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.

 



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69 Comments on "An Introduction To ChexSystems, Inc"

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Tom
Tom

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

chuck
chuck

Would SARS be reported on Chex?

Paul
Paul

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?

Josh L Rodriguez

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

Thomas Vargo
Thomas Vargo

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.

Jason
Jason

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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[…] To be eligible for a new bonus you must currently have an account, or have closed an account within the past 90 days (you also can’t have ever closed a Chase account with a negative balance – which you wouldn’t want to do anyway as it would be a red flag on your ChexSystems report). […]

BionicBuk
BionicBuk

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.

AlwaysLearning22
AlwaysLearning22

There is apparently a ChexSystems ‘consumer score’ – https://www.chexsystems.com/web/chexsystems/consumerdebit/page/requestreports/consumerscore/ and you can obtain it with a written request by fax or mail. – https://www.chexsystems.com/web/chexsystems/consumerdebit/otherpage/RequestYourScore

They should reply via U.S. mail within fifteen business days.

I will be sending a letter tomorrow

trackback

[…] you want to learn more about ChexSystems, I’d strongly recommend you read our introduction here. We also list some financial institutions that are more inquiry sensitive than others. If […]

alex
alex

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

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[…] Hard/soft pull: Soft, ChexSystems […]

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[…] 大部分情况下每当我们申请一个新的 Checking/Savings Account 时就会在 ChexSystems 上留下一个 Hard Pull。除了 Hard Pull 之外,以下信息都有可能被上报 ChexSystems 信用局 (via Doctor of Credit): […]

Miles Hustler
Miles Hustler

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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[…] Introduction To ChexSystems […]

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[…] that it would somehow affect other things.  Would there be a black mark on my credit report or ChexSystems report?  Over time I learned that it really had no affect at all (other than sometimes tying up my money […]

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