I’ve had 8 new Chex Systems inquiries in the past 12 months and that I have a right to receive my report.

    I shouldn’t be alarmed about any negative remarks, right? This is just standard procedure?

    Thanks for your help!

    • Tom says:

      Dave,

      Same thing here — got an unsolicited letter from ChexSystems saying I have 8 inquiries in the last 12 months.

      Perhaps 8 in 12 months is a standard level that triggers a letter.

      How to interpret the letter? Is it a warning shot across the bow? Or a note to alert me just in case I have NOT been opening accounts (ie fraud alert)? Both?

      At any rate, I think I will take a break from opening new accounts for a few months, unless I know the bank does not use CS.

  45. Quinn says:

    Is it possible to place a security freeze on a ChexSystems account? Is there much benefit to doing so (do identity thieves open bank accounts)?

  46. Trippy says:

    I had initiated an electronic funds transfer into Fidelity from another bank and then closed that one as I had forgotten about it. Today I received a failure message from Fidelity, is this going to be a negative?

  47. Frank says:

    PNC indicated I was flagged through the EWS, early warning system. They indicated this is different than ChexSystems

    • Joe says:

      Hi, were you flagged as delinquent, or for inquiries? The banker said my EWS said I was declined and said to get my report and check for “debts under my name”. I was scared, but I came back with it and she said there were no derogatory marks… PNC must just know whats up with the churning game!

      • Frank says:

        It seems they KNOW if an account was recently opened. I told them it was a business account and they obtained an authorization through email to allow me to open the account.
        It took one hour.

  48. Russell says:

    I have run up ~30 inquiries this year on Chex (just got a report from them). I’m feeling a little scared now honestly. I’ve only been denied 3-4 times, all by Chex inquiry sensitive banks, but the last time it happened at a community bank, the banker gave me my Chex score. It was 523 and categorized as ‘high risk’ in bold. How long do you guys recommend I wait before I start hitting hard again?

    • Gadget says:

      I thought the same thing when I got my Chex score the first time. (you can request it online, and they will mail it to you – I believe it used to cost money to get it, now it’s free) Fortunately, no bank I know of really uses that score. Also, there is no explanation of how that score is calculated. What I do know is that the vast majority of the big banks use EWS, not Chex.

      I think it is safe to assume that, because Chex inquires fall off after 3 years, your score would also recover in that amount of time. If, in the future, banks actually started to use the Chex score, it would take some time to recover.

      But, my advice – stay away from the inquiry sensitive banks and “keep on keeping on”. And dispute any Chex duplicate inquires or invalid info if you want to feel better about the Chex report, but often that doesn’t get anything accomplished. Tell nosey bankers that you were shopping around for a better bank and haven’t found the right fit! Either they want to close a deal, or they will do what they have to get you out of the door if they cannot close the deal because of bank policy. Most of my denials were about being out of the geo. area, not Chex. Exceptions being Key Bank and Discover who shut me down just because they could.

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